Abstract
In a situation of deep economic crisis such as the present one confronting some European countries, it is necessary to take measures to reduce the dangerous disequilibria that they face. The orthodoxy dictates that it is imperative to undertake strong fiscal consolidation to ensure a recovery in economic activity. The existing debate has tended to focus on the global analysis of such policies. As a contribution to this literature, in this chapter we provide a multisector and multiregional study of the effects of the fiscal adjustment implemented in Greece in 2012 using an Input-Output methodology. It allows us to trace the consequences of this fiscal policy for the different Greek economic sectors, as well as for the EU and the rest of the world. This is undertaken using the WIOD (World Input Output Database). This study concludes that, far from leading to a revival in the Greek economy, the fiscal adjustment has led to a contraction in the health and public administration sectors, as well as the industrial sectors with the last leading to a greater downturn in the economy.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
The 40 countries are: 27 EU countries (all excepting Croatia), and Australia, Brazil, Canada, China, Indonesia, India, Japan, Korea, México, Russia, Turkey, Taiwan and USA.
- 2.
This matrix includes information on intermediate inputs for 40 countries with 35 sectors in each one, and another country, referred to as rest of world, whose part has not been included in the countries considered.
- 3.
Generally, the elaboration of input–output tables by direct surveys is done each 5 years. Between these years the tables are updated. We have used WIOD-2010 because this is the last published matrix.
- 4.
This matrix has been calculated using Matlab computing software.
Bibliography
Alesina, A., & Perotti, R. (1997). Fiscal adjustments in OECD countries: Composition and macroeconomic effects. IMF Staff Papers, 44(2), 210–248.
Angeloni, I., & Ehrmann, M. (2004). Euro area inflation differentials. (Working Paper, n. 388), European Central Bank.
Angeloni, I., Kashyap, A., Mojo, B., & Terlizzese, D. (2003). Monetary policy transmission in the euro area. Cambridge: Cambridge University Press.
Atkinson, A. B. (2012). Public economics after the idea of justice. Journal of Human Development and Capabilities, 13(4), 1–16. doi:10.1080/19452829.2012.703171.
Atkinson, A. (2014). Public economics in an age of austerity. New York: Routledge.
Atkinson, A. (2015). Inequality: What can be done? Oxford: Oxford University Press.
Batini, N., Callegari, G., & Melina, G. (2012). Succesful austerity in the Unites States, Europe and Japan. (IMF Working Paper, WP/12/190).
Blanchard, O., & Leigh, D. (2013). Growth forecast errors and fiscal multipliers. También se ha publicado en American Economic Review, 103, 117–120. IMF Working Papers, WP/13/I, January.
Borooah, V. K. (2014). Europe in an age of austerity. New York: Palgrave Macmillan.
Cadarso, M. A., Gómez, N., López, L. A., & Tobarra, M. A. (2010). CO2 emissions of international freight transport and offshoring: Measurement and allocation. Ecological Economics, 69(8), 1682–1694.
Charles, S., Dallery, T., & Marie, J. (2014). Why are Keynesian multipliers bigger in hard times? A Palley-Aftalion-Pasinetti explanation. http://www.academia.edu/9704418/ Why are Keynesian Multipliers Bigger in…
Christiano, L., Eichenbaum, M., & Rebelo, S. (2010, December). When is the government spending multiplier large. Northwestern University.
Christodoulakis, N. (2013). From grexit to growth: On fiscal multipliers and how to end recession in Greece. National Institute Economic Review, 224, 66–76.
Claussen, V., & Hayo, B. (2006). Assymmetric monetary policy effects in EMU. Applied Economics, 38, 1123–1134.
Corsetti, G., Meier, A., & Müller, G. J. (2012). What determines government spending multipliers. (IMF Working Paper, WP/12/150).
Dejuán, O., López, L. A., Tobarra, M. A., & Zafrilla, J. (2013). A post-Keynesian AGE model to forecast energy demand in Spain. Economic Systems Research, 25(3), 321–340.
Euro group. (2015). Euro group statement on Greece. Press Release 532/15, 27/06/2015d.
European Commission. (2010, May). The economic adjustment programme for Greece. Occasional Papers, n. 61, Directorate-General for Economic and Financial Affairs.
European Commission. (2012a, March). The second economic adjustment programme for Greece. Occasional Papers, n. 94. Directorate-General for Economic and Financial Affairs.
European Commission. (2012b, December). The second economic adjustment programme for Greece. Fist Review-December 2012. Occasional Papers, n. 123, Directorate-General for Economic and Financial Affairs.
European Commission. (2013a, May). The Second economic adjustment programme for Greece. Second Review-May 2013, Occasional Papers, n. 148, Directorate-General for Economic and Financial Affairs.
European Commission. (2013b, July). The second economic adjustment programme for Greece. Third Review-July 2013, Occasional Papers, n. 159, Directorate-General for Economic and Financial Affairs.
European Commission. (2014, April). The second economic adjustment programme for Greece. Fourth Review-April 2014, Occasional Papers, n. 192, Directorate-General for Economic and Financial Affairs.
International Monetary Fund. (2012). World economic outlook: growth resuming, dangers remain. Washington, DC: IMF.
Kotios, A., Galanos, G., Plymakis, S., & Roukanas, S. (2015). The vicious circles of recession and development prospects. Procedia Economics and Finance, 19, 63–68.
Leontief, W. (1973). Análisis económico input–output. Barcelona: Ariel.
Miller, R. E., & Blair, P. D. (1985). Input–output analysis. Cambridge: Cambridge University Press.
Nayyar, D. (2008). Macroeconomics of structural adjustment and public finances in developing countries: A heterodox perspective. International Journal of Development Issues, 7(1), 4–28.
Timmer, M. (2012). The World Input–output Database (WIOD): Contents, sources and methods. Accessed in www.wiod.org
Timmer, M. P., Dierzenbacher, E., Los, B., Stehren, R., & De Vries, G. J. (2015). An illustrated user guide to world input–output database: The case of global automotive production. Review of International Economics, 23, 575–605.
WIOD. (2010). In Timmer, M. (Ed.), The World Input-output Database (WIOD): Contents, sources and methods. Accessed in www.wiod.org
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2017 Springer International Publishing Switzerland
About this chapter
Cite this chapter
Carrasco, I., Córcoles, C., McCombie, J. (2017). The Economic Effects of the Implementation of the Greek Adjustment Plan in the Great Recession. In: Schofield, N., Caballero, G. (eds) State, Institutions and Democracy. Studies in Political Economy. Springer, Cham. https://doi.org/10.1007/978-3-319-44582-3_15
Download citation
DOI: https://doi.org/10.1007/978-3-319-44582-3_15
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-44581-6
Online ISBN: 978-3-319-44582-3
eBook Packages: Economics and FinanceEconomics and Finance (R0)