austerity - The New School SCEPA

Evidence suggests that the introduction of the EMU is associated with a shift from sustainability to unsustainability of external debt accumulation among the Euro countries considered.

This note offers policy recommendations based on empirical support that shows current account imbalances in the EMU are unsustainable and may jeopardize stability in the Euro Area.

This research contradicts the highly cited Rienhart and Rogoff study, which states that debt higher than 90% of GDP will negatively affect a country's economic growth.

Economic policy debate in the United States and other developed economies has been dominated by talk of lowering fiscal deficits through spending reductions.