Is Greek Debt Really Unsustainable? - by Andrew Watt - Social Europe Occasional Paper
25 August 2021
Fig 1: Greece - Debt: GDP Ratio 180 170 160 150 140 130 120 110 100 2007 2008 2009 2010 2011 2012 2013 2014 1 All the figures in this paper are based on data from the AMECO database, except Fig. [...] The key point here is that posting primary surpluses puts Greek debt ratios on a declining path, unless that improvement is offset by the other term in the debt-change 4 The equation can be written Δ∆ D/Yt-t-1 = (r-g) D/Yt-1 – PB, where D is the government debt, Y is output, r. [...] 5 Examples of such turnarounds include the United Kingdom after the ERM crisis or Sweden after the financial crisis in the early 1990s. [...] 8 In fact due to fiscal drag and other factors, the impact would probably be higher still. [...] 10 Andrew Watt: The Euro Area – Back To Open Crisis In 2015?, Social Europe, 29.12.2014, 9 Andrew Watt is Head of Department at the Macroeconomic Policy Institute (IMK Institut für Makroökonomie und Konjunk.