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The financial fragility and the crisis of the Greek government sector

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  • Georgios Argitis
  • Maria Nikolaidi

Abstract

The purpose of this paper is to develop Minskyan financial fragility indices for the government sector and to examine the financial structure of the Greek government before and after the onset of the sovereign debt crisis in 2009. We provide empirical evidence that clearly shows the growing financial fragility of the Greek public sector in the 2000s. We also assess the effectiveness of the implemented bailout adjustment programmes in Greece and claim that the conducted austerity measures and fiscal consolidation have not significantly improved the financial posture of the Greek government sector. We argue that the implementation of fiscal and wage austerity in an economy that lacks structural competitiveness produces prolonged recession and unemployment with adverse feedback effects on the financial fragility of the government.

Suggested Citation

  • Georgios Argitis & Maria Nikolaidi, 2014. "The financial fragility and the crisis of the Greek government sector," International Review of Applied Economics, Taylor & Francis Journals, vol. 28(3), pages 274-292, May.
  • Handle: RePEc:taf:irapec:v:28:y:2014:i:3:p:274-292
    DOI: 10.1080/02692171.2013.858667
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    File URL: http://hdl.handle.net/10.1080/02692171.2013.858667
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    References listed on IDEAS

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    1. Gregor Semieniuk & Till van Treeck & Achim Truger, 2011. "Reducing Economic Imbalances in the Euro Area: Some Remarks on the Current Stability Programs, 2011–14," Economics Working Paper Archive wp_694, Levy Economics Institute.
    2. Jan Kregel, 2011. "Debtors' Crisis or Creditors' Crisis? Who Pays for the European Sovereign and Subprime Mortgage Losses?," Economics Public Policy Brief Archive ppb_121, Levy Economics Institute.
    3. L. Randall Wray, 2006. "Extending Minsky's Classifications of Fragility to Government and the Open Economy," Economics Working Paper Archive wp_450, Levy Economics Institute.
    4. Wynne Godley & Dimitri B. Papadimitriou & Greg Hannsgen & Gennaro Zezza, 2007. "The U.S. Economy: Is There a Way Out of the Woods?," Economics Strategic Analysis Archive sa_nov_07, Levy Economics Institute.
    5. Hyman P. Minsky, 1992. "The Capitalist Development of the Economy and the Structure of Financial Institutions," Economics Working Paper Archive wp_72, Levy Economics Institute.
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    Cited by:

    1. Hiroshi Nishi, 2016. "An empirical contribution to Minsky’s financial fragility:Evidence from non-financial sectors in Japan," Discussion papers e-16-007, Graduate School of Economics , Kyoto University.
    2. repec:eee:rujoec:v:1:y:2015:i:4:p:419-438 is not listed on IDEAS

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