In this paper, we will approach the origins of the Greek public debt crisis under the prism of the Greek Economy’s fiscal position over time; the evolution of budget deficits; as well as the (distorted) growth model that prevailed in the country during the past few decades. We argue that the public debt crisis was to a great extent the result of accumulated budget deficits and, at the same time, the predominance of a non-sustainable growth model, which has been parasitically thriving off the state. This sort of distorted government intervention in the economy used borrowed resources to create a wasteful state, which sustained high aggregate demand and high private consumption and, by extension, fuelled non-sustainable growth. Our argument is that th e growth achieved by the Greek economy was not the outcome of competitive, innovative, and outward-oriented entrepreneurship, albeit was to a great extent the result of high private consumption, as well as investment in non-tradeable goods. As a result, this non-sustainable growth failed to create the conditions for the sustainable management of Greece’s ballooning deficits and debt.
KeywordsInternational Political EconomyPublic Debt CrisisPublic Deficit and DebtGrowth ModelGreek Economy
Acemoglu, D. (2009). The Crisis of 2008: Structural Lessons for and from Economics. CEPR Policy Insight No. 28, Centre for Economic Policy Research.
Alogoskoufis, G. (2009). Greece after the Crisis. Kastaniotis Publications. (In Greek)
Alogoskoufis, G. (2013). Macroeconomics and Politics in the Accumulation of Greece’s Debt: 1975-2009. Athens University of Economics and Business. (In Greek) https://doi.org/10.2139/ssrn.2360268
Anastasatos, T. (2009). Towards a New Greek Growth Model: Investment and Extroversion. Eurobank Research: Economy and Markets. (In Greek)
Arghyrou, M., & Tsoukalas, J. (2010). The Greek Debt Crisis: Likely Causes, Mechanism and Outcomes. Working Paper No. 3266, Center for Economic Studies. https://doi.org/10.2139/ssrn.1719032
Argitis, G. (2012). Bankruptcy and Economic Crisis (in Greek). Alexandria.
Bank of Greece (2010). Governor’s Annual Report 2009. http://www.bankofgreece.gr/BogEkdoseis/ekthdkth2009.pdf
Blaug, M. (1997). Economic Theory in Retrospect. Cambridge University Press. https://doi.org/10.1017/CBO9780511805639
Cecchetti, S. G., Mohanty, M. S., & Zampolli, F. (2011). The Real Effect of Debt. Working Paper No 352, Bank for International Settlements.
Christodoulakis, Ν. (2009). Ten Years of EMU: Convergence Divergence and New Policy Priorities. National Institute Economic Review, 208, 86-100. https://doi.org/10.1177/0027950109338653
Cohn, T. (2009). Global Political Economy Theory and Practice. Gutemberg.
Davradakis, Μ. (2011). Greek Current Account Balance and Debt Financing of the Private Sector. Economic Research & Forecasting Division, Eurobank. (In Greek)
Dimeli, S. (2010). Macroeconomic Aggregates and Growth Rates of the Greek Economy. Athens University of Economics and Business. (In Greek)
Drimpetas, E., & Kalogeridis, N. (2016). The Dynamics and Role of Greece’s Banking System, 2000-2010. In S. Roukanas, & P. Sklias, (Eds.), The Greek Political Economy, 2000-2015. From EMU to the Support Mechanism (pp. 66-95). Livanis Publications.
EEAG (2011). The EEAG Report on the European Economy: A New Crisis Mechanism for the Euro Area (pp. 71-125). Center for Economic Studies.
ELSTAT (Hellenic Statistical Authority) (2017). Imports-Exports of Goods and Services, 2016. http://www.statistics.gr/el/statistics/-/publication/SEL30/2016
European Commission (2021). Annual Macro-Economic Database (AMECO). http://eu.economy_finance/ameco//user/serie/SelectSerie.cfm
Gaston Gelos, R., Sahay, R., & Sandleris, G. (2004). Sovereign Borrowing by Developing Countries: What Determines Market Access? Working Paper 04/221, International Monetary Fund. https://doi.org/10.5089/9781451875263.001
Karavitis, N. (2008). Public Debt and Deficit. Dioniko Publications. (in Greek)
Katrakilidis, C., & Tabakis, N. (2006). Greek Budget Deficits, Structural Breaks and the Concept of Sustainability: New Econometric Evidence. Economics and Business Review, 8, 263-278.
Kazakos, P., Liargovas, P., & Repoussis, S. (2016). Greece’s Public Debt. Papazisis Publications. (In Greek)
Knoop, T. (2004). Recessions and Depressions. Understanding Business Cycles. Greenwood Praeger Publishers.
Kohli, A. (2004). State-Directed Development: Political Power and Industrialization in the Global Periphery. Cambridge University Press. https://doi.org/10.1017/CBO9780511754371
Kollintzas, T. (2011). The ‘Other’ Memorandum and Restructuring. (In Greek) http://www.euro2day.gr/specials/opinions/article/638571/to-allo-mnhmonio-kai-h-anadiarthrosh.html
Konstantakopoulou, I. (2012). The Evolution of the Current Account Balance over Time. Economic Developments 2021/12, KEPE. (In Greek)
Kotios, A., & Pavlidis, G. (2012). International Economic Crises: Systemic or Policy Crises? Rosili Publications. (in Greek)
Krugman, P. (2008). The Return of Depression Economics and the Crisis of 2008 (Greek Translation by Ariadne Alavanou). Kastaniotis
Krugman, P. (2011). End This Depression Now! (Translated in Greek by Tina Theou), Polis Publications.
Makrydakis et al. (1999). Forecasting: Methods and Applications. Wiley.
Malliaropoulos, D. (2011). Competitiveness, External Deficit and External Debt of the Greek Economy. Economy and Markets, 6, 1-14.
Mamatzakis, Ε. (2016). Greek Statistics: Unraveling Ariadne’s Thread. In S. Roukanas, & P. Sklias (Eds.), The Greek Political Economy, 2000-2015. From EMU to the Support Mechanism. Eburon.
Maris, G., Sklias, P., & Maravegias, N. (2021). The Political Economy of the Greek Economic Crisis in 2020. European Politics and Society, 1-21. https://doi.org/10.1080/23745118.2021.1895552
Naftemboriki (2017). Per Capita GDP Inconsistent with Greek Productivity. Naftemboriki Newspaper. (In Greek). https://m.naftemporiki.gr/story/1219349/to-kata-kefalin-aep-den-sunadei- me-tin-antagonistikotita-tis-xoras
Orleans, A. (2010). From Euphoria to Panic (Greek Translation by Babis Papadimitriou). In P. Askenazy, & C. Daniel (Eds.), Les Troupes de la Defense (pp. 9-118). Polis Publications.
Pantelakis, N. (1995). Public Borrowing. National Bank of Greece Cultural Foundation. (In Greek)
Papadimitriou, P., & Hadjigiannakis, G. (2010). The Fiscal Situation in Greece: In the End, It is All Our Blame. In Minutes of the International Conference on International Business (pp. 1-18). (In Greek)
Papadogiannis, G. (2012, November 25). Greek Banks Extend Loans for Consumption and Not Production. (In Greek) http://www.kathimerini.gr/474143/article/oikonomia/ellhnikh-oikonomia/ daneia-sthn-katanalwsh-kai-oxi-sthn-paragwgh-apo-tis-ellhnikes-trapezes
Pinto, B., & Prasad, M. (2009) Lessons from Market-Access Countries on public Debt Sustainability and Growth. In C. Braga, & D. Domeland (Eds.), Debt Relief and beyond: Lessons Learned and Challenges Ahead (pp. 181-201). The World Bank.
Rapanos, V. (2008). Economic Theory and Fiscal Policy: Fiscal Institutions in Greece. In T. Giannitsis (Ed.), In Search of a Greek Growth Model (pp. 159-180). Papazisis Publications. (In Greek)
Reinhart, C. M., & Roggof, K. S. (2010). From Financial Crash to Debt Crisis. Working Paper No. 5795, National Bureau of Economic Research. https://doi.org/10.3386/w15795
Roukanas, S. (2015). The Political Economy of the Greek Crisis: The Need to Design a State Growth Strategy. In PEDiS Scientific Conference Titled “Greece and the European Union at the Crossroads of Crucial Developments”: Policies, Strategic Choices, and Prospects (pp. 265-282). Nomiki Vivliothiki. (In Greek)
Roukanas, S., & Sklias, P. (2016). The Greek Political Economy, 2000-2015. From EMU to the Support Mechanism. Eburon.
Sidiropoulos, Μ. (2009, February 10). Should Greece Eradicate Its Public Debt? (In Greek) https://sidiropoulos.wordpress.com/2009/02/10/%cf%80%cf%81%ce%ad%cf %80%ce%b5%ce%b9-%ce%b7-%ce%b5%ce%bb%ce%bb%ce%ac%ce%b4%ce% b1-%ce%bd%ce%b1-%ce%b5%ce%be%ce%b1%ce%bb%ce%b5%ce%af%cf%88%ce%b5% ce%b9-%cf%84%ce%bf-%ce%b4%ce%b7%ce%bc%cf%8c%cf%83%ce%b9/
Sidiropoulos, Μ. (2016). Economic Policy Impetus to Post-EMU Greece’s Economic Growth. In S. Roukanas, & P. Sklias (Eds.), The Greek Political Economy, 2000-2015. From EMU to the Support Mechanism (pp. 303-318). Eburon.
Skidelsky, R. (2009). Keynes: The Return of Master. Allen Lane (Penguin Books).
Sklias, P., & Maris, G. (2013). The Political Dimension of the Greek Financial Crisis. Pespectives on European Politics and Society, 14, 144-164. https://doi.org/10.1080/15705854.2012.732392
Sklias, P., & Maris, G. (2016). The Maastricht Convergence Criteria and Greece in the 1980s and 1990s. In P. Sklias, & S. Roukanas (Eds.), The Greek Political Economy 2000-2015 (pp. 33-53). Eburon Academic Publishers.
Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations. Book V, Chapter III. https://www.gutenberg.org/cache/epub/3300/pg3300-images.html
Wolfson, M. (1994). Financial Crises: Understanding the Postwar Experience. M.E. Sharpe.
Woodward, D. (1992). Debt and Adjustment: An Introduction. Pinter Publishers.