This paper analyzes how the impact of a change in the sovereign debt-to-GDP ratio on economic growth depends on the state of the financial market.

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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.

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.

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.

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.

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

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