The Diversity of Debt Crises in Europe

This article seeks to explain intercountry differences in the debt crises in Europe. Is there a single explanation, cause? Specifically, were the crises due to government budget deficits or to the private sector? The answer will determine the appropriate policies to prevent a recurrence. The Stability and Growth Pact, Maastricht Treaty, and the European Union focused on rules concerning government debt ratios and deficit ratios. But they ignored the problem of “excessive” debt ratios in the private sector that led to a crisis in the financial markets