Example of Economic Paper : Debt Financing in Euro Zone Contries

INTERNATIONAL ECONOMICS

RESEARCH PROPOSAL

“Debt financing of Euro Zone countries : the crossed destinies between France & Italy.”

Brief summary of the topic :

Since the financial crisis (Lehman’s brothers), which was followed by the sovereign debts crisis in the euro zone, the debt financing of European countries has considerably evolved. In this paper, we go to focus on the way that especially France and Italy find founds in the financial markets in order to finance their policy budget. We will speak about their respective institutions issuing debts, the role of financial rating institutions and the European Central Bank according to the different markets situations, the different factors which can influence the price of the financing (interest rates). We will try to oppose the two countries to explain the price differences of their debt issuing.

Problem statement :

* How the French and Italian states finance their debts in the financial markets ?

Central Research questions :

* How these countries issue debts in financial markets ?

* Who buy the sovereign debts bonds ?

* Which (internal and external) factors influence the interest rates of the issuing ?

* What extent the European Central Bank have to intervene to help a country in difficulty ?

Key notions :

* Different issues bonds : OATs, BTPs, fixed rates, variable rates or rate indexed to inflation

* Commercial banks, Insurance companies, Domestical financing and Central Banks

* Macroeconomics aggregates : GDP, sovereign deficit and debt, employment, inflation and Balance of payments

* Speculation & Speculative tools : Securitization, CDS, CDO, forwards and futures

* Primary and secondary markets, FESF & MES

* Financial institutions and ratings

Methodology :

1. Firstly, we will see which ways used by France and Italy (included the different types of bonds)

2. Secondly, we will analyze all the factors influencing the price of funds...