A Financial and Economic Crisis in Greece

Abstract

This chapter is about the financial and economic crisis in Greece. After listing symptoms that indicate the reality of a crisis, the following sections describe the prelude to the crisis. The first deals with the incubation of modern Greece—and of some behaviour of recent Greek governments—within the Ottoman Empire, continuing with economic and political developments in the decades immediately subsequent to the Second World War. The next section examines developments in the 1980s and early 1990s, with particular attention to fiscal policy, monetary policy and the macroeconomic environment. A third section discusses the slowing productivity growth that characterizes the last quarter of the twentieth century. This is followed with a caveat regarding the statistics provided by the Greek government in the past. Access to the European monetary union is the topic of the next section. Then comes a discussion of the apparent boom brought by accession to the euro. The chapter ends with a simplified model of the dynamic of the crisis in Greece.