The Pitfalls of External Dependence: Greece, 1829-2015

Carmen Reinhart and Christoph Trebesch

No 21664, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: F3 G01 H6 N10 N13 N14 (search for similar items in EconPapers)
Date: 2015-10
New Economics Papers: this item is included in nep-cba and nep-his
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Published as Carmen M. Reinhart & Christoph Trebesch, 2015. "The Pitfalls of External Dependence: Greece, 1829–2015," Brookings Papers on Economic Activity, vol 2015(2), pages 307-328.

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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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