Whither Public Interest: The Case of Greece's Public Finances

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. During the last three decades there has been an almost continuous undermining of the public interest by private interests operating either outside or inside Greek public administration. The result of this infiltration has been a gradual loss of bureaucratic autonomy to pursue the public interest. The web of relationships developed between private interests and the two dominant political parties have eroded both the efficacy of public administration and the dynamism of the private sector as incumbent firms and public (or quasi-public) sector functionaries have been using their power to prevent the birth of new firms and to raid the state coffers. The upshot of these have been the emergence of permanently large budget and current account deficits, which have in turn driven Greece's foreign indebtedness to alarming levels, necessitating the current bailout by the EU/ECB/IMF. JEL-Code: E21, H11, H41, H62, H63. Terms of use: Documents in

The Democratization of Rent Seeking in Greece

“…Although it is common to attribute Greece's Great Depression 62 solely on governments' profligacy, in fact, the private sector reduced its saving rate at the same time as the government was trying to decrease its own dis-saving from the early 1990s to the mid-2000s. Indeed, it was the decline in the private sector's gross saving rate (from 27% in 1988 to 11% in 2008), that led to large current account deficits after 1997, which took Greece's net foreign assets' position from -3% in 1997 to -86% of GDP by the end of 2009 (Moutos and Tsitsikas, 2010). At that point investors started to question the government's ability (and/or willingness) to service its debt to foreigners, since it became clear that the Greek government faced a mission-impossible; on the one hand, to make public debt sustainable, the economy should grow so as to increase tax revenue; on the other hand, to make net foreign debt sustainable, the economy should contract so as to eliminate the huge current account deficit.…”

“…electoral win (by a very small margin), the government proceeded in "rewarding" citizens (i.e., their electoral base) with large increases in public-sector wages 51 (Moutos and Tsitsikas, 2010) and pensions (Tinios, 2012). In effect, in the pre-EMU accession phase, the threat of exclusion acted as a hard budget constraint that forced the Greek government to redress its fiscal imbalances (in the way described).…”

Credit Market Disequilibrium in Greece (2003-2011) - A Bayesian Approach

“…For an account of the macroeconomic developments in Greece during that period, from different perspectives, see for example:Malliaropoulos and Anastasatos (2011);Mitsopoulos and Pelagidis (2011);Moutos and Tsitsikas (2010). For a long-run analysis of the business cycle in Greece seeMichaelides et al (2013).ECB Working Paper 1805, June 2015…”