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Begin New Search Topic Debt Political Geography Greece Content Type Working Paper Publication Year within 25 Years Publication Year within 10 Years

1. Using RRF resources to kick-start a job-rich recovery in Greece

Author:
Manos Matsaganis and Georgios Manalis
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
The Recovery and Resilience Facility (RRF) is a golden opportunity for those member states that were most badly hit first by the debt crisis then by the pandemic. Greece, one of the largest beneficiaries in per capita terms, is due to receive very significant resources that can help arrest the decline of the 2010s. Can these resources be spent wisely and efficiently enough to kickstart the process of inclusive and sustainable growth? This paper briefly reviews the Greek National Recovery and Resilience Plan (Greece 2.0), assessing its potential contribution to upgrading the economy’s growth model, enhancing skills, and boosting employment. In 2007-19, total investment in Greece shrank by a stunning 70% in real terms. Over the same period, public investment fell by 62%, business investment by 44%, and household investment (on housing, mostly) by 89%. Under-investment constrains growth and undermines the future prospects of the Greek economy. The Recovery and Resilience Facility offers Greece a unique opportunity to bridge the investment gap, giving a boost to the sustainable recovery of the Greek economy. Technically, Greece 2.0, the country’s National Recovery and Resilience Plan is competently drafted, as its favourable reception by the European Commission indicates. Still, critical issues abound. In this sense, Greece 2.0 embodies the contradictions of the current juncture. On the one hand, there is a consensus that the Greek economy should rebalance, by pursuing a growth strategy that relies much more on exports than in the recent past, and much less on domestic consumer demand fuelled by debt. On the other hand, the legacy of the past weighs heavily on social and political actors, limiting their room for manoeuvre. The list is daunting. It remains to be seen how the above will play out over the next few years.
Topic:
Debt, Economy, Crisis Management, Resilience, and Economic Recovery
Political Geography:
Europe and Greece

2. Household Wealth Inequalities in the wake of the Greek Debt Crisis

Author:
Apostolos Fasianos
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
Despite the renowned interest in wealth disparities, the distribution of wealth in Greece is largely understudied. This study maps the levels, dynamics, and composition of household wealth using data from the three waves of the Household Finance and Consumption Survey for Greece for the period after the debt crisis of 2009-10 till 2017. The evidence suggests that the richest 1% of the population holds roughly as much wealth as the poorest 50%, while the richest 10% holds about four times the wealth of the poorest 50%. Most inequality indicators employed indicate increasing trends in wealth disparities between 2009 and 2017. During this period, average and median wealth holdings decreased by about one third, and the share of financially fragile households increased by about 20%. Estimates from factor inequality decompositions suggest that, although relatively evenly distributed, housing asset holdings explain much of the increase in overall wealth inequality in Greece, followed by self-employment business equity; financial assets play a negligible role. Financial wealth inequality is much more pronounced than housing wealth inequality in Greece. The findings of the paper carry important implications for the design of appropriate policies aiming at reducing wealth inequalities and strengthening financial resilience.
Topic:
Debt, Income Inequality, Economic Crisis, and Wealth
Political Geography:
Europe and Greece

3. How ‘demos’ met ‘cracy’: debt, inequality, money

Author:
Andreas Antoniades and Ugo Panizza
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Centre for Global Political Economy, University of Sussex
Abstract:
The recurrence of ever more destructive economic crises and patterns of pervasive indebtedness and inequality threaten the social fabric of our societies. Our main responses to these trends have been partial, focusing on symptoms rather than causes, often exacerbating rather than improving the underlying socio-economic dynamics. To reflect on these conditions and on ‘what needs to be done’ this paper turns to a similar socio-economic malaise faced by the city-state of Athens in the 6th century BC. Most historical studies dealing with this crisis focus on the comprehensive debt relief policy (seisachteia) implemented by Solon. We argue that this debt relief, although necessary, was the least important of Solon’s reforms. Solon read the problem of debt as a problem of money so he went on to reform the monetary and exchange system. But he did not think that these reforms alone could restore socioeconomic sustainability. For this, a redefinition of what was counted as valuable economic activity and as income had also to take place. And for all these to work, citizens had to be involved more in the commons. Far from only achieving socioeconomic sustainability, these reforms gave rise gradually to the demos that we meet in the golden age of Democracy. It is indeed interesting that Democracy, in its ideal type of the 5th century BC, finds its origin in the way in which a society responded to a major socioeconomic crisis, characterised by pervasive indebtedness and destabilising inequalities. Such a broader historical horizon may help us grasp better the problems, stakes and challenges of our times.
Topic:
Debt, Political Economy, History, Democracy, and Global Political Economy
Political Geography:
Greece and Global Focus

4. Laid Low: The IMF, The Eurozone and the First Rescue of Greece

Author:
Paul Blustein
Publication Date:
04-2015
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
As Greece descended into a financial maelstrom in the spring of 2010, a small group of staffers at the International Monetary Fund (IMF) held top-secret talks with officials from the German and French finance ministries to discuss the idea of restructuring Greece’s debt. Many independent analysts believed a restructuring was inevitable because the country’s debt burden appeared unsustainable. But instead, the “Troika” — the tripartite group of lenders that included the IMF, the European Commission and European Central Bank — attempted to resolve the crisis by giving Athens bailout loans of unprecedented magnitude, piling debt atop debt. The idea considered in those secret talks would come to fruition only much later, in March 2012, when Greece received the largest debt relief in history. In the meantime, the rescue effort would go terribly awry, with consequences that continue to reverberate today as the euro area struggles with weak growth and a rekindled crisis in Greece. This paper tells the story of the first Greek rescue, focusing on the role played by the IMF. A detailed look back at this drama elucidates significant concerns about the Fund’s governance and its management of future crises. The Fund has come under attack for yielding to the clout of European policy makers and lending its credibility to a rescue that some of its senior staffers viewed with grave misgivings. The result, critics lament, tarnished the Fund’s reputation for technocratic judgment, rendering it less effective at promoting international stability. The 2010 rescue enabled Greece to avoid default at that point, which might well have sparked a global conflagration akin to the 2008 bankruptcy of Lehman Brothers. European banks holding Greek bonds continued receiving payments of interest and principal for quite a long time thereafter, from the money lent by the Troika. But the interests of the Greek people were arguably sacrificed, and among economists there is widespread agreement that the country’s debt should have been restructured much sooner. In addition to shedding new light on what happened, this chronicle of events highlights the importance of the IMF’s acceptance, as a condition of its participation in the rescue, of a “junior partner” role in the Troika. This step is judged in the concluding section as being particularly ill-boding for the IMF’s ability to manage future crises, and policy recommendations are offered for alleviating the harm.
Topic:
Debt, Diplomacy, Regional Cooperation, Fiscal Policy, Eurozone, and IMF
Political Geography:
Europe and Greece

5. Three Myths Behind the Case for Grexit: A Destructive Analysis

Author:
Photis Lysandrou
Publication Date:
06-2015
Content Type:
Working Paper
Institution:
City Political Economy Research Centre (CITYPERC), University of London
Abstract:
Greece faces a stark choice: either to compromise on the terms laid down by its international creditors and thereby remain in the eurozone or reject any compromise on the terms and exit the eurozone. The Syriza government was elected in January, 2015, on the double promise that it would tear up the deeply unpopular memorandum imposed by the Troika while at the same keeping the euro. It was a promise that it could not keep. After several months of tough negotiations it has become clear that Greece's creditors, led by the German government, have no intention of accepting a renegotiated deal that substantively lightens Greece's debt burden and thus the need for the type of harsh austerity measures contained in the memorandum.
Topic:
Debt, Economics, Government, and Financial Crisis
Political Geography:
Europe and Greece

6. Sovereign Debt Crisis Management: Lessons from the 2012 Greek Debt Restructuring

Author:
Miranda Xafa
Publication Date:
06-2014
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
The 2012 Greek debt exchange was a watershed event in the euro area debt crisis. It generated fears of contagion and was viewed as a threat to the euro itself. Although it achieved historically unprecedented debt relief, amounting to €106 billion (55 percent of GDP), it was “too little, too late” in terms of restoring Greece's debt sustainability. There is a heated debate as to whether the debt restructuring should have taken place sooner, when Greece's adjustment program was agreed to in May 2010. This paper argues that a deep haircut up front, under threat of legislative action, would have been seen as unnecessary and deeply coercive. But delaying the restructuring beyond mid-2011, when it became clear that Greece's debt was unsustainable, was unjustified. The delay reduced the stock of privately held debt subject to a haircut, possibly making an official debt restructuring inevitable down the road. Initial fears that the Greek debt restructuring would pose a serious threat to the euro area's financial stability proved to be exaggerated. On the contrary, it demonstrated that an orderly default involving a pre-emptive debt restructuring is possible in a monetary union, provided appropriate firewalls are in place to limit contagion risks. With crisis management institutions and procedures now in place in the euro area, and with much stricter fiscal surveillance, the Greek experience is likely to remain unique in the history of debt restructurings; however, some lessons can be learned from its specific features.
Topic:
Debt and Governance
Political Geography:
Europe and Greece