Greek Debt Research Articles

Peripheral Europe's debt and German wages: the role of wage policy in the Euro area

The paper argues that the Greek debt crisis, as well as those of other Southern European countries and Ireland, has to be seen in macroeconomic context. The sum of the public sector balance, the (domestic) private sector balance and the current account deficit (or equivalently: the capital inflows) has to add up to zero. By implication in a country that has a current account deficit either the private sector or the public sector has to run a deficit. Therefore, the peripheral countries can only solve their public debt problems if there is a change in German current account surpluses. The paper explores the implications of this for wage policy in the Euro zone.

Lessons from a Crisis: Reflections on Economic Governance for Europe

Contrary to public perception, the European Union has dealt well with the Greek debt crisis. European institutions and Member States came together to face the crisis and managed to do so, thanks to coordination and resourcefulness. Now the bigger question looms: how to prevent the recurrence of such a crisis of confidence for as long as possible, and in the event of another crisis, how to manage it. The Task Force on Economic Governance is considering measures that will enforce budgetary discipline of Member States, establish effective crisis mechanisms and increase coordination and supervision of macroeconomic imbalances.

The Influence of Greek Banking Capital in Non-Eurozone Countries

The Greek debt crisis is poised to undermine already dwindling investment flows into south-eastern Europe's emerging economies, adding to barriers to recovery in one of the continent's most fragile regions. Greek lending in Central and Eastern Europe is concentrated mainly in Romania and Bulgaria, both struggling to recover from sharp economic contractions and most exposed to any scaling back in funding as Greece's banks shore up their own finances. Greece has been a major investor in the region- it is the second biggest in Serbia- since the fall of communism in 1989. Its problems have so far had only a limited impact on nearby states and it is unclear how much of a drag it may create. The European Bank for Reconstruction and Development- B.E.R.D.- warned of potential hits to bank systems and economies and analysts have also raised concerns. Greek firms are also not expected to invest heavily in their usual target areas as they digest severe government cost cuts at home, while simple proximity to a country that has become the latest trouble spot on investors' radar may also be an issue. Greek banks could be the main canal to transmit the crisis in Romania. At the same time, the measures of prudenciality taken by Central Bank should counteract the possible difficulties for Romanian banking system.

The Challenges of Euro Adoption in Romania: Some Lessons from the Greek Experience

Romania belongs to the group of the new EU members that are committed by the Treaty to adopt the euro, which implies that they must strive to fulfill all the nominal convergence criteria. Analyzing the Greece’s monetary experience towards the EMU and its available policy instruments for this goal, this paper tries to derive some challenging lessons for Romania on its path to euro adoption. The present Greek debt crisis and the background of the global financial crisis are also taken into consideration. The Greek situation shows that an overly ambitious timetable and effort for adopting the single currency can be rather costly for the country concerned and the endeavor to improve the performance of the economy must be a permanent process and not be limited to satisfying the Maastricht convergence criteria.

LOOKING FORWARD

At the height of the Greek debt crisis, I chanced to be on the phone with the editor of a major Athens daily and, making small talk, said he must be awfully busy. He was, he said—laying off the rep...

How to Restructure Greek Debt

Plan A for addressing the Greek debt crisis has taken the form of a €110 billion financial support package for Greece announced by the European Union and the International Monetary Fund on May 2, 2010. A significant part of that €110 billion, if and when it is disbursed, will be used to repay maturing Greek debt obligations, in full and on time. The success of Plan A is not inevitable; among other things, it will require the Greeks to accept - and to stick to - a harsh fiscal adjustment program for several years.If Plan A does not prosper, what are the alternatives? And how quickly could a Plan B be mobilized and executed?This paper outlines the elements of one possible Plan B, a restructuring of Greece’s roughly €300 billion of government debt. Prior sovereign debt restructurings provide considerable guidance for how such a restructuring might be shaped. But several key features of the Greek debt stock could make this operation significantly different from any previous sovereign debt workouts.To be sure, a restructuring of Greek debt will not relieve the country from the painful prospect of significant fiscal adjustment, nor will it displace the need for financial support from the official sector. But it may change how some of those funds are spent (for example, backstopping the domestic banking system as opposed to paying off maturing debt in full).This paper does not speculate about whether a restructuring of Greek debt will in fact become necessary or politically feasible. It focuses only on the how, not the whether or the when, of such a debt restructuring.

The Greek Debt Crisis: Likely Causes, Mechanics and Outcomes

The Greek Debt Crisis: Likely Causes, Mechanics and Outcomes

Economic restructuring and the debt problem: the Greek case

The Greek postwar economic development process clearly illustrates the links between the debt explosion, that many countries in the periphery and semi-periphery face at the moment, and the strategy of free-market economic restructuring. It is argued that both the balance of payments and the budget deficits, which fuelled the Greek debt explosion in the 1980s, have been heavily conditioned by structural problems that are directly related to the development strategy adopted by the Greek ruling elite. In the absence of radical structural changes, a new stop–go cyclical pattern tends to become a permanent feature of the development process: debt-led growth followed by Stabilization Programmes to secure the external debt servicing