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The Greek fiscal crisis and the role of fiscal governance

  • Georgia Kaplanoglou
  • Vassilis T. Rapanos

In view of the growing attention paid to the role of fiscal governance in budgetary outcomes, this paper tries to shed light on the link between the recent Greek fiscal crisis and aspects of fiscal governance. It reviews fiscal developments in Greece over the last decade and challenges the widely held view that optimistic macroeconomic forecasts adopted by the Greek government, as well as three international organisations, were responsible for unrealistic fiscal deficit forecasts. Instead, the weak domestic institutional budget framework and the ineffectiveness of international organizations to act as signaling mechanisms emerge as the main reasons for weak fiscal performance. In this light, the paper puts forward some ideas for improving the domestic institutional framework for conducting fiscal policy in Greece.

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File URL: http://eprints.lse.ac.uk/36432/
File Function: Open access version.
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Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 36432.

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Length: 51 pages
Date of creation: Jun 2011
Date of revision:
Handle: RePEc:ehl:lserod:36432
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Web page: http://www.lse.ac.uk/
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