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Case studies 61<br />
Figure 4.20 Selected Eurozone countries’ private debt<br />
260<br />
240<br />
220<br />
200<br />
180<br />
160<br />
140<br />
120<br />
100<br />
80<br />
60<br />
Private debt - ex-financials (% of GDP)<br />
Germany<br />
France<br />
Spain<br />
Italy<br />
Greece<br />
01 02 03 04 05 06 07 08 09 10 11 12 13<br />
Source: Authors’ calculations based on national accounts data.<br />
Figure 4.21 External imbalances of the Eurozone periphery<br />
6<br />
3<br />
0<br />
-3<br />
-6<br />
-9<br />
-12<br />
-15<br />
A. Current account balances (% of GDP) B. Net external position (% of GDP)<br />
Greece<br />
Ireland<br />
Portugal<br />
Spain<br />
01 02 03 04 05 06 07 08 09 10 11 12 13<br />
60<br />
40<br />
20<br />
0<br />
-20<br />
-40<br />
-60<br />
-80<br />
-100<br />
-120<br />
-140<br />
Greece<br />
France<br />
Portugal<br />
Italy<br />
Ireland<br />
Spain<br />
Germany<br />
01 02 03 04 05 06 07 08 09 10 11 12 13<br />
10<br />
0<br />
-10<br />
-20<br />
-30<br />
-40<br />
-50<br />
-60<br />
-70<br />
-80<br />
-90<br />
-100<br />
C. Target 2 balances (% of GDP)<br />
Ireland<br />
Greece<br />
Spain<br />
Portugal<br />
07 08 09 10 11 12 13 14<br />
Source: Authors’ calculations based on IMF data and Eurocrisis Monitor Database.<br />
Let us start by examining the dynamics of external liabilities. The boom-bust<br />
experience of the smaller euro periphery economies provides special insights into<br />
the dynamics of leverage for small open economies operating inside a currency<br />
union. While a currency union shares many characteristics of a fixed exchange<br />
rate regime, it is qualitatively different due to the existence of a common central<br />
bank that can provide cross-border liquidity flows in the event of a crisis.
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