High public debt hampers fiscal stimulus in eurozone – Bank of Portugal research

Debt

Euro area countries with higher public debt levels face the prospect of more acute crises, are more vulnerable to spillover effects and have less room for fiscal stimulus, says research published by the Bank of Portugal.

“A high public debt burden is problematic especially in a monetary union like the euro area, in which fiscal policies remain at national level, while member states share the same currency and lack monetary policy autonomy,” say the authors.

In Economic consequences of high

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