Acta Universitatis Danubius. Œconomica, Vol 14, No 7 (2018)

Abstract

In the recent last decade, politicians, economists, media, are frequently discussing about Euro area survival, macroeconomic convergence or divergence, stabilization policies, economic cycles, fiscal space, austerity, debt consolidation, fiscal crisis, structural reforms etc. But these debates did not stop the sovereign debt defaults neither the escalating growth of private debt in the world and in European Monetary Union countries. The literature points out that some of the main causes of European sovereign debt crisis are  pre and post financial crisis events, the real estate market bubbles and poor public policies in some European Union countries. The specialists are still unable to fully understand and predict sovereign debt crises and the implications of debt accumulation in private sector. Thus, beyond a historical incursion based on some case studies, the present article intends to draw a series of lessons detached from the analysis of the European debt crisis, trying to clarify what is the basis of a contagion trend at Euro area level regarding indebtness, what is the connection between public and private debt and what can be done regarding the indebtness macroeconomic policy in order to ensure a smooth passage along the economic cycle.