The Twin Deficits, Monetary Instability and Debt Crises in the History of Modern Greece
Hellenic Observatory Research Seminars
This presentation 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. Throughout its two-hundred-year history, modern Greece was characterized by prolonged periods of low economic growth, monetary instability and sustained fiscal and external deficits. These often led to high inflation, international over-indebtedness, and sovereign debt crises and defaults. Current account deficits have been a consequence of the shortfall of domestic savings relative to investment. The only exception was during the 1950s and the 1960s. Until the 1950s the main drivers of fiscal deficits have been the occasional military mobilizations and wars because of the pursuit of the grand idea, the two world wars and a civil war. After the late 1970s, the main driver of fiscal deficits has been the attempt to redistribute income and wealth and create a welfare state, in the pursuit of greater equality.
Speaker: George Alogoskoufis, Professor of Economics, Athens University of Economics & Business
Chair: Kevin Featherstone, Hellenic Observatory Director