The twin deficits, monetary instability and debt crises in the history of modern Greece

Alogoskoufis, George (2023) The twin deficits, monetary instability and debt crises in the history of modern Greece. GreeSE papers: Hellenic Observatory Papers on Greece and Southeast Europe (189). Hellenic Observatory, European Institute.

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Abstract

This paper reviews, analyses and interprets the determinants and the implications of the twin, fiscal and current account, deficits in the history of modern Greece. The analysis focuses on the determinants and the dynamic interactions among the twin deficits, domestic monetary regimes, and access to international borrowing. Two are the main conclusions: First, when Greece did not have access to international borrowing, fiscal imbalances usually led to monetary destabilization and inflation. Second, when it did have access to international borrowing, fiscal imbalances were generally larger, led to external deficits and, eventually, sovereign debt crises and defaults. The monetary and exchange rate regime also mattered. The 1950s and 1960s were the only prolonged period in which the twin deficits were tackled effectively and, as a result, the only period in which Greece enjoyed high economic growth, monetary stability, and external balance simultaneously.

Item Type:	Monograph (Working Paper)
Official URL:	https://www.lse.ac.uk/Hellenic-Observatory/Assets/...
Additional Information:	© 2023 The Author
Divisions:	Hellenic Observatory
Subjects:	H Social Sciences > HC Economic History and Conditions J Political Science > JN Political institutions (Europe)
JEL classification:	N - Economic History > N1 - Macroeconomics and Monetary Economics; Growth and Fluctuations > N10 - General, International, or Comparative N - Economic History > N2 - Financial Markets and Institutions > N20 - General, International, or Comparative N - Economic History > N4 - Government, War, Law, and Regulation > N40 - General, International, or Comparative
Date Deposited:	02 Oct 2023 16:00
Last Modified:	02 Oct 2023 16:06
URI:	http://eprints.lse.ac.uk/id/eprint/120344

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