austerity

Austerity in Europe

Austerity in Europe

Most European countries have embarked on a range of austerity measures designed to reduce their budget deficits.Why have austerity measures been pursued with great vigour in Europe? What is impact of austerity measures on economic activity?Why Austerity?Pressure from Bond Markets. Investors have become nervous about holding debt in several Euro-zone countries. This has pushed up interest rates and increased risk of liquidity shortages. This pressure from the bond market is greater because there is no lender of last resort in Euro-zone.(EU…