ABSTRACT. We trace the reasons for the negative development of Greek government debt from 1980 to 2014 by studying the deficits of the Greek state under the same period. During all these years of deficit, Greece accumulated the enormous debt that today is about 175% of its GDP. We observe five negative effects of the austerity policy for the years 2010–2014 and two positive ones. We see that GDP per capita decreases by 22%, while the positive from the austerity policy is that the compensation of employees in % of GDP, even following the GDP effect, decreases only by 5%. The negative effect on the unemployment rate is almost as big as GDP. The austerity policy has a little greater negative effect both on private consumption expenditure and expected government consumption: 23%. Finally, we observed the 23.2% cut of monthly wages in 2012. The last measurement that we study is the number of tourist overnights which has an increasing trend under austerity, but needs a broader investigation to calculate the exact positive effect. pp. 29–45
JEL codes: F34; H63

Keywords: austerity; consumption; deficit; Greek debt crisis; GDP; unemployment

How to cite: Mantalos, Panagiotis (2017), “The Greek Debt Crisis and the Economic Effects of Austerity,” Journal of Self-Governance and Management Economics 5(2): 29–45.

Received 2 June 2016 • Received in revised form 13 July 2016
Accepted 13 July 2016 • Available online 1 August 2016


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Department of Economics and Statistics,
School of Business and Economics,
Linnaeus University

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