VoxEU

Assessing debt sustainability in the euro area

In the euro area, as in many countries, the COVID-19 pandemic led to a substantial increase in government debt. A column, co-authored by GSEM Professor Jean-Charles Rochet, discusses a new approach to evaluate public debt sustainability in the euro area.

Over the past ten years, the European Central Bank (ECB) has played a key role in stabilising the European sovereign debt market. However, the recent inflationary surge could be a game-changer because a strong reaction by the ECB and a rapid increase in real rates could spell trouble for a number of peripheral European economies.

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