Financialisation and the Financial and Economic Crises
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Financialisation and the Financial and Economic Crises

Country Studies

  • New Directions in Modern Economics series

Edited by Eckhard Hein, Daniel Detzer and Nina Dodig

The contributions to this book provide detailed accounts of the long-term effects of financialisation and cover the main developments leading up to and during the crisis in 11 selected countries: the US, the UK, Spain, Greece, Portugal, Germany, Sweden, Italy, France, Estonia, and Turkey. The introductory chapter presents the theoretical framework and synthesizes the main findings of the country studies. Furthermore, the macroeconomic effects of financialisation on the EU as a whole are analysed in the final chapter.
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Chapter 5: Financialisation and the crisis: the case of Greece

Yanis Varoufakis and Lefteris Tserkezis

Abstract

The present chapter analyses the changing relationship between the real and the financial sector in the course of the long-run development of the Greek economy, focusing on the effects of financialisation and on its connection to the current economic crisis. The first section offers a brief discussion of the basic tendencies characterising the long-run development of the Greek economy over the past three decades. The second section examines the effect of financialisation on several aspects of the real economy, including income distribution, gross capital formation, consumption and the evolution of the current account. In the third section, the results of the preceding analysis are linked to the outbreak of the current crisis, in an attempt to explain the reasons behind this crisis’s excessive severity in the case of the Greek economy, while the fourth section concludes.

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