Euro adoption lowered PIIGS borrowing costs but did not fix underlying problems

Evidence

What the PIIGS all have in common was how their adoption of the euro made the interest payments on their bonds fall as core banks came to prefer their debt to even lower-yielding German and French debt. Yet, despite all the cheap money this produced in the PIIGS, Portugal was in trouble long before the crisis of 2008. — Mark Blyth, Austerity, 192

Categorization

• XREF: Connects to the broader eurozone-periphery capital flows argument central to the austerity literature Mattei and Blyth otherwise develop. — connects to: Euro adoption erased perceived country risk in sovereign bond yields — Mark Blyth, Austerity: The History of a Dangerous…, 220; Euro-induced cheap credit caused periphery current account deficits and vulnerability — Mark Blyth, Austerity: The History of a Dangerous…, 221; Adopting the euro endowed Greece with Germany’s credit rating and cut its borrowing costs — Mark Blyth, Austerity: The History of a Dangerous…, 177 (+2 more)

Broader Connections

• Euro adoption erased perceived country risk in sovereign bond yields #expands (0.92) — Mark Blyth, Austerity, 220
• Adopting the euro endowed Greece with Germany’s credit rating and cut its borrowing costs #exemplifies (0.90) — Mark Blyth, Austerity, 177
• Euro-induced cheap credit caused periphery current account deficits and vulnerability #expands (0.80) — Mark Blyth, Austerity, 221
• Fixed exchange rates force austerity when competitiveness declines #qualifies (0.75)