WORKING PAPER | This paper analyzes the feedback mechanisms between economic downturns and financial stress for several euro-area countries.

POLICY NOTE | This research contradicts the highly cited Rienhart and Rogoff study, which states that debt higher than 90% of GDP will negatively affect a country's economic growth.

WORKING PAPER | A simple model illustrates interactions between the "primary" fiscal deficit (total deficit minus interest payments), economic growth, and debt.

POLICY NOTE | This note offers policy recommendations based on empirical support that shows current account imbalances in the EMU are unsustainable and may jeopardize stability in the Euro Area.

WORKING PAPER | Evidence suggests that the introduction of the EMU is associated with a shift from sustainability to unsustainability of external debt accumulation among the Euro countries considered.

POLICY NOTE | In this context, “macro imbalances” are trends or cycles in net borrowing flows that may be strong enough to threaten the system’s stability unless offsetting policies are put into place.