External Debt and Macroeconomic Policy in a Small, Open Economy: The Case of Greece

  • P. P. Athanasoglou
  • G. A. Zombanakis
Part of the International Economics Study Group book series (IESG)


Foreign borrowing may be used to finance the accumulation of a country’s physical capital and thus to enhance its productive capacity, as long as the rate of return on investment is, at least, equal to the cost of borrowing. In addition, foreign borrowing may also be used to finance transitory balance-of-payments deficits. Over the last decade foreign borrowing from both developed and mainly developing countries has grown dramatically. However, the accumulation of unsustainable amounts of debt, in many cases for reasons beyond those referred to above, led many developing countries to debt crises. Hence, in recent years research concerning the impact of domestic policies on foreign debt has attracted considerable interest.


Interest Rate Monetary Policy Current Account Fiscal Policy Money Supply 


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Copyright information

© The International Economics Study Group 1992

Authors and Affiliations

  • P. P. Athanasoglou
  • G. A. Zombanakis

There are no affiliations available

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