Sustainability of Public Debt in the European Monetary Union. A Case Study of Greece

Inhaltsverzeichnis (Table of Contents)

• Introduction
• The Public Debt Model
  • The Government Budget Constraint
  • Sustainability of the Public Debt
    • General Dynamics
    • Monetization of Debt
    • The Fiscal Theory of the Price Level (FTPL)
  • Special Case of a Monetary Union
    • Common Monetary Policy
    • Budget Rules in the EMU
    • No Bailout Clause in the EMU
    • Result
• Case Study of Greece
  • Development of the Government Budget Constraint
    • Government Debt Development
    • Government Deficit Development
    • Net Government Lending/Borrowing
    • Interest-Growth Differential
    • Monetary Policy in the EMU
    • Result
  • Welfare Implications of Public Debt
    • Crowding-out Effect
    • Economic Growth
    • Limitations of Policy Discretion
    • Redistribution Effect
    • Result
  • Rationale of Public Debt
    • Business-cycle Smoothing
    • Intertemporal Burden Sharing
    • Political Process
    • Result
• Policy Options for Greece and the EMU
  • Credible Budget Rules
  • Debt Default
  • Money Finance
  • Structural Reform, Austerity Measures and Affirmative Actions
  • Expansive Monetary Policy despite of a Liquidity Trap
  • Expansive Fiscal Policy despite of high Debt

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This bachelor thesis aims to explore the sustainability of government debt through a theoretical framework and its practical application in a case study. The case study focuses on the situation of Greece, offering a prime example of the current sovereign debt crisis in the European Monetary Union. The analysis delves into the factors contributing to Greece's high public debt and its consequences.

• Sustainability of Public Debt
• Government Budget Constraint
• Fiscal Theory of the Price Level
• Government Debt Dynamics
• Welfare Implications of Public Debt

Zusammenfassung der Kapitel (Chapter Summaries)

The thesis begins with an introduction outlining the topic and its relevance. Chapter 2 delves into the public debt model, specifically examining the government budget constraint and its relation to debt sustainability. This chapter covers concepts such as general dynamics, monetization of debt, and the Fiscal Theory of the Price Level. Chapter 3 presents a case study of Greece, analyzing the development of the government budget constraint, its impact on welfare, and the rationale behind public debt. This chapter explores topics such as crowding-out effects, economic growth, and policy limitations.

Schlüsselwörter (Keywords)

The key terms and concepts explored in this thesis include government debt sustainability, government budget constraint, fiscal theory of the price level, sovereign debt crisis, case study of Greece, European Monetary Union, welfare implications, crowding-out effect, and economic growth.