Working Paper: CEPR ID: DP8996
Authors: Tryphon Kollintzas; Dimitris Papageorgiou; Vanghelis Vassilatos
Abstract: In this paper we present stylized facts of the Greek economy that characterize the causes and the consequences of its ongoing crisis. Then, we offer an explanation that can account for those causes and consequences. This explanation is based on the view of Greeksociety as consisting of two groups with conflicting goals:'insiders' and 'outsiders'. Insiders are enjoying rightful and unrighteous benefits and the system is protecting them from their own potentially unlawful behavior, competition and meritocracy. Outsiders are the rest ofsociety. The economic consequence of the 'insiders - outsiders society' is the accumulation of public and foreign debts as well as relatively low overall growth - features that characterize the Greek economy, for some time. Finally, following the insiders- outsiders explanation, we offer policy recommendations for an exit from the crisis and the resumption of growth.
Keywords: competitiveness; Greek crisis; growth; insiders-outsiders; total factor productivity; twin deficits
JEL Codes: D72; E62; E65; F34; O43; O52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Insiders (G14) | Public Spending (H59) |
| Public Spending (H59) | Public Deficits (H62) |
| Public Deficits (H62) | Low Economic Growth (O49) |
| Insiders (G14) | Low Economic Growth (O49) |
| Insiders (G14) | Low Tax Revenues (H29) |
| Low Tax Revenues (H29) | Public Deficits (H62) |
| Public Deficits (H62) | Accumulation of Public and Foreign Debts (H69) |
| Insiders (G14) | Higher Imports (F14) |
| Higher Imports (F14) | Low Economic Growth (O49) |
| Insiders (G14) | Lower Exports (F14) |
| Lower Exports (F14) | Low Economic Growth (O49) |