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Greece's "Unpleasant Arithmetic" Containing the Threat to the Global Economy


  • Barth James R.

    () (Auburn University and Milken Institute)

  • Li Tong

    () (Milken Institute)

  • Prabhavivadhana Apanard

    () (Milken Institute)


Greece's debt-to-GDP ratio is reaching unsustainable levels. But why should the debt load of such a small country cause such outsized tremors in global financial markets?Greek debt may be relatively small, but a sufficient amount is held by a few major banks in Europe to cause disruptions to the credit system. This effect is magnified because other banks from around the world are exposed to these European banks, making the problem global.In this article we examine the exposure of banks around the world to Greek debt, and call for swift and decisive action by policymakers to head off a global banking crisis.

Suggested Citation

  • Barth James R. & Li Tong & Prabhavivadhana Apanard, 2011. "Greece's "Unpleasant Arithmetic" Containing the Threat to the Global Economy," Global Economy Journal, De Gruyter, vol. 11(4), pages 1-15, December.
  • Handle: RePEc:bpj:glecon:v:11:y:2011:i:4:n:6

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    References listed on IDEAS

    1. Paarlberg, Robert, 1997. "Agricultural Policy Reform and the Uruguay Round: Synergistic Linkage in a Two-Level Game?," International Organization, Cambridge University Press, vol. 51(03), pages 413-444, June.
    2. Harrigan, James, 1996. "Openness to trade in manufactures in the OECD," Journal of International Economics, Elsevier, vol. 40(1-2), pages 23-39, February.
    3. Cowling, Keith & Sugden, Roger, 1998. "Strategic Trade Policy Reconsidered: National Rivalry vs Free Trade vs International Cooperation," Kyklos, Wiley Blackwell, vol. 51(3), pages 339-357.
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