The Pitfalls of External Dependence: Greece, 1829-2015

Carmen Reinhart and Christoph Trebesch

No 10898, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Two centuries of Greek debt crises highlight the pitfalls of relying on external financing. Since its independence in 1829, the Greek government has defaulted four times on its external creditors ? with striking historical parallels. Each crisis is preceded by a period of heavy borrowing from foreign private creditors. As repayment difficulties arise, foreign governments step in, help to repay the private creditors, and demand budget cuts and adjustment programs as a condition for the official bailout loans. Political interference from abroad mounts and a prolonged episode of debt overhang and financial autarky follows. We conclude that these cycles of external debt and dependence are a perennial theme of Greek history, as well as in other countries that have been ?addicted? to foreign savings.

Keywords: Bailouts; Crisis resolution; External debt; Sovereign default (search for similar items in EconPapers)
JEL-codes: E6 F3 H6 N0 (search for similar items in EconPapers)
Date: 2015-10
New Economics Papers: this item is included in nep-cba, nep-his, nep-mac and nep-opm
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Citations: View citations in EconPapers (33)

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Related works:
Journal Article: The Pitfalls of External Dependence: Greece, 1829–2015 (2015)
Working Paper: The Pitfalls of External Dependence: Greece, 1829-2015 (2015)
Working Paper: The Pitfalls of External Dependence: Greece, 1829-2015 (2015)
Working Paper: The Pitfalls of External Dependence: Greece, 1829-2015 (2015)
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