The Causes of the Greek Debt Problem

George S. Atsalakis, Emilios Galariotis and Constantin Zopounidis
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George S. Atsalakis: Technical University of Crete, Crete, Greece
Emilios Galariotis: Audencia Business School, Nantes, France
Constantin Zopounidis: Technical University of Crete, Crete, Greece & Audencia Business School, Nantes, France

International Journal of Sustainable Economies Management (IJSEM), 2019, vol. 8, issue 4, 13-28

Abstract: In Greece, special interest groups were the main drivers of pressure to increase public spending and, by extension, to increase public debt to cover the expenditure by blocking any effort of prudent governance. They were so greedy, that when the funds of public vaults were not sufficient to meet their expectations, they exerted pressures or even extorted the state to engage in public borrowing so as to accrue even greater funds, disregarding the short- and long-term cost of such actions for the state and society. As a result, a vicious circle led to Greek public over-indebtedness in order to support public overspending. It is indicative that the Greek state's primary expenditure rate increased between 2000 and 2009 by 135%. In other words, the citizens were obliged to pay taxes that would support two states: the expenses' level the state had until 2000 and the costs of one more state after 2000-2009.

Date: 2019
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