Evaluation in terms of constitutional economics of the European Union debt crisis

The concept of constitutional economics is a notion that analyse how the power and authorities of a state can be and must be limited. The basic aims of constitutional economy are to ensure financial and monetary discipline, prevent politicians from implementing an election economics and populist policies and protect and guarantee economic rights and freedoms of individuals. Constitutional economics aims at preventing utility-maximizations of politicians, bureaucrats and voters as politicians, bureaucrats and voters acting upon utility-maximization have caused an increase in the debt stocks of the countries and even a debt crisis in the absence of debt management. The phase starting with 2008 crisis turned into a debt crisis in the Euro Area. The basic reason of having a debt crisis in the Euro Area is the excessive borrowing and weak financial structure. The Euro area countries not meeting the Maastricht Criteria caused the crisis to deepen. The macroeconomic indicators of these countries deteriorated as a result of a deepening crisis. This is especially observed in Portugal, Ireland, Spain, Italy and Greece (PIIGS). In these countries, the major problems observed after the crisis were unemployment, inflation, growth and public debt. The aim of the present study was to evaluate the adaptation of the countries affected from the debt crisis in the Euro region to the Maastricht Criteria. It has been observed that the member countries affected from the debt crisis do not fully meet the Maastricht Criteria. Especially, no financial discipline has been realized in these countries. For this reason, the reasons and the results of the debt crisis have been evaluated.