The role of contagion in solving sovereign Debt Crisis Economics Paper (Research Paper Sample)

European Sovereign Debt Crisis
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European Sovereign Debt Crisis
Introduction
The European community faced a trail of the economic and sovereign debt crisis from the 2007 to 2008 global financial crisis. Most countries had been experiencing healthy economies before the 2007 to 2008 debt crisis. Public debt had been reasonably growing, financial shortages were very little, and economic growth satisfactory. According to Yurt sever (2011), the financial crisis shook the European community and led to the global financial crisis. World output contracted by 0.6% and trade shrank by 11% by 2019, and the resultant global crisis (Yurtsever, 2011). (Fernandes et al., 2016) posited that most European countries instituted various economic policies and measures to solve the debt crisis driven macroeconomic problems such as recession and banking financial crisis. Among the policies were bailout packages meant to solve the banking financial crisis and revitalize the economies. (Yurtsever, 2011) noted that the European government and international institutions cooperated to restore confidence in the financial markets. Policymakers faced severe challenges in the implementation of interventionist policies and bailout strategies. According to (Yurtsever, 2011), bailout strategies failed to revitalize the economies from the financial crisis as markets failed to respond fully and immediately to the bailout strategies.