Advertisement

European Union pp 183-206 | Cite as

The Third Hellenic Economic Adjustment Program

Success Story of Macroeconomic Stabilization or Failed Story of Economic Growth Restoration?
  • Konstantinos J. HazakisEmail author
Chapter

Abstract

Long-term economic adjustment without growth delivers economic stagnation. Analyzing the Hellenic adjustment effort, it becomes evident that fiscal consolidation attains primary surpluses while it leaves public debt at non-sustainable levels. The terms of the economic consolidation program in Greece do not favor structural and real convergence to euro area average but mainly target nominal convergence with Eurozone economies. Excessive direct and indirect taxation, internal devaluation of incomes, institutional inertia on critical growth issues, and public expenditure contraction undermine real economic adjustment.

Bibliography

  1. Aiginger, K., & Schratzenstaller, M. (2011, January). Consolidating the Budget Under Difficult Conditions—Ten Guidelines Viewed Against Europe’s Beginning Consolidation Programmes. Intereconomics, 46(1), 36–42.Google Scholar
  2. Alesina, A., & Ardagna, S. (1998, October). Fiscal Adjustments: Why They Can Be Expansionary. Economic Policy, 13, 488–545.Google Scholar
  3. Alesina, A., & Ardagna, S. (2012). The Design of Fiscal Adjustments (NBER Working Paper Series, Working Paper No. 18423). Cambridge, MA: National Bureau for Economic Research. http://www.nber.org/papers/w18423. Accessed 10 November 2018.
  4. Anderson, D., Hunt, B., & Snudden, S. (2014). Fiscal Consolidation in the Euro Area: How Much Pain Can Structural Reforms Ease? Journal of Policy Modeling, 36, 785–799.CrossRefGoogle Scholar
  5. Bi, R., Qu, H., & Roaf, J. (2013, June). Assessing the Impact and Phasing of Multiyear Fiscal Adjustment: A General Framework (IMF Working Paper No. 13/182). Washington DC: IMF.Google Scholar
  6. Bitzenis, A., Papadopoulos, I., & Vlachos, V. (2013). Reflections on the Greek Sovereign Debt Crisis: The EU Institutional Framework, Economic Adjustment in an Extensive Shadow Economy. Cambridge, UK: Cambridge Scholars Publishing.Google Scholar
  7. Blanchard, O., & Leigh, D. (2013). Growth Forecasts Errors and Fiscal Multipliers (IMF Working Paper No. 13/1). Washington, DC: IMF.Google Scholar
  8. Botta, A. (2015). The Theoretical Weaknesses of the Expansionary Austerity Doctrine (Post Keynesian Economics Study Group, Working Paper No. 1511). Available at https://www.postkeynesian.net/downloads/working-papers/PKWP1511.pdf.
  9. Bourles, R., Cette, G., Lopez, J., Mairesse, J., & Nicoletti, G. (2010). Do Product Market Regulations in Upstream Sectors Curb Productivity Growth? Panel Data Evidence for OECD Countries (National Bureau of Economic Research, Working Paper No. 16520). Washington, DC. Available at https://ideas.repec.org/a/tpr/restat/v95y2013i5p1750-1768.html.
  10. Canton, E., Grilo, I., Monteagudo, J., Pierini, F., & Turrini, A. (2014, June 1–6). The Role of Structural Reform for Adjustment and Growth, European Commission (ECFIN Economic Brief, 34). Brussels.Google Scholar
  11. Carnot, N. (2014, August). Evaluating Fiscal Policy: A Rule of Thumb (European Economy, Economic Paper No. 526) (pp. 1–41). Brussels.Google Scholar
  12. De Grauwe, P., & Ji, Y. (2013, February 21). Panic-Driven Austerity in the Eurozone and Its Implications. Vox EU. Available at https://voxeu.org/article/panic-driven-austerity-eurozone-and-its-implications.
  13. Drazen, A., & Isard, P. (2004). Can Public Discussion Enhance Program Ownership? (National Bureau of Economic Research, Working Paper No. 10927). Cambridge, MA: NBER.Google Scholar
  14. ESM. (2018). European Commission Directorate General Economic and Financial Affairs, Update 9 July, Compliance Report, ESM Stability Support Programme for Greece Fourth Review. Available at https://ec.europa.eu/info/sites/info/files/economy-finance/compliance_report_4r_2018.06.20.docx.pdf.
  15. Eurogroup. (2018a). Remarks by M. Centeno Following the Eurogroup Meeting of 21 June 2018. Available at https://www.consilium.europa.eu/en/press/press-releases/2018/06/22/remarks-by-m-centeno-following-the-eurogroup-meeting-of-21-june-2018/.
  16. Eurogroup. (2018b). President of the Euro Group, 21st June 2018. Available at https://www.consilium.europa.eu/en/meetings/eurogroup/2018/06/21/.
  17. European Commission. (2010). The Economic Adjustment Program for Greece (European Economy, Occasional Paper No. 61). Brussels: DG Economic and Financial Affairs.Google Scholar
  18. European Commission. (2014, April). The Second Economic Adjustment Programme for Greece, Fourth Review (Economic and Financial Affairs, Occasional Paper No. 192). Brussels.Google Scholar
  19. European Commission. (2018a, Winter). European Economic Forecast (Directorate General for Economic and Financial Affairs, Issue, No. 1). Brussels.Google Scholar
  20. European Commission. (2018b, Spring). Statistical Annex to the European Economy. Brussels: DG Economic and Financial Affairs.Google Scholar
  21. European Parliament, Directorate General for Internal Policies. (2014, February). State of Play in Implementing Macroeconomic Adjustment Programmes in Euro Area. Study on the Request of the Economic and Monetary Affairs Committee. Strasbourg. http://www.europarl.europa.eu/document/activities/cont/201402/20140219ATT79589/20140219ATT79589EN.pdf. Accessed 10 November 2018.
  22. Fernandez, S., & Paulet, T. (2014, May). Adjustment Programs in the Euro Area: Mission Accomplished? Synthesis, 22, 1–14.Google Scholar
  23. Gros, D., & Alcidi, C. (2013, April). Country Adjustment to a Sudden Stop: Does the Euro Make a Difference? (European Economy, Economic Paper No. 492). Brussels.Google Scholar
  24. Hazakis, K. (2015). The Political Economy of Economic Adjustment Programs in the Eurozone: A Detailed Policy Analysis. Politics and Policy, 43(6), 822–854.CrossRefGoogle Scholar
  25. Hazakis, K. (2018). European Union Political Economy: Theory and Policy. Lanham, MD: Lexington.Google Scholar
  26. IMF. (2013). Greece Ex Post Evaluation of Exceptional Access Under the 2010 Stand-By Arrangement. Washington, DC: IMF.Google Scholar
  27. IMF. (2016). Greece Preliminary Sustainability Analysis-Updated Estimates and Further Considerations (IMF Country Report No. 16/130). Available at http://www.imf.org/external/pubs/ft/scr/2016/cr16130.pdf. Accessed 29 May 2016.
  28. IMF. (2018). Greece, Article IV Consultation and Proposal for Post Program Monitoring (Country Report No. 18/248). Washington, DC: IMF.Google Scholar
  29. Karger, H. (2014). The Bitter Pill: Austerity, Debt, and the Attack on Europe’s Welfare States. Journal of Sociology and Social Welfare, 41(2), 33–53.Google Scholar
  30. Kotios, A., Galanos, G., & Poufinas, T. (2018). Assessment of the Effectiveness of Adjustment Programs at the Core of the Greek Economy. Modern Economy, 9(9), 1548–1591.CrossRefGoogle Scholar
  31. Kyrkilis, D., & Hazakis, K. (2014, April 4). The Impact of Economic Adjustment Programs on Greek Competitiveness (Working Paper No. 2). Volos: South and East European Development Center.Google Scholar
  32. Larch, M., Magnusson, K., & Tatar, B. (2014, February). Hard Work and More: How to Successfully Conduct Adjustment with Official Assistance (European Economy, Economic Paper No. 514). Brussels.Google Scholar
  33. Ministry of Finance. (2018a, August). Council of Advisors, Hellenic Republic. Economic Bulletin, issue 4, Athens.Google Scholar
  34. Ministry of Finance. (2018b, September). Council of Advisors, Hellenic Republic. Economic Bulletin, issue 5, Athens.Google Scholar
  35. Ministry of Finance. (2018c, November). Budget, Hellenic Republic. Athens.Google Scholar
  36. Pisany-Ferry, J., Sapir, A., & Wolff, G. (2013). EU-IMF Assistance to Euro Area Countries: An Early Assessment. Brussels: Bruegel Institute.Google Scholar
  37. Reinhart, C. M., & Rogoff, K. S. (2014). Recovery from Financial Crises: Evidence from 100 Episodes. American Economic Review, 104(5), 50–55.CrossRefGoogle Scholar
  38. Sapir, A. (2018). High Public Debt in Euro Area Countries: Comparing Belgium and Italy, Policy Contribution (Issue 15). Bruegel Institute.Google Scholar
  39. Sapir, A., Wolff, G. B., Sousa, C., & Terzi, A. (2014). The Troika and Financial Assistance in the Euro Area: Successes and Failures. Study on the Request of the Economic and Monetary Affairs Committee. http://www.bruegel.org/publications/publication-detail/publication/815-the-troikaand-financial-assistance-in-the-euro-area-successes-and-failures/. Accessed 10 November 2018.
  40. Stuckler, D., & Basu, S. (2013). The Body Economic: Why Austerity Kills. London: Allen Lane.Google Scholar
  41. Varga, J., Roeger, W., & Veld, J. (2013, December). Growth Effects of Structural Reforms in Southern Europe: The Case of Greece, Italy, Portugal and Spain (European Economy, Economic Paper No. 511).Google Scholar
  42. Vogel, L. (2014, November). Structural Reforms at the Zero Bound (European Economy, Economic Paper No. 537). Brussels.Google Scholar
  43. World Bank. (2018). World Bank Online Database. Washington, DC: World Bank. http://data.worldbank.org/. Accessed 10 November 2018.
  44. Young, O. (1989). International Cooperation: Building Regimes for Natural Recourses and the Environment. Ithaca: Cornell University Press.Google Scholar

Copyright information

© The Author(s) 2019

Authors and Affiliations

  1. 1.Democritus University of ThraceKomotiniGreece

Personalised recommendations