The 2012 Greek Retrofit and Borrowing Costs in the European Periphery

Patrick Bolton, Mitu Gulati, Xuewen Fu and Ugo Panizza

No 18411, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This article examines the impact of Greece retroactively, via legislation, changing the terms in hundreds of billions of euros worth of Greek government bonds governed by domestic Greek law. As the abrogation of gold clauses in US government bonds by the US Congress in 1933 had been, the Greek action was decried as violative of the rule of law and sure to negatively impact the future ability of Euro area sovereigns to borrow. We test whether the Greek action had negative spillovers on European government debt markets. We find no evidence of increased borrowing for even the most peripheral European economies from the Greek action.

Keywords: Sovereign debt restructuring; Greece; Euro area crisis; Contagion (search for similar items in EconPapers)
JEL-codes: F30 F34 G01 H63 K12 (search for similar items in EconPapers)
Date: 2023-09
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Working Paper: The 2012 Greek Retrofit and Borrowing Costs in the European Periphery (2023)
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