The Global Financial Crisis and its Budget Impacts in OECD Nations
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The Global Financial Crisis and its Budget Impacts in OECD Nations

Fiscal Responses and Future Challenges

Edited by John Wanna, Evert A. Lindquist and Jouke de Vries

The global financial crisis of 2007–09 constituted the biggest shock to the economies of the OECD nations since the Second World War and caused most of their governments to move into intense crisis mode. They made significant adjustments to their fiscal policy regimes, including massive interventions to stabilize markets and economies. But how they reacted to the crisis, and what measures they took to deal with it, still underpin their economic and budgetary positions. This singular shock provides the editors and authors of this book with an intriguing opportunity to examine how different OECD budgetary systems performed. Chapters cover the EU, North America and Asia, assessing how governments responded to the challenge and how their budget systems evolved in the aftermath.
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Chapter 10: The global financial crisis in Greece: its background causes, escalation and prospects for recovery

Michael G. Arghyrou


Greece is a country in deep crisis – fiscal, economic, political and social. Between 2008 and 2013 its economy recorded six consecutive years of recession before registering a slightly positive growth rate in 2014. This prolonged economic contraction has resulted in record rates of unemployment (increasing from 7.8 percent in 2008 to a peak of 27.5 percent in 2013 before declining to 26.5 percent in 2014). Greece faces fiscal derailment, with its public debt to gross domestic product (GDP) ratio surging from 109 percent in 2008 to 177 percent in 2014. As a result, since early 2010 Greece has been effectively excluded from international bond markets, relying on external rescue schemes, provided by the European Union and the International Monetary Fund (IMF), to fund the servicing of its public debt and basic state services. Finally, the country’s position in the European Economic and Monetary Union (EMU) is in considerable doubt, with many inside and outside the country calling for a Greek exit from the euro, the so-called ‘Grexit’.

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