The Causes of the Greek Debt Problem

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Author(s): George S. Atsalakis (Technical University of Crete, Crete, Greece), Emilios Galariotis (Audencia Business School, Nantes, France)and Constantin Zopounidis (Technical University of Crete, Crete, Greece & Audencia Business School, Nantes, France)
Copyright: 2023
Pages: 17
Source title: Research Anthology on Macroeconomics and the Achievement of Global Stability
Source Author(s)/Editor(s): Information Resources Management Association (USA)
DOI: 10.4018/978-1-6684-7460-0.ch099

Keywords: Business & Management / Business Science Reference / Economics & Economic Theory / Economics and Economic Theory

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Abstract

In Greece, special interest groups were the main drivers of pressure to increase public spending and, by extension, to increase public debt to cover the expenditure by blocking any effort of prudent governance. They were so greedy, that when the funds of public vaults were not sufficient to meet their expectations, they exerted pressures or even extorted the state to engage in public borrowing so as to accrue even greater funds, disregarding the short- and long-term cost of such actions for the state and society. As a result, a vicious circle led to Greek public over-indebtedness in order to support public overspending. It is indicative that the Greek state's primary expenditure rate increased between 2000 and 2009 by 135%. In other words, the citizens were obliged to pay taxes that would support two states: the expenses' level the state had until 2000 and the costs of one more state after 2000-2009.

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