The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Greek Crisis in Perspective: Origins, Effects and Ways-Out

  • Nicos Christodoulakis
Reference work entry


In 2011 the Euro faced its toughest challenge since its introduction as several of the participating Member States faced unprecedented financial problems. Greece was the most severe case requiring intervention from the EU and IMF to stabilize its economy and repay debt obligations. This article explains the debt process in Greece from the 1980s to date, and describes its main causes and episodes. It also assesses the IMF-EU Memorandum and argues that the collapse of growth inhibits the prospects of debt stabilization. An alternative scenario is discussed showing that stabilization can become more effective and realistic if recession is tackled first and reforms follow on a steadier path.


Debt Fiscal deficits External balances Crisis Eurozone Greece 

JEL Classifications

H60 H61 
This is a preview of subscription content, log in to check access.



I have benefited from various comments by V. Sarantides and A. Ntantzopoulos and I am also thankful to participants in a LSE seminar on an earlier version of the paper.

Disclaimer Views expressed in this article are solely those of the author, without implicating or representing any other person or organization.


  1. Bayoumi, T., and Barry, Eichengreen. 1992. Shocking aspects of European monetary unification. CEPR discussion paper no. 643, May.Google Scholar
  2. Blanchard, O. 2006. Current account deficits in rich countries. IMF Mundell-Fleming Lecture.Google Scholar
  3. Blanchard, O., and F. Giavazzi. 2002. Current account deficits in the Euro area: The end of the Feldstein-Horioka puzzle? Brookings Papers on Economic Activity 33: 147–210.CrossRefGoogle Scholar
  4. Christodoulakis, N. 1994. Fiscal developments in Greece 1980–93: A critical review. European Economy: Towards Greater Fiscal Discipline 3: 97–134 .Brussels.Google Scholar
  5. Christodoulakis, N. 2009. Ten years of EMU: Convergence, divergence and new priorities. National Institute Economic Review 208: 86–100 .LondonCrossRefGoogle Scholar
  6. Christodoulakis, N. 2010. Crisis, threats and ways out for the Greek economy. Cyprus Economic Policy Review 4(1): 89–96.Google Scholar
  7. Christodoulakis, N. 2012. Market reforms in Greece 1990–2008: Domestic limitations and external discipline. In Market reforms in Greece, ed. Kalyvas, S. and G. Pagoulatos. Columbia University Press (forthcoming).Google Scholar
  8. Christodoulakis, N., and V. Sarantides. 2011. External asymmetries in the Euro area and the role of foreign direct investment, Bank of Greece. Discussion paper.Google Scholar
  9. De Grauwe, Paul. 2010. The Greek crisis and the future of the eurozone. Intereconomics 2: 89–93.Google Scholar
  10. European Commission. 2009. Quarterly report on the Euro area 8(1), Brussels.Google Scholar
  11. European Economy. 2011. The economic adjustment programme for Greece: Fifth review. Occasional papers 87, October.Google Scholar
  12. European Economy. 2012. The second adjustment programme for Greece: Fifth review. Occasional papers 94, March.Google Scholar
  13. Feldstein, Martin. 2012. The failure of the Euro: The little currency that couldn’t. Foreign Affairs 91(1): 105–116.Google Scholar
  14. IMF. 2011. Greece: Third review under the stand-by arrangement. International Monetary Fund, Country Report No. 11/68, March.Google Scholar
  15. Krugman, Paul. 2011. Origins of the euro crisis, blog “The Conscience of a Liberal,” 23 September.Google Scholar
  16. Memorandum, II. 2012. Memorandum of understanding on specific economic policy conditionality, 9 February 2012. Available at
  17. Shelburne, R.C. 2008. Current account deficits in European emerging markets. UN discussion paper, no. 2008. 2.Google Scholar
  18. Skouras, S., and Christodoulakis, N. 2011. Electoral misgovernance cycles: Evidence from wildfires and tax evasion in Greece and elsewhere. LSE, Hellenic Observatory. GreeSE paper no. 47.Google Scholar
  19. Vehrkamp, R. 2011. Who’s next? The Eurozone in an insolvency trap. Bertelsmann Stiftung, no. 2.Google Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  1. 1.Department of International and European Economic Studies (DIEES)AUEB, Athens University of Economics and BusinessAthensGreece