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Fiscal adjustment in Greece: In search for sustainable public finances

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  • van Aarle, Bas
  • Kappler, Marcus

Abstract

This paper analyses Greek fiscal sustainability from a retrospective and a prospective view. Implications of Greek fiscal (un)sustainability are discussed. In the empirical analysis econometric testing of Greek government solvency during the period 1985-2008 is combined with a scenario analysis of budgetary adjustments during the period 2011-2030 under alternative hypotheses.

Suggested Citation

  • van Aarle, Bas & Kappler, Marcus, 2011. "Fiscal adjustment in Greece: In search for sustainable public finances," ZEW Discussion Papers 11-080, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:11080
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    References listed on IDEAS

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    1. Antje Berndt & Rohan Douglas & Darrell Duffie & Mark Ferguson, "undated". "Measuring Default Risk Premia from Default Swap Rates and EDFs," GSIA Working Papers 2006-E31, Carnegie Mellon University, Tepper School of Business.
    2. António Afonso, 2005. "Fiscal Sustainability: The Unpleasant European Case," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(1), pages 19-44, March.
    3. Trehan, Bharat & Walsh, Carl E, 1991. "Testing Intertemporal Budget Constraints: Theory and Applications to U.S. Federal Budget and Current Account Deficits," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 23(2), pages 206-223, May.
    4. Juan J. Cruces & Christoph Trebesch, 2013. "Sovereign Defaults: The Price of Haircuts," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(3), pages 85-117, July.
    5. Bohn, Henning, 1995. "The Sustainability of Budget Deficits in a Stochastic Economy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(1), pages 257-271, February.
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    Cited by:

    1. Tielens, J. & van Aarle, B. & Van Hove, J., 2014. "Effects of Eurobonds: A stochastic sovereign debt sustainability analysis for Portugal, Ireland and Greece," Journal of Macroeconomics, Elsevier, vol. 42(C), pages 156-173.

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    More about this item

    Keywords

    Greece; euro area; fiscal policy; policy rules; fiscal sustainability;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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