Greek Debt Research Articles

Fictional Expectations and the Global Media in the Greek Debt Crisis: A Topic Modeling Approach

Abstract We study the role of global media during the Greek debt crisis and relate it to the transmission of events on financial actors’ expectations. To identify news coverage about the Greek debt crisis, we apply topic modeling to a newly compiled dataset of over 430,000 articles from The International New York Times and Financial Times from 2009 to 2015. We identify a Greek debt crisis topic and relate it to events concerning Greece during this time period. Our finding is that events are only relevant for financial markets when they are covered in the media, whereas events without media coverage have no effect. News coverage without immediate events is equally irrelevant for financial markets.

The Greek Debt Crisis and Albanian Return Migration

ABSTRACTExisting research on the relatively recent phenomenon of Albanian migrants returning to Albania is limited and focuses on the reasons for return, the characteristics of the return migrants, and on employment in general. Based on in-depth qualitative interviews with 25 returnees in Tirana, the study explores primarily, but not exclusively, the impact of the ongoing Greek debt crisis on the decision of Albanian migrants to return to Albania. More specifically, it analyses the reasons that motivated them to leave Greece; the barriers they faced while trying to reintegrate into Albanian society, which has undergone vast changes during the time of their absence; the way these barriers influence their future intentions; and, finally, the role of the Albanian government in their reintegration.

Moral Hazard: German Public Opinion on the Greek Debt Crisis

The recent Eurozone crisis and negotiations over bailout packages to Greece are more than a simple controversy about financial resources. They have a decidedly moralistic overtone. Giving more funds is thought by some to be unfair to hard‐working taxpayers and does not teach Greece an important moral lesson. Yet much international political economy scholarship neglects such considerations. We build on moral psychology to understand the ethical drivers of both German support and opposition to the 2015 Greek government bailout package. We analyze original survey data to show how morality is an essential factor in Germany's hard‐line approach. Our results show that caring and European attachment are associated with bailout support, while authority, national attachment, and retributive fairness drive opposition. Some morals also have boundaries: National attachment attenuates the effect of harm/care on support for foreign financial assistance but strengthens the effect of fairness on bailout opposition. Moral psychology helps us understand foreign policy but must be adapted to account for multiple potential ingroups.

LOCAL PUBLIC DEBT MANAGEMENT: LESSONS FROM GREECE IN INCLUSIVE ECONOMIC PERSPECTIVE

This paper discusses the potential dangers of adversarial debt management in China between central and local authorities. It draws lessons from Germany’s recent mishandling of the Greek debt crisis to illustrate nuances and stresses the wisdom of cooperation and mutual support in restoring balance to local Chinese finance. Inclusive economic theory provides additional insight.

The Tragedy of the Greek Debt Crisis: To Be Done With Judgment

Since the first memorandum “agreement” between Greece and its international creditors in 2010, the “tragedy of the Greek debt crisis” has become one of the most popular narratives that frame Greece’s condition of indebtedness. Highlighting the interplay between appearances of “debt crisis” and notions of tragedy as its point of departure, this essay builds on Nietzsche’s thought and introduces a philosophy of tragedy that understands what appears to be a “debt crisis” as, in fact, a crisis of the creditor’s capacity to reproduce the non-resolvable power relations between them and their debtor. For Nietzsche, in order for the creditor to experiment with their debtor’s appropriation, the creditor stages a series of acts of judgment (κρίσις) that introduce masks and appearances of their debtor’s redemption. In the comments that follow I make the case that Gilles Deleuze and Félix Guattari draw upon Nietzsche’s philosophy of tragedy in order to grasp the interdependencies between performances of evaluation, capitalistic modes of production and the production of infinite debt. Drawing upon Deleuze and Guattari’s readings of Nietzsche’s philosophy of tragedy and Maurizio Lazzarato’s works on Nietzsche and Deleuze and Guattari, I argue that what appears to be a “Greek debt crisis” is a crisis of credit’s capacity to extract profit from infinite debt. Connecting this theorization to the Greek situation, I look at the “YES” and “NO” demonstrations that occurred two days before the Greek bailout referendum of 2015. I contend that while the “YES” demonstration reenacted the infinitization of Greece’s indebtedness to its creditors the “NO” demonstration performed politics that exceed notions of judgment and debt.

International Debt Overhang and Monetary Policy: A Simulation Exercise Using Czech Republic Data

We are concerned with the dangers arising from excessive international debt overhang, primarily to financial stability in the debtor country. Assuming that debt forgiveness is not possible, a subject which we modelled earlier relating to the Greek debt crisis, (Goodhart et al. (2018)), we show how an independent monetary policy can be used to smooth consumption for both borrowers and lenders. A counter-cyclical monetary policy can contract liquidity when debt growth is high and expand liquidity when default rates are high. These results are closely related to the policy debate on monetary policy as a macroprudential policy tool.

The Greek Debt Crisis: Like the Enigma of Sphinx. An Estimation of the Probability of Default

The present study deals with the Greek debt crisis and tries to shed light on its determinants, going back to its origins, while examining its negative effects following the burst of the global financial crisis that still plagues the country. This paper also examines the efforts taken to deal with it, a combination of Greek austerity measures and strong financial aid from foreign institutions. Moreover, a probability of default assessment is performed in order to emphasize the fact that, even if the macroeconomic assumptions underpinning the fiscal adjustment program prove realistic and effective, Greek sovereign debt is far from viable and the financial situation of the public sector will remain fragile, having a long and difficult road to follow. Finally, it is pointed out that long term and permanent measures have to be taken in order to address the long-standing weaknesses of the economy and get rid of the vice of default for good, as well as the establishment of a stable political and economic environment.

Legal considerations to international contracts in the recent Greece financial crisis

PurposeThis research aims to focus on what has happened in light of the Greece legal crisis in terms of international contracts and what legal situations have arisen.Design/methodology/approachThis research focuses on what has happened in light of the Greek legal crisis in terms of international contracts and what legal situations have arisen. The overall situation in relation to international contracts and risk mitigation is discussed to analyze the efforts that have been made. The state of affairs in the country with regard to facilitating financial trade and enabling Greeks to send payments abroad or at the rate they need to is also explored.FindingsThe effects of financial crisis on international trade contracts as they relate to commercial businesses without taking into consideration the wider contractual obligations that Greece, as a country, have already defaulted on. The crux of the current crisis is the fact that Greece did not stick to the commitments it made to the European Union when it joined the eurozone and took on euro as their currency, replacing the drachma. It is important to understand that due to the scope of the economic crisis in the Greece, it is not simply the other contractual party’s creditworthiness and trustworthiness that are at issue, it is their ability to keep any promises in whatever climate arises in their country.Research limitations/implicationsThe study is based on the financial crisis in Greek. Further research is needed to investigate the applicability of the findings in different contexts.Originality/valueThe study findings are believed to be valuable for international commercial contracts with regard to the Greek debt crisis in discussing the financial legal situation, facilitating trade and enabling Greeks to send payments abroad or at the rate they need. The study contributes to a better understanding of international commercial contract system.

Feedback trading and short-term return dynamics in Athens Stock Exchange

PurposeThe purpose of this paper is to examine the hypothesis of feedback trading along with the short-term return dynamics of three size-based stock portfolios of Athens Stock Exchange during the Greek debt crisis period.Design/methodology/approachTo this end, the authors employ for the first time in the literature two well-known models while the variance equation is modeled by means of a multivariate EGARCH specification. As a robustness test an innovative nested-EGARCH model is also employed.FindingsThe assumption that positive feedback trading is an important component of the short-term return movements across the three stock portfolios receives significant support. Moreover, the volatility interdependence, both in magnitude and sign, is almost similar across the three models. Finally, bad news originating from the portfolio of small stock appears to have a higher impact on the volatility of large and medium size stock returns than good news during the Greek debt crisis period.Originality/valueThe methodology is innovative and the authors test for the first time the feedback trading hypothesis across different size stocks. The authors believe that the results might entail significant policy implications for investors and market regulators.

Measuring bank downside systemic risk in Taiwan

In this study, both systemic and individual bank risks across domestic and international banks in Taiwan are analyzed given a risk event breakout, using the conditional value-at-risk (CoVaR) and the conditional expected shortfall (CoES) by estimating the bivariate quantile autoregression with asymmetric downside risk adjustment to the daily stock returns of banks. The estimation results reveal the significant external asymmetric downside risk in individual bank systemic risk in contrast to the internal asymmetric downside risk in system itself. The individual bank systemic risk contribution is idiosyncratic and incoherent, but the system risk impact on banks is consistent and co-integrated toward all banks. The empirical results show that the larger size or leverage of the individual banks causes higher system risk impact, as they are hit and go down jointly in shocking events. The foreign banks incur and spread more symmetric external risk, whereas the domestic banks suffer and release more asymmetric external risk. Accordingly, the banks in North America and Europe not only take system risk but contribute the most systemic risk during the subprime crisis and Greek debt crisis, respectively, leading to the episode of asymmetric volatility externality effect on the Taiwanese banks in Asia.

The legacy of a fractured Eurozone: The Greek Dra(ch)ma

This paper addresses neoliberal origins of the acute geoeconomic and social crisis that was inflicted on Greece since 2010 with the unleashing of the 3 consecutive bailout plans and the implementation of fierce austerity policies. We further scrutinize the composition of the soaring Greek debt and most importantly, the unsettling utilization of the troika loans for the 2010–15 period. For the first time in the literature, we provide evidence that the vast bulk of the loans went overwhelmingly not to benefiting a “profligate” Greek state but to avoiding the write-downs of bad loans made by reckless creditors (mainly, German and French banks) to the Greek government and private banks. We propose the temporary adoption of a parallel currency in the form of government IOUs, together with other drastic measures to reboot the ailing Greek economy inside the Eurozone.

Measuring contagion risk in high volatility state among Taiwanese major banks

This paper studies the structural tail dependence and contagion risk especially in high volatility state between domestic (Taiwanese) and foreign banks. Aptly the two-state threshold copula GARCH provides the threshold regression and copulas to classify the actual volatility index into a high or in a low state and estimate the structural tail dependences using Kendall taus to probe the co-movement among banks. In high volatility state, the average Kendall taus and value at risk as well as expected shortfall are about two times larger than in low volatility state. The asymmetric jumps of Kendall taus appear more frequent in the subprime crisis whereas the symmetric trends of Kendall taus appear higher in Greek debt crisis. Among three copula models in low volatility state, Gaussian and Student-t copula models have established a more significant estimate than the Clayton copula model. However, in high volatility state, Clayton copula model could still produce an acceptable estimate. Empirically, using Clayton copula in high volatility state has demonstrated clearly intensive tail jumps capable to distinguish the contagion risk.

Debt, recovery rates and the Greek dilemma

Most discussions of the Greek debt overhang have focussed on the implications for Greece. We show that when additional funds released to the debtor (Greece), via debt restructuring, are used efficiently in pursuit of a practicable business plan, then both debtor and creditor can benefit. We examine a dynamic two country model calibrated to Greek and German economies and support two-steady states, one with endogenous default and one without, depending on creditors’ expectations. In the default steady state, debt forgiveness lowers the volatility of both German and Greek consumption whereas demanding higher recovery rates has the opposite effect. In a second order approximation of the model, conditional welfare analysis shows that a policy of immediate leniency followed by harsher terms as the economy grows is beneficial to both creditors and debtors.

Where to Go: Trade Protectionism or Open Competition? Evidence from Micro-enterprise Innovation

Where to Go: Trade Protectionism or Open Competition? Evidence from Micro-enterprise Innovation

14. The Greek Crisis: The Internet as the Historians Tool

It has been rightly observed that it will take decades for historians to actually make sense of what happened in world history in 2011. Ultimately, the recentness of any event will determine when a process can be historically analyzed. Even more, there is a lot of discussion on the relationship between history and the Internet, and on histories 'impact' capacity, i.e. its ability to connect with the developments in the wider society. Historians, unlike other disciplines have not utilized the net to service historical study. This research examined the foreign response to the Greek Debt Crisis through looking at the net as a primary source of historical information; looking at the net as a tool in generating further historical information (similar to Oral History). This was achieved through analyzing blogs, online newspaper articles, embassy websites, online journals and other websites that the Internet had to offer. The findings of the research facilitated the creation of multiple timelines based on threats, projections, and a general history. In addition, the research also served as a methodological experiment. Fundamentally, the research concluded that the Internet could be used as a primary source as well as a supplementary source in dealing with a recent event. Moreover it pushed the boundaries of historical distance in historiography.

Why prices don't respond sooner to a prospective sovereign debt crisis

Transactions costs associated with taking short positions on sovereign debt can have profound effects on government debt yields and the pattern of trade as a country moves toward default. To make this point we propose an equilibrium model of the sovereign debt market and fit the model to reproduce the dynamic path of 5-year Greek sovereign bond yields between 2008 and its credit event in 2012. We find that short-selling costs play a central role in accounting for the path of government bond yields and the pattern of movements in net credit default swap positions on Greek debt during this sample period.

Sovereign Debt Restructuring in Europe

AbstractThe Eurozone sovereign debt crisis began in the spring of 2010. Seven years on seems like an appropriate point at which to critique how the crisis has been handled and to assess whether policy changes will be required should it flare up again. In particular, there are a number of lessons to be learned from the Greek debt restructuring of 2012.

Humiliation and Greek debt

This article, the basis of a talk to the Hellenic Political Science Association in March 2012, presents an approach to the analysis of humiliation or forced social displacement. It makes reference to the particular example of Greece during the sovereign debt crisis and offers a comparison with the effects of Hurricane Katrina on New Orleans. Distinctions are made between yielding responses and challenging responses to humiliation, including escape and acceptance in the first category, and resistance-rejection, revenge-rejection and conciliation-reform in the latter category.

Testing for financial contagion: New evidence from the Greek crisis and yuan devaluation

This paper examines contagion effects from two recent crises. First, the effects of the Greek debt crisis on surrounding European nations, and second, the effects of the yuan devaluation on key trading partners such as the US and the BRICS countries. Kendall's tau correlation coefficient was used to measure the degree of cross-market linkages between equity returns before and during the crisis periods. To test for a significant increase in these coefficients that would indicate contagion, a test statistic developed by Li (2009) was used. Empirical results suggest both crises produced contagious effects. In addition, the results suggest that the contagion effects from the Greek debt crisis were not persistent while the effects from the yuan devaluation were. We further demonstrate that superior investment returns appear to be attainable when our contagion results are used for the management of trading risks.

Efficiency or speculation? A time-varying analysis of European sovereign debt

The outbreak of the Greek debt crisis caused turmoil in European markets and drew attention to the problem of public debt and its consequences. The increase in the return rates of sovereign debts was one of these consequences. However, like any other asset, sovereign debt returns are expected to have a memoryless behaviour. Analysing a total of 15 European countries (Eurozone and non-Eurozone), and applying a time-varying analysis of the Hurst exponent, we found evidence of long-range memory in sovereign bonds. When analysing the spreads between each bond and the German one, it is possible to conclude that Eurozone countries’ spreads show more evidence of long-range dependence. Considering the Eurozone countries most affected by the Eurozone crisis, that long-range dependence is more evident, but started before the crisis, which could be interpreted as possible speculation by investors.