Abstract
Some southern countries in Europe, together with Ireland, were particularly affected by the sovereign debt crises in the Eurozone and were obliged to implement tough corrective measures which proved to be very recessive in nature. As a result, not only GDP declined but unemployment jumped to very high levels as well.This paper uses a modified version of k-means (restricted k-means) to analyze the clustering of the Eurozone countries during the recent sovereign debt crisis, combining monthly data on unemployment and government bond yield rates. Our method shows that the separation of southern Europe from the other Eurozone is not necessarily a good characterization of this area before the crisis but the group of externally assisted countries plus Italy gains consistence as the crisis evolved, although there is no perfect homogeneity in this group, since the problems they faced, the type of response requested, the speed of reaction to the crisis and the lasting effects were not the same for all these countries.
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