Why are current account Imbalances the key source of many macroeconomic Crisis, e.g. european Sovereign debt...

Why are current account Imbalances the key source of many macroeconomic Crisis, e.g. european Sovereign debt Crisis. Can someone explain this thoroughly please?

Expert Solution

A sovereign debt crisis is called that when a country unable to pay debut. whose country called Sovereign debt crisis. but it does not accure in a one day or one week. ts gave many warning also gave a sign to debt.country ignore for a own benifeits.that process not a one day process that ole thing occure slowly and slowly.

This happens when pepole realize tat the Greece going own debt in 2009. thats time european is works good , but condition became wrost,in several county,debt are arising for a property transferd to sovereign debt as a result of a banking system baiout.so goverment gave a slow responses. Five countries -Portugal, Italy,Spain, Ireland, Greece are failed to make a good economic growth .so in 2008-2009 fall all rates those rates depend a country GP ratio like a housing rate and parallely increasses of debt.

Thats time Eurozone country facing a big problem because those time debt problem were also generally uncompettitve with heigher inflaction rate,and also incessing a labour cost soo the export become less demanding to lower economic growth. in case no lander make a market with the Eurozone. Eurozone held a nervouse debt become.Fears of default raise bond yeilds, but this made it more expensive to pay intrest on debt .Cost of debt were increses in coming year Those country were not a part of Eurozone those country not in a present a markel treaty.these country worreid treaty would lead to second Eurozone The second Eurozone country agreed to cut spending which a further effected potential growth. Thats things led to rise a global risk aversion.so its simply say that European sovereign debt crisis was a period when many European country realize financally insititution, high debt rate and less demand in export.

Rahul Sunny answered 2 years ago

Consider the European sovereign debt crisis. In 2011, many countries in the European markets were suffering...

Consider the European sovereign debt crisis. In 2011, many countries in the European markets were suffering through a sovereign debt crisis which impacted multiple nations (Greece, Spain, Italy, Ireland, Portugal). What were some of the causes and how did countries respond to this crisis?

Please read 'Crisis in the Euro Zone' (The Greek Sovereign Debt Crisis) on page 264 in...

Please read 'Crisis in the Euro Zone' (The Greek Sovereign Debt Crisis) on page 264 in the 8th edition and discuss the following questions: This article explores the causes of the 2010 financial crisis in Greece and its implications for other countries in the Euro Zone. Years of overspending by the Greek government led to huge deficits that the country could not manage. While the country’s problems had been hidden throughout much of the decade, a new government that took...

describe the main issues of the European debt crisis

Describe how the European debt crisis evolved.

There were key similarities between the American economic crisis and the European crisis. As well as...

There were key similarities between the American economic crisis and the European crisis. As well as key differences. Describe these similarities and differences. In your description of the similarities, explain key relationships between the causes of the crisis in the United States and the causes in Europe (for instance, how did the housing bubble contribute to the crises in both Europe and the United States? What were some of the key characteristics of the recessions in the United States and...

During the euro-area sovereign debt crisis, the spread between the yields on bonds issued by the...

During the euro-area sovereign debt crisis, the spread between the yields on bonds issued by the governments of peripheral European countries (such as Greece, Ireland, Italy, Portugal, and Spain) and those on bonds issued by Germany widened considerably. Use the model of supply and demand for bonds to illustrate how this could be explained by a change in investors' perceptions of the relative riskiness of peripheral sovereign versus German bonds.

What were the causes of the 2010-2012 sovereign debt crisis in the EU? What does this...

What were the causes of the 2010-2012 sovereign debt crisis in the EU? What does this crisis tell us about the weakness of the euro? Do you think the euro will survive the sovereign debt crisis?

Leading commentator shave argued that the European Debt Crisis has been particularly damaging for the “European...

Leading commentator shave argued that the European Debt Crisis has been particularly damaging for the “European Periphery” (e.g. Spain, Italy, Greece) because of their adoption of the Euro (common currency). Briefly sketch out the trade-offs involved in adopting a common currency. What are the main economic considerations that weigh on these costs and benefits?

Leading commentators have argued that the European Debt Crisis has been particularly damaging for the “European...

Leading commentators have argued that the European Debt Crisis has been particularly damaging for the “European Periphery” (e.g. Spain, Italy, Greece) because of their adoption of the Euro (common currency). Briefly sketch out the trade-offs involved in adopting a common currency. What are the main economic considerations that weigh on these costs and benefits?

What is The "Current Macroeconomic Situation" In the U.S. (e.g. is The U.S. Economy Currently Concerned...

What is The "Current Macroeconomic Situation" In the U.S. (e.g. is The U.S. Economy Currently Concerned about Unemployment, Inflation, Recession, Etc.)? What Fiscal Policies And Monetary Policies Would Be Appropriate At This Time?

Question