Questions on Budget Deficts and National Debt

By using the data (Up to the year 2008) for Euro zone countries (excluding Malta and Cyprus) from “OECD factbook” discuss the impact of the following factors in bringing about the “Euro crisis”:

1- Budget deficits and national debt

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2- Balance of payments

3- Social expenditures

Using graphs compare the above factors for the countries in trouble, PIGS (Portugal, Ireland, Italy, Greece and Spain) vs. other countries in the Euro zone like Germany and France that fared well and contrast which of the above factors may have contributed to the crisis.

The fact that all these countries were using a single currency and did not have the power to devalue their own currency could be another factor you need to consider when analyzing this issue.

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