Which Macroeconomic Determinants Affect the Sovereign Risk in the EU?

The sovereign debt market has gathered a lot of attention post the global financial recession. As the euro is one of the strongest and more powerful currencies worldwide and the second most traded currency, it is very important to study how the countries of the Eurozone can be shielded and be protected from all the internal and external risks. This can be achieved by examining the macroeconomic determinants of the sovereign risk.The main purpose of this work is to identify the macroeconomic determinants of sovereign risk. The sample consists of the 19 countries of the Eurozone, part of the monetary union of the European Union. The sample period will start in 1999 the year in which the countries participating in EMU (European Monetary Union) adopted the euro as their common currency and will end in the year of 2016.Based on the results of the panel regression, it becomes clear which financial indicators are contributing to the sovereign risk.