Is Greece Heading For a Recovery?

Related publications

• Strategic Analysis 15 August 2014

  Will Tourism Save Greece?

  Dimitri B. Papadimitriou, Gennaro Zezza and Michalis Nikiforos
  Abstract

  What are the prospects for economic recovery if Greece continues to follow the troika strategy of fiscal austerity and internal devaluation, with the aim of increasing competitiveness and thus net exports? Our latest strategic analysis indicates that the unprecedented decline in real and nominal wages may take a long time to exert its effects on trade—if at all—while the impact of lower prices on tourism will not generate sufficient revenue from abroad to meet the targets for a surplus in the current account that outweighs fiscal austerity. The bottom line: a shift in the fiscal policy stance, toward lower taxation and job creation, is urgently needed. 

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• Strategic Analysis 15 February 2024

  Greece: Time to Reduce the Dependency on Imports

  Dimitri B. Papadimitriou, Nikolaos Rodousakis, Giuliano Toshiro Yajima and Gennaro Zezza
  Abstract

  In this report, Dimitri B. Papadimitriou, Nikolaos Rodousakis, Giuliano T. Yajima, and Gennaro Zezza investigate the determinants of the recent performance of the Greek economy.

  Despite geopolitical instability from the continuing Ukraine-Russia and Israel-Gaza wars and higher-than-expected inflation rates, the country has managed to register the highest growth rates among eurozone member-states in 2021 and 2022.

  Yet the authors’ projections, based on 2023Q3 official statistics, show that there will be a deceleration of GDP growth in the upcoming two years. This will be driven mainly by sluggish consumption demand due to the falling trend of real wages and persistent higher imported inflation, coupled with the inability of the government to deploy NGEU funds and a significant loss of production due to climate damage from floods and fires. These dynamics will likely continue the brain drain of skilled workers, who opt to move abroad for better employment opportunities. The overreliance of the Greek economy on tourism is also questioned, given the dependency on foreign industrial inputs.

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• Working Paper No.1042 13 February 2024

  Saving Social Security

  Edward Lane
  Abstract

  For more than 25 years, the Social Security Trust Fund was projected to run out of money in 2033 (give or take a few years), potentially causing benefits to be severely reduced in the absence of corrective legislative action. Today (February 2024), projections are made by the Social Security Administration that indicate that future benefits will need to be reduced by roughly 25 percent or taxes will need to be increased by about 33 percent, or some combination to avoid benefit curtailment. While Congress will most probably prevent benefits from being reduced for retirees and those nearing retirement, the longer Congress and the president take to address the shortfall, the more politically unpalatable (and possibly draconian) the solutions will be for all others.

  Dozens of proposals are being evaluated to address the long-term problem by mainstream benefits experts, economists, think tanks, politicians, and government agencies but, with rare exceptions from a few economists, none address the short-term problem of Trust Fund depletion, provide a workable roadmap for the long-term challenges, or consider fundamental financing differences between the federal government and the private sector.

  This paper aims to address these issues by suggesting legislative changes that will protect the Social Security system indefinitely, help ensure the adequacy of benefits for retirees and their survivors and dependents, and remove confusing and misleading legislative and administrative complexity. In making recommendations, this paper will demonstrate that the Social Security Trust Funds, while legally distinct, are essentially an artificial accounting contrivance within the US Treasury that have become a tool to force program changes that, for ideological reasons, will likely shift an increasing financial burden onto those who can least bear it. Finally, while the focus of this paper is on the Social Security system, it would be incomplete without also addressing, albeit in a limited way, the larger political issue of the nation’s debt and deficit along with the implications for inflation

  Download Working Paper No. 1042 PDF (2.11 MB)