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The Greek Public Debt Problem

Listed author(s):
  • Michalis Nikiforos
  • Dimitri B. Papadimitriou
  • Gennaro Zezza

This paper examines the issue of the Greek public debt from different perspectives. We provide a historical discussion of the accumulation of Greece's public debt since the 1960s and the role of public debt in the recent crisis. We show that the austerity imposed since 2010 has been unsuccessful in stabilizing the debt while at the same time taking a heavy toll on the Greek economy and society. The experience of the last six years shows that the country's public debt is clearly unsustainable, and therefore a bold restructuring is needed. An insistence on the current policies is not justifiable either on pragmatic or on moral or any other grounds. The experience of Germany in the early post-World War II period provides some useful hints for the way forward. A solution to the Greek public debt problem is a necessary but not sufficient condition for the solution of the Greek and wider European crisis. A broader agenda that deals with the malaises of the Greek economy and the structural imbalances of the eurozone is of vital importance.

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File URL: http://www.levyinstitute.org/pubs/wp_867.pdf
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Paper provided by Levy Economics Institute in its series Economics Working Paper Archive with number wp_867.

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Date of creation: May 2016
Handle: RePEc:lev:wrkpap:wp_867
Contact details of provider: Web page: http://www.levyinstitute.org

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  1. Barro, Robert J & Gordon, David B, 1983. "A Positive Theory of Monetary Policy in a Natural Rate Model," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 589-610, August.
  2. Michaelis Nikiforos & Laura Carvalho & Christian Schoder, 2014. ""Twin deficits" in Greece in search of causality," IMK Working Paper 143-2014, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  3. Jeromin Zettelmeyer & Christoph Trebesch & Mitu Gulati, 2013. "The Greek debt restructuring: an autopsy," Economic Policy, CEPR;CES;MSH, vol. 28(75), pages 513-563, 07.
  4. Timothy W. Guinnane, 2004. "Financial Vergangenheitsbewältigung: The 1953 London Debt Agreement," Working Papers 880, Economic Growth Center, Yale University.
  5. Dimitri B. Papadimitriou & Michalis Nikiforos & Gennaro Zezza, 2013. "The Greek Economic Crisis and the Experience of Austerity: A Strategic Analysis," Economics Strategic Analysis Archive sa_jul_13, Levy Economics Institute.
  6. Ardagna, Silvia, 2004. "Fiscal Stabilizations: When Do They Work and Why," Scholarly Articles 2580047, Harvard University Department of Economics.
  7. International Monetary Fund, 2010. "Greece; Staff Report on Request for Stand-By Arrangement," IMF Staff Country Reports 10/110, International Monetary Fund.
  8. Ardagna, Silvia, 2004. "Fiscal stabilizations: When do they work and why," European Economic Review, Elsevier, vol. 48(5), pages 1047-1074, October.
  9. Dimitri B. Papadimitriou & L. Randall Wray & Yeva Nersisyan, 2010. "Endgame for the Euro? Without Major Restructuring, the Eurozone is Doomed," Economics Public Policy Brief Archive ppb_113, Levy Economics Institute.
  10. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-491, June.
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