Greece will go to the polls on January 25th and everybody from German conservatives to Greek leftists seems to agree: Greek public debt is unsustainable. A haircut on investors and some form of partial default – more politely known as debt restructuring – is the only answer.
Whatever value the other variables take, a primary surplus (deficit) reduces (increases) the debt-to-GDP ratio by an equal amount. After running deficits as far back as the eye can see, Greece posted a very substantial primary surplus of 2.7% of GDP in 2014. As Fig. 4 shows this is considerably higher than all the other countries. The gap between the Greek surplus and the Spanish deficit ratios exceeds five percentage points.
Whatever value the other variables take, a primary surplus (deficit) reduces (increases) the debt-to-GDP ratio by an equal amount. After running deficits as far back as the eye can see, Greece posted a very substantial primary surplus of 2.7% of GDP in 2014. As Fig. 4 shows this is considerably higher than all the other countries. The gap between the Greek surplus and the Spanish deficit ratios exceeds five percentage points.
This Occasional Paper, authored by Andrew Watt, looks at the issue of Greek debt sustainability ahead of the elections on 25th January. Watt argues that it is far from clear that Greek debt is indeed unsustainable. According to Watt, fiscal and monetary policy changes would significantly help Greece to reduce its debt burden and make some sort of debt restructuring unnecessary.http://www.socialeurope.eu/occasional-papers/op-6-greek-debt-really-unsustainable/
This paper is published in cooperation with our partners at the Macroeconomic Policy Institute (IMK) of the Hans Böckler Stiftung.
Click the cover or here to download the paper and please feel invited to comment on the paper below.
Click the cover or here to download the paper and please feel invited to comment on the paper below.
Keine Kommentare:
Kommentar veröffentlichen