 Notes on the Accumulation of Greek Public Debt between 1981 and 2000Economic Research Guardian, 2023, vol. 13, issue 1, 16-30 Abstract: This paper examines the issue of accumulation dynamics of the Greek Public Debt between 1981 and Greece’s entry into the Eurozone on 1 January 2001. The author argues that the recent research on the Greek Sovereign Debt Crisis (May 2010) did not take this matter into consideration. The paper uncovers the causes of the Public debt accumulation in the 1980s but also points out that its service costs were minimal since the Greek government sold domestically its non-indexed drachma obligations. The costs of refinancing rose since the end of the 1980s when Greece started to sell internationally debt denominated in other currencies. This move was in effect a result of the process of financial liberalisation of Greek markets and the abolishment of capital controls. The rising costs of debt servicing and public expenditures along with insufficient tax revenues troubled the government of the Nea Demokratia (1990-1993). As the case was, the bright prospects of Greece joining the Economic and Monetary Union reflected upon the diminishing interest rates of new debt issued in the second half of the 1990s. This allowed the Greek government to keep the debt-to-GDP ratio, so far reached, at a lesser expense. However, the financial liberalisation, which allowed foreign and local buyers to purchase government securities denominated in foreign currency, exposed Greece to the first speculative attack on its exchange rate in 1994 since the foreign speculators were attracted by the high debt-to-GDP ratio. Although the Greek government and the Bank of Greece repelled the attack, a more prudent policy decision would have been to decrease the debt-to-GDP ratio in the years to follow, but myopic policy constraints did not allow its execution although it has been strongly argued in the literature. Keywords: Greek Public Debt Accumulation; European Sovereign Debt Crisis (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:wei:journl:v:13:y:2023:i:1:p:16-30 Access Statistics for this article Economic Research Guardian is currently edited by Mihai Mutascu More articles in Economic Research Guardian from Mutascu Publishing |
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