The Origins of the Italian Sovereign Debt Crisis

• Main Author: Henningsen, David M.
• Format: Others
• Published: Scholarship @ Claremont 2012
• Subjects: Sovereign Debt; Budget Deficits; austerity; interest rates; tax evasion; Italy; International Business; International Economics; Macroeconomics; Taxation
• Online Access: http://scholarship.claremont.edu/cmc_theses/379; http://scholarship.claremont.edu/cgi/viewcontent.cgi?article=1385&context=cmc_theses

Over the past decade, the European Union has been characterized by an explosion of expenditure, insufficient revenue, high deficits and a lack of budget discipline. Financial markets in Europe are currently dealing with enormous government debts, poor government balance sheets and a weakening banking system. The purpose of this paper is to investigate the origins of the current Euro-crisis and specifically identify the extent to which it will affect the nation of Italy going forward. To understand Italy's stance amid the Euro-crisis, we proceed as follows: First, a historical background section will develop the fundamental issues that have developed in Europe over time leading to the current situation. Next, a discussion about Italian economics and politics will identify Italy's central policy issues placed in the context of the Euro-crisis. Subsequently, Italy's issues with tax evasion will be covered illustrating its history and enforcement addendums going forward. The final section of this paper will present a forward-looking prediction about the fate of Italy and the Euro-zone and will include some of the necessary steps toward avoiding an international economic collapse.