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Master of Arts / Department of Economics / Lloyd B. Thomas Jr / The European sovereign debt crisis has had a profound impact on the rest of the world. The “debt crisis” refers to the rapid accumulation of debt within some struggling euro-zone countries. This debt accumulation has resulted in a variety of financial bailouts made to various countries within the European Union and a debt default by the country of Greece. The results of this crisis have changed the way of life for many living within the struggling economies. Division within the euro zone, on both policy and ideology, has begged the question of whether the euro will be able to survive in the long term. The purpose of this report is to investigate the buildup and evolution of this crisis, as well as to highlight various responses and proposed solutions of the future.

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abstract

本文根據Detragiche (1992)的模型進行延伸，從原先的一財模型變成兩財模型。若貿易財為資本密集財時，且人們偏好目前消費甚於未來消費時，會生過度消費與過度投資的現象，進而形成了債務危機。我們可以發現，隨著時間的增長，貿易財的消費量會逐漸下降，而外債的存量會愈來愈高﹔到無窮期時，消費量會趨近於O，負債的情況仍繼續存在，這使得債務國發生了債務危機，也產生了賴債的可能性。 債權國為了減低自身損失，會提出債務削減方案以期望債務國願意進行重新協商。對債務國而言，需有夠大的誘因才能吸引期進行談判，此誘因為透過協商可增加其消費數量，進而提高福利水準。或是在期初直接對債務國設立借款上限，當達到借款上限時，無法再向債權國借款，以免受到賴債的傷害。當達到借款上限時，經濟體會變成一封閉體系，除了將出口所得支付債款外，其餘金錢僅能投入國內資本市場。此時消費與每人資本存量會下降，導致投資下降，利率的上升和工資的下跌。

This paper investigates the determinants of sovereign debt crises by using cross-country data from 1977 to 2010. In particular, I focus on the structure of sovereign debt by analysing the debt composition (domestic versus external), maturity structure (short-term versus long-term), composition type (bank loans versus bond) and currency denomination (domestic currency versus foreign currency) of debts. I also assess whether the previous history of banking and currency crises affect the likelihood of a sovereign debt crisis. The results suggest that both the structures of debt and the past history of other financial crises are important determinants of debt crises. The results are robust when using alternative measures to understand the risks of sovereign debt. I also investigate the impacts of debt structure and past financial crises history on the levels and changes of foreign and local currency long-term debt credit ratings.

The main objective of this thesis is to evaluate whether European monetary union will overcome the crisis and move towards deeper integration. The first chapter is to assess whether the EMU an optimal currency area. The second chapter aims to clarify the causes and context of the emergence of the debt crisis, the third chapter then describes the long-term measures to overcome the crisis and outlining possible scenarios for the future development of the European Monetary Union and Greece.

The master thesis focuses on the European debt crisis. It first studies the development of monetary integration on the continent. It is followed by the detailed analyses of the debt crisis, how it started, what were the triggers, how it unfolded and at what point is it now. It identifies the fundamental issues of the crisis and the reasons of it. Lastly, it analyzes the implications of the crisis in the Czech Republic and Slovakia. The master thesis contains 73 pages, 25 figures or tables and 1 annex.

This study investigates the effect of the European sovereign debt crisis on alternative capital sources of public companies from France, Germany, Switzerland and the United Kingdom. Specifically, it studies which financing choices expose a company to potential bank lending and demand shocks during the Euro crisis. To this end, the study employs average treatment effect estimations and difference-in-differences regressions to show whether financially more (less) constrained companies use more (less) alternative capital than matching control companies. I find that two of three financially more constrained company groups show higher use of alternative capital sources than matched companies due to evidence for bank lending shocks in Germany and France. Companies with a high financial dependence behave against the expectation because of high cash holdings and lower need for alternative capital. Companies with high cash holdings showed signs of a demand shock. Swiss and British companies appear to be much less affected by the Euro crisis because of weaker financial ties with the most affected southern Eurozone economies.

This thesis describes Greek and Irish economy in circumstances of world economic crisis. It studies the state of those economies in the course of membership in European Union, basic macro-economic characteristics and fundamental reasons for recession. Enhanced focus is put on fiscal politics of both countries, because in moment public finances present a big challenge for them. With respect to the present debt crisis the thesis offers an overview of steps made or being made to correct the current situation. An implementation of a fiscal union is also discussed as a next neccessary level of an European integration. It also thinks over the the future development of EU and sustainability of a common currency.