IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/74536.html
   My bibliography  Save this paper

An Evaluation of Policies for Fiscal and External Sustainability during the Recent Greek Economic Crisis

Author

Listed:
  • Chronis, Panagiotis
  • Zombanakis, George A.

Abstract

The scope of this note is to point out that high growth rates must be accompanied by current account surpluses financing the internal debt service as a necessary and sufficient condition for a debt-reduction strategy. The recipe is applied in the case of Greece which, looking back at the pre-crisis period, has been experiencing substantial consumption-led growth following extensive foreign borrowing.

Suggested Citation

  • Chronis, Panagiotis & Zombanakis, George A., 2016. "An Evaluation of Policies for Fiscal and External Sustainability during the Recent Greek Economic Crisis," MPRA Paper 74536, University Library of Munich, Germany, revised 30 Jan 2016.
    • Handle: RePEc:pra:mprapa:74536
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/74536/1/MPRA_paper_74536.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Nicholas Apergis & Konstantinos Katrakilidis & Nicholas Tabakis, 2000. "Current account deficit sustainability: The case of Greece," Applied Economics Letters, Taylor & Francis Journals, vol. 7(9), pages 599-603.
    2. International Monetary Fund, 2014. "Benin: Sixth Review Under the Extended Credit Facility Arrangement and Request for a Waiver of Nonobservance of a Performance Criterion," IMF Staff Country Reports 2014/150, International Monetary Fund.
    3. International Monetary Fund, 2013. "Greece: Third Review Under the Extended Arrangement Under the Extended Fund Facility—Staff Report; Staff Statement; Press Release; and Statement by the Executive Director for Greece," IMF Staff Country Reports 2013/153, International Monetary Fund.
    4. George A. Zombanakis & Constantinos Stylianou & Andreas S. Andreou, 2009. "The Greek Current Account Deficit:Is it Sustainable after all?," Working Papers 98, Bank of Greece.
    5. Sophocles Brissimis & George Hondroyiannis & Christos Papazoglou & Nicholas Tsaveas & Melina Vasardani, 2012. "Current account determinants and external sustainability in periods of structural change," Economic Change and Restructuring, Springer, vol. 45(1), pages 71-95, February.
    6. International Monetary Fund, 2013. "Samoa: Request for Disbursement Under the Rapid Credit Facility-Staff Report; Staff Supplement; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Samoa," IMF Staff Country Reports 2013/162, International Monetary Fund.
    7. Fratzscher, Marcel & Müller, Gernot J. & Bussière, Matthieu, 2004. "Current accounts dynamics in OECD and EU acceding countries - an intertemporal approach," Working Paper Series 311, European Central Bank.
    8. Chinn, Menzie D. & Prasad, Eswar S., 2003. "Medium-term determinants of current accounts in industrial and developing countries: an empirical exploration," Journal of International Economics, Elsevier, vol. 59(1), pages 47-76, January.
    9. Freund, Caroline, 2005. "Current account adjustment in industrial countries," Journal of International Money and Finance, Elsevier, vol. 24(8), pages 1278-1298, December.
    10. Olivier Blanchard & Francesco Giavazzi, 2002. "Current Account Deficits in the Euro Area: The End of the Feldstein Horioka Puzzle?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 33(2), pages 147-210.
    11. International Monetary Fund, 2014. "Jamaica: Sixth Review Under the Arrangement Under the Extended Fund Facility," IMF Staff Country Reports 2014/359, International Monetary Fund.
    12. Thierry Tressel & Shengzu Wang & Joong S Kang & Jay C Shambaugh & Jörg Decressin & Petya Koeva Brooks, 2014. "Adjustment in Euro Area Deficit Countries; Progress, Challenges, and Policies," IMF Staff Discussion Notes 14/7, International Monetary Fund.
    13. International Monetary Fund, 2014. "Greece: Fifth Review Under the Extended Arrangement Under the Extended Fund Facility, and Request for Waiver of Nonobservance of Performance Criterion and Rephasing of Access," IMF Staff Country Reports 2014/151, International Monetary Fund.
    14. International Monetary Fund, 2013. "Portugal: Seventh Review Under the Extended Arrangement and Request for Modification of End-June Performance Criteria—Staff Report; Press Release on the Executive Board Discussion; and Statement by th," IMF Staff Country Reports 2013/160, International Monetary Fund.
    15. International Monetary Fund, 2014. "Pakistan: Third Review Under the Extended Arrangement and Request for Waiver of Nonobservance of Performance Criterion, and Request for Modification of Performance Criteria," IMF Staff Country Reports 2014/184, International Monetary Fund.
    16. Mr. S. M. Ali Abbas & Mr. Jakob E Christensen, 2007. "The Role of Domestic Debt Markets in Economic Growth: An Empirical Investigation for Low-Income Countries and Emerging Markets," IMF Working Papers 2007/127, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Christodoulos K. Akrivos, 2019. "Managers’ Perception on Public Organizations’ Performance and New Public Management during Economic Crises," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 57-69.
    2. Nikolaos Papanikolaou, 2018. "Geopolitical Implications of an Economical Force Affected by the Eurozone Crisis: The Case of Cyprus," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 92-97.
    3. repec:ers:journl:v:vi:y:2018:i:3:p:92-97 is not listed on IDEAS
    4. George Michalopoulos & Konstantinos Tsermenidis, 2018. "Country Risk on the Bank Borrowing Cost Dispersion Within the Euro Area during the Financial and Debt Crises," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 76-92.
    5. M. Zholamanova & M. Arzayeva R. Doszhan & A. Turlybekova A. Kukiev, 2018. "Devaluation in Kazakhstan: History, Causes, Consequences," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 831-842.
    6. repec:ers:journl:v:vi:y:2018:i:4:p:76-92 is not listed on IDEAS

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. George A. Zombanakis & Constantinos Stylianou & Andreas S. Andreou, 2009. "The Greek Current Account Deficit:Is it Sustainable after all?," Working Papers 98, Bank of Greece.
    2. Blaise Gnimassoun & Valérie Mignon, 2013. "Current-account adjustments and exchange-rate misalignments," Working Papers hal-04141182, HAL.
    3. Garg, Bhavesh & Prabheesh, K.P., 2017. "Drivers of India’s current account deficits, with implications for ameliorating them," Journal of Asian Economics, Elsevier, vol. 51(C), pages 23-32.
    4. Yannis M. Ioannides & Christopher A. Pissarides, 2015. "Is the Greek Crisis One of Supply and Demand?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 46(2 (Fall)), pages 349-373.
    5. Athanasios Kolliopoulos, 2021. "Reforming the Greek Financial System: a decade of failure," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 155, Hellenic Observatory, LSE.
    6. Helmut Herwartz & Florian Siedenburg, 2007. "Determinants of Current Account Imbalances in 16 OECD Countries: An Out-Of-Sample Perspective," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 143(2), pages 349-374, July.
    7. Blaise Gnimassoun & Valérie Mignon, 2015. "Persistence of Current-account Disequilibria and Real Exchange-rate Misalignments," Review of International Economics, Wiley Blackwell, vol. 23(1), pages 137-159, February.
    8. Florian Morvillier, 2018. "On the impact of the launch of the euro on EMU macroeconomic vulnerability," EconomiX Working Papers 2018-51, University of Paris Nanterre, EconomiX.
    9. Ali, Amjad & Audi, Marc, 2023. "Analyzing the Impact of Foreign Capital Inflows on the Current Account Balance in Developing Economies: A Panel Data Approach," MPRA Paper 118173, University Library of Munich, Germany.
    10. Panayiotis Alexakis & Gikas Hardouvelis & Dean Paxson & Gordon Sick & Lenos Trigeorgis, 2018. "Greek Sovereign Debt: Addressing Economic Distress and Growth in the Euro Area," Multinational Finance Journal, Multinational Finance Journal, vol. 22(1-2), pages 1-33, March - J.
    11. Kolliopoulos, Athanasios, 2021. "Reforming the Greek financial system: a decade of failure," LSE Research Online Documents on Economics 108523, London School of Economics and Political Science, LSE Library.
    12. Dimitrios Doulos & Odysseus Katsaitis & George A. Zombanakis, 2021. "How to Make Butter out of Guns: The Turkish Case and the Greek Bitter Lesson," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 1055-1072.
    13. Mark Weisbrot & David Rosnick & Stephan Lefebvre, 2015. "The Greek Economy: Which Way Forward?," CEPR Reports and Issue Briefs 2015-04, Center for Economic and Policy Research (CEPR).
    14. Aleksander Aristovnik, 2005. "Current Account Reversals In Selected Transition Countries," International Finance 0510021, University Library of Munich, Germany.
    15. Oscar Bajo-Rubio & Carmen D Roldᮠ & Esteve, 2014. "Sustainability of external imbalances in the OECD countries," Applied Economics, Taylor & Francis Journals, vol. 46(4), pages 441-449, February.
    16. Aleksander Aristovnik, 2005. "Twin Deficits Hypothesis And Horioka-Feldstein Puzzle In Transition Economies," International Finance 0510020, University Library of Munich, Germany.
    17. Sophocles Brissimis & George Hondroyiannis & Christos Papazoglou & Nicholas Tsaveas & Melina Vasardani, 2012. "Current account determinants and external sustainability in periods of structural change," Economic Change and Restructuring, Springer, vol. 45(1), pages 71-95, February.
    18. Gruber, Joseph W. & Kamin, Steven B., 2007. "Explaining the global pattern of current account imbalances," Journal of International Money and Finance, Elsevier, vol. 26(4), pages 500-522, June.
    19. Pierre-Olivier Gourinchas & Philippe Martin & Todd E. Messer, 2020. "The Economics of Sovereign Debt, Bailouts and the Eurozone Crisis," NBER Working Papers 27403, National Bureau of Economic Research, Inc.
    20. Michele Ca' Zorzi & Michał Rubaszek, 2012. "On the Empirical Evidence of the Intertemporal Current Account Model for the Euro Area Countries," Review of Development Economics, Wiley Blackwell, vol. 16(1), pages 95-106, February.

    More about this item

    Keywords

    Twin Deficits; Debt; Sustainability;
    All these keywords.

    JEL classification:

    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:74536. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.