The Sustainability of European External Debt: What Have We Learned?

24 Pages Posted: 20 Jul 2015

See all articles by Juan Carlos Cuestas

Juan Carlos Cuestas

University of Sheffield

Luis A. Gil-Alana

University of Navarra - Department of Economics

Paulo Regis

Xi'an Jiaotong University (XJTU)

Date Written: August 2015

Abstract

In this paper we aim to analyze the level of sustainability of external debt and, more importantly, how it has changed for a number of European economies. Given the severity of the crisis since 2008, we argue that the path of external debt burdens may have changed since the start of the crisis, given the concerns about debt accumulation in most countries. We analyze the reaction of present debt accumulation to past debt stock, incorporating the possibility of endogenously determined structural breaks in this reaction function. We find that structural breaks happen in most cases after 2008, highlighting the importance of the policy measures taken by most governments.

Suggested Citation

Cuestas, Juan Carlos and Gil-Alana, Luis A. and Regis, Paulo, The Sustainability of European External Debt: What Have We Learned? (August 2015). Review of International Economics, Vol. 23, Issue 3, pp. 445-468, 2015, Available at SSRN: https://ssrn.com/abstract=2632745 or http://dx.doi.org/10.1111/roie.12175

Juan Carlos Cuestas (Contact Author)

University of Sheffield

17 Mappin Street
Sheffield, Sheffield S1 4DT
United Kingdom

Luis A. Gil-Alana

University of Navarra - Department of Economics ( email )

Campus de Arrosadia
Pamplona, 31006
Spain

Paulo Regis

Xi'an Jiaotong University (XJTU) ( email )

26 Xianning W Rd.
Dushu Lake Higher Education Town
Suzhou, Jiangsu Province 215123
China

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