Ron Christner

(Loyola University, New Orleans, LA 70118, USA)

 

 

Abstract: An evaluation and Analysis of how Italy and Spain can avoid defaults on their government bonds, similar to what has happened in Greece and Portugal. The objective is to propose a plan to avoid default without causing an economic recession in the two countries. The methodology and results will include an analysis of the current economic situation in the two countries vis a vis those of the other major western European countries and the necessary policy steps for them to avoid default. It will include a comparative analysis of major economic variables including 10 year government bond rates, deficit spending, and debt levels as a percentage of GDP as well as the interconnection and interdependence among creditor and debtor countries in the Euro currency block. This includes the Italian and Spanish levels of debt held by the respective banks in the other European countries, primarily France and Germany, and the possible impact on those banks of an Italian or Spanish government default.

 

 

Key words: Euro; Euro currency; default; government bond

 

JEL code: G