Sovereign Debt: Two Perspectives

Volume 15, Number 3
Third Quarter 2013

In the aftermath of the global recession, public debts and deficits have risen in many developed economies. As a result, a number of governments have adopted austerity policies in an effort to avoid fiscal crises and maintain access to financial markets. Writing in the third-quarter edition of EconSouth, Atlanta Fed staffers Andrew Flowers and Galina Alexeenko explore the issue from two perspectives.

Flowers, a senior economic research analyst in the Bank's research department, explored the debate over austerity policies and examined the relationship between debt levels and economic growth. "These questions are at the center of the austerity debate, given how growth has slowed in developed countries since the Great Recession," he noted.

Alexeenko, director of the Regional Economic Information Network at the Atlanta Fed's Nashville Branch, surveyed the differing approaches taken by several European countries as they seek to improve their fiscal health. In the nearly four years since the sovereign debt crisis erupted, Greece, Ireland, Portugal, Spain, and Italy have taken measures to put their fiscal houses back in order, each with varying socioeconomic costs, she said.

Explore the topic further in "Sovereign Debt: Two Perspectives," available in print and online in the third-quarter issue of EconSouth.