Rising debt has weakened eurozone – Bank of Spain paper
Highly indebted countries face lower output and limited ability to respond to crises, researchers say
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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