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  3. Journal of Economic Perspectives
  4. Summer 2012
  5. The European Sovereign Debt Crisis

Journal of Economic Perspectives

ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)

The European Sovereign Debt Crisis

  • Philip R. Lane
Journal of Economic Perspectives
vol. 26, no. 3, Summer 2012
(pp. 49–68)
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Abstract

The origin and propagation of the European sovereign debt crisis can be attributed to the flawed original design of the euro. In particular, there was an incomplete understanding of the fragility of a monetary union under crisis conditions, especially in the absence of banking union and other European-level buffer mechanisms. Moreover, the inherent messiness involved in proposing and implementing incremental multicountry crisis management responses on the fly has been an important destabilizing factor throughout the crisis. After diagnosing the situation, we consider reforms that might improve the resilience of the euro area to future fiscal shocks.

Citation

Lane, Philip R. 2012. "The European Sovereign Debt Crisis." Journal of Economic Perspectives 26 (3): 49–68. DOI: 10.1257/jep.26.3.49

Additional Materials

JEL Classification

  • E62 Fiscal Policy
  • F34 International Lending and Debt Problems
  • F36 Financial Aspects of Economic Integration
  • H63 National Debt; Debt Management; Sovereign Debt