Economics of Debt


Mark A. Petersen (Editor)
Faculty of Commerce and Administration, North-West University (Mafikeng), Mmabatho, South Africa

Series: Economic Issues, Problems and Perspectives, Global Political Studies
BISAC: BUS022000

Recently, debates about the economics of debt have been dominated by issues related to the global financial crisis. In this edited volume, the relationships between this crisis and euro zone sovereign debt, debt mechanics, the Greek economic decline, European budget rules, debt obligations, convertible bonds, household indebtedness, financial guarantees as well as proposed Basel III leverage and liquidity regulation is explored.

The sovereign debt crisis and weak European economic growth has damaged the European and Monetary Union and the Euro itself. Among the causes of this crisis is rapid government debt level growth, trade imbalances, monetary policy inflexibility and loss of confidence. Moreover, the consequences involve disrupted bond markets and the banking sector, depreciation of the Euro, reduced economic growth, loss of confidence, reduced remittances, tight fiscal measures and politics. Initial crisis cures included the creation of the European Financial Stability Facility, the European, Financial Stabilization Mechanism and the Brussels Agreement. In particular, the book investigates which economic mechanisms of the currency union have managed to turn the European political and cultural heterogeneity into such severe external imbalances between the Northern and Southern euro zone. Another problem addressed is the extent to which the external debt accumulation of Southern EMU countries can be attributed to euro capital market integration.

Also, we employ the most recent data on money, credit, industrial production and productivity to show that the Greek drama is an almost ideal application of the Austrian ideas. A reinforced budget rule, according to which structural budget balances must be virtually zero, has been adopted. In this edited volume, we argue that such a target can make fiscal and monetary policies pro-cyclical. (Imprint: Nova)

Table of Contents

Table of Contents


Chapter 1: Causes, Consequences and Cures of the Eurozone Sovereign Debt Crisis
(Gisele Mah, Mark A. Petersen, Janine Mukuddem-Petersen and Lungile N. P. Hlatshwayo, North-West University, South Africa)

Chapter 2: Modeling the Debt Mechanics of the European Monetary Union
(Karl Farmer, University of Graz, Austria)

Chapter 3: The Greek Economic Drama: An Almost Perfect Austrian Application
(Mike G. Tsionas, Athens University of Economics and Business, Greece)

Chapter 4: On the Unfeasibility of the New European Budget Rule
(Nuno M. Venes, Lusiada University of Lisbon, Portugal)

Chapter 5: On the Impact of CDO Rating Announcements on the Bank’s Share Price
(Anit Deb and Dirk Schiereck, Darmstadt University of Technology, Germany)

Chapter 6: Convertible Bonds: Funding Strategies, Pricing, Liquidity and Market Observations
(Jason West, Griffith University, Australia)
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Chapter 7: The Financial Crisis and Household Indebtedness in South Africa
(Christelle Meniago, Janine Mukuddem-Petersen, Mark. A. Petersen, Itumeleng. P. Mongale and Thahir. Bosch, North-West University, South Africa; South African Reserve Bank, South Africa and others)

Chapter 8: Financial Guarantees and Other Fiscal Risks in South Africa: An Econometric Approach
(Collins Ogutu Miruka, Janine Mukuddem-Petersen and Christelle Meniago, North-West University, South Africa; Financial Modeling and Optimization Research Group, South Africa)

Chapter 9: Basel III and Leverage
(MA. Petersen, J. Mukuddem-Petersen, JB. Maruping and CO. Miruka, North-West University, South Africa)

Chapter 10: Basel III and Liquidity
(MA. Petersen, LNP. Hlatshwayo, J. Mukuddem-Petersen and F. Gideon, North-West University, South Africa)



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