Is the Greek debt sustainable? Analyzing three different scenarios for the forthcoming period 2018–2022

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Abstract

In this paper, we attempt to estimate the development of the Greek public debt for the period 2018–2022. In order to achieve this, we analyze three different fiscal scenarios that are based on the official data available, together with our estimations that are based on a specific conceptual framework that we develop. The three scenarios are based on a different mixture of Gross domestic product (GDP) growth rates and budgetary surpluses of GDP. The analysis concludes that the numerical outcome is almost the same in all three case scenarios. However, the third scenario is the best since it leads to higher growth, GDP, and less austerity measures, and thus making public debt sustainable in the long run. The third scenario also provides the best combination of the trade-off between austerity and growth. We conclude by discussing some policy measures.

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