Rising debt has weakened eurozone – Bank of Spain paper

Bank of Spain
The Bank of Spain
Luis García

Highly indebted eurozone countries may be more vulnerable to future economic shocks, a working paper published by the Bank of Spain argues.

In Economic consequences of high public debt: evidence from three large-scale DSGE models, Pablo Burriel et al note the coronavirus pandemic led to major fiscal deficits in many eurozone countries.

They note that monetary policy in the eurozone focuses on the bloc as a whole. This, they argue, leaves individual economies with high debt levels “poorly

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