Working Papers


The CGK Working Paper Series is an outlet for research related to the activities of the Constantine G. Karamanlis (CGK) Chair. The papers are available only as on line pdf files, by clicking on the title.


George Alogoskoufis, Greece and the Euro: A Mundellian Tragedy
CGK Working Paper no. 2019-01 (April 2019)

This paper analyzes the process of destabilization, crisis and adjustment in the Greek economy since the accession of the country to the European Union and, subsequently, the euro area. It reviews four policy cycles of the past 40 years, the four acts of the Greek tragedy, and discusses alternative ways forward, following the sudden stop and the great depression of the 2010s. It concludes that despite the significant constraints implied by continued participation in the euro area, namely a stark Mundellian conflict between internal and external balance, exiting the euro area risks further destabilizing the economy and bringing about a return of the problems of the 1980s. The current challenge for Greece is to seek to remain and prosper in the euro area. This would require a policy mix based on supply side reforms which would allow for a sustained recovery without the reemergence of external imbalances.

George Alogoskoufis and Laurent Jacque, Economic and Financial Asymmetries in the Euro Area, CGK Working Paper no. 2019-02 (April 2019)

This paper provides a perspective on the euro area (EA), focusing on macroeconomic and financial asymmetries among its member states and the need for major and fundamental reforms. After surveying the evolution of EU macroeconomic and monetary cooperation and developments since the creation of the euro, and particularly the euro area crisis, we argue that the euro area is in need of fundamental fiscal, financial and labor market reforms. In addition to reforms currently discussed, a common EA budget of moderate size would help smooth out the asymmetric impact of macroeconomic shocks through the operation of automatic fiscal stabilizers. It would also help countries in recession face smaller national fiscal and financial consequences of such recessions, and would also partly address labor market fragmentation as it could be targeted to euro area wide unemployment and health insurance. It would also help in the avoidance of future crises if the scope of the ECB to act as a lender of last resort in times of crisis was expanded and officially recognized.

Eleni Louri and Petros Migiakis, Financing economic activity in Greece: Past challenges and future prospects, CGK Working Paper no. 2019-03 (April 2019)

We examine the existence of a feedback loop between the resilience of the financial sector and Greek economic activity. A sequence of structural VARs is employed using data for bank credit, liquidity, capital, asset quality and private demand in 2001-2018 in two data sets. One in monthly frequency with which we examine the determinants of credit provision by Greek banks, and another in quarterly frequency with which we examine the finance-growth nexus for the Greek economy. We find that (a) the deterioration in the quality of Greek banks’ balance sheets affected negatively the provision of credit to the economy, (b) central bank liquidity and recapitalizations of Greek banks provided only a partial remedy and (c) the decline in credit significantly weakened economic activity. Also, we find that there is a role for market financing of the economy but this cannot substitute for the predominantly bank-based financing. Therefore, as the Greek economy starts bouncing back Greek banks have an important role to play, first by solving the high NPLs problem and providing the necessary credit and second by improving the efficiency of capital allocation towards a sustainable growth model.

Calliope Spanou, Competing frames, domestic discretion and uneven outcomes: Administrative reform in Greece under the crisis, CGK Working Paper no. 2019-04 (April 2019).

In the past nine years, the Greek administration has undergone a wide range of reforms. Did the high ambitions translate into significant change? In order to provide some answers, the paper examines and compares the outcome of administrative reforms that took place in the past years in two core state areas relating to the use of state resources and presenting similar problems: (i) budgeting and fiscal management and (ii) human resources management. Reforms in these areas are assessed in relation to targeted administrative deficiencies. The main research finding is that change has been uneven. The ambitious agenda primarily resulted in the modernization of policy instruments. New policy frames competed with old ones, sometimes prevailing and sometimes being captured and hollowed out. In fiscal management there is significant change, challenging deeper policy frames and patterns accounting for critical deficiencies. In contrast, in HRM reforms results are rather unambitious. Thus the changes introduced are mostly secondary and do not challenge the core of pre- existing policy arrangements. The paper offers an explanation of these uneven outcomes and questions the conditions of reform sustainability.

Nicos Christodoulakis, Greece and the Euro Area: The Cost of Weak Institutions, CGK Working Paper no. 2019-05 (May 2019)

In the second decade of the Economic and Monetary Union, the convergence process between the less and the more developed members of the Euro Area weakened significantly, as disparities in the growth slowdown after the global financial crisis caused asymmetric losses in per capita income. The most pronounced divergence took place between Greece and its Euro Area peers as prolonged austerity measures imposed in exchange of a debt bailout led to a serial collapsing of growth. At the same time, Greece had suffered from a dramatic deterioration of institutions, ranging from serious blows in Government effectiveness and political stability to market distortions and a serious weakening of the rule of law. To assess the impact of such effects on convergence, an empirical growth model with the relevant World Bank indicators as explanatory variables is estimated. Considering the other Euro Area economies as control countries, the model is then used to calculate the cost of crumbling institutions in Greece in terms of per capita GDP foregone. The estimate is so significant that Greece – alongside with macroeconomic stabilization – should urgently focus on improving institutions, if a convergence process toward the more developed nations of the Euro Area is to set off again.

Dimitri A. Sotiropoulos, State-Society Relations in Greece Before and After the Recent Economic Crisis, CGK Working Paper no. 2019-06 (May 2019)

This paper analyzes the process of destabilization of state-society relations in Greece, owing to the recent economic crisis. The paper uses A. O. Hirschman’s analytical framework of “exit, voice and loyalty”. Before the crisis erupted, a minimum loyalty of Greek society to the state was discernible, for as long as the state could selectively distribute resources to citizens and interest groups. Afterwards societal actors, subjected to harsh austerity measures, withdrew their loyalty. They turned against the state through large-scale mobilizations (“voice”). Later on, informal groups and networks of social solidarity supplanted the state in the provision of goods and services to the victims of the economic crisis. In this phase, without completely abandoning “voice”, citizens opted out in favour of an “exit” from the state, not understood in the literal sense of the word, but in terms of disaffection and alienation from the state.

Nikolaos Leounakis and Ploutarchos Sakellaris, Greek Economic Growth: Past and Future, CGK Working Paper no. 2019-07 (May 2019)

We decompose Greek economic performance over the last sixty years into the contributions of productivity, capital accumulation, and labor growth. Recent Greek economic history is a succession of long periods of boom with long periods of stagnation or depression. The decisive factor in either booms or slumps has been total factor productivity (TFP) growth. In particular, bad performance of TFP is the main culprit for the fourteen-year recession from 1980 to 1993 as well as for the current depression. This suggests that action on reversing the shortfall in productivity should be the most important focus for policy makers now. We argue that the crisis has led to permanent loss of output. In projections, we show that the economy needs to grow at average rates of about 3.5% over the next five years to be able to recover in 2026 the standard of living enjoyed in 2007, its peak historical level.

Yannis M. Ioannides, A Unified Framework for Studying Reforms, Deficits, and Debt in Fiscal and Currency Unions, CGK Working Paper no. 2019-08 (May 2019)

This paper emphasizes the importance of differences in population sizes in a general international equilibrium model of a monetary union under alternative scenaria of monetary, fiscal, and debt policy coordination. It goes beyond Casella (1992) by allowing for coexistence of fiscal policy, national as well as union-wide (in the form of fiscal policy coordination at the supra-national level), along with monetary policy. It goes beyond Casella (1992) and Ioannides (2016; 2017) in examining the impact of market reforms and of various types of technological progress and explores their consequences for the sustainability of deficit spending and public debt. It considers, in particular, conditions for participating in a fiscal union within a monetary union, a hitherto unexplored question. The paper allows for inefficiencies in tax collection that serves as another difference across countries and examines how union-wide coordination of tax and spending policy, typically a nation-specific competence, may improve welfare. This is intended to explore the contrast between monetary policy outcomes determined by deliberations and voting in the cental bank, given the fiscal policy stance, and national fiscal policy interdependence, given union-wide monetary policy. It examines the implications of different sizes of the members of a currency union.


Marios P. Efthymiopoulos, NATO Smart Defense and Cyber Resilience, CGK Working Paper no. 2016-1 (May 2016)

This paper aims to evaluate NATOs’ “Smart Defense” policy in the view of the continuing significance and global roles of the Alliance. Smart Defense being an integrative part of the collective defense of NATO, it is required to respond to existing threats and challenges through the use of new operational and tactical elements, which should include flexibility and the adaptive use of technology. Current and future strategic threats and challenges require NATO to re-examine policy and operational posture. This includes building on NATOs future strategy, through adaptable poli- cy and procedure. Through NATOs’ cyber-defense policy, greater resilience when dealing with threats can be achieved. A methodological approach will be presented on to how to integrate NATOs collective defense, through cyber-defense policy, to the 21st challenges and threats. NATOs resilience policy, if adopted at the Warsaw Summit in July 2016, will become an integrated part of NATO’s Smart Defense and collective defense. It will create a new standardized form of procedure, which will afford flexible strategic and operational forces but also commanding forces, through the use of multi-level and multi-dimensional tools.


Ioannis Parisis, The Maritime Dimension of European Security: Strategies, Initiatives, Synergies, CGK Working Paper no. 2015-1 (February 2015)

This paper explores the importance of maritime security in general and especially for Europe. It identifies current and predicted threats encountered in this field. It also analyzes the pursuit of the efforts and initiatives undertaken by the European Union, third countries and international organizations, as well as the strategies launched in the domain of maritime security.

Kostas A. Lavdas, Sleepwalkers in Athens: Power, Norms, and Ambiguity in Thucydides, CGK Working Paper no. 2015-2 (March 2015)

This paper reevaluates different readings of Thucydides, assisted by an analysis of the causes of the Peloponnesian War. The paper argues that Thucydides’ own account of the outbreak of the Peloponnesian War hints at a more nuanced and pluralist methodology compared to the one that has traditionally been associated with his celebrated approach to the “truest reason” of the war. Relations between the “immediate” causes and the “truest reason” why war broke out can best be understood through the prism of a particular approach to levels of analysis, one that strives to master a more abstract understanding in order to transcend and harness the richness, the complexity, even the ambiguity of actual interactions, interactions that Thucydides understood so well. But the complexity and ambiguity of actual interactions do not seem to lead to war as an inevitable outcome. In the absence of a systematic approach to the relations between levels, harnessing the sensitive understanding of actual events preceding the war manifests itself almost as a response to an aporia: what Thucydides implies is that – given the participants’ mindsets, preconceptions, norms, culture, and interests – a number of conditions that must be analysed at a higher level of abstraction may render a certain outcome probable.

Voula Verouchi, Cultural Barriers to Prosperity: The Case of Greece, CGK Working Paper no. 2015-3 (May 2015)

Attempting to analyse the problems that Greece faces in a one dimensional way will not do justice, either to Greece, or to the attempt to discover the root of the problems. Many academics, economists, reputable journalists and others have contributed to an understanding of the financial crisis. Explanations are wide- ranging and most are multifaceted. This paper should be seen as another endeavour to analyse what went wrong with Greece, providing an inside view on the forces that lead to its collapse which include, but are not limited to culture, a rather hostile and misunderstood view of capitalism, ineffective legal and economic structures, and a heterogeneous social group of people, very much still holding onto traditional ideas about family and the nation. The paper takes a critical perspective with regard to these factors which as expected have become a serious burden to the path towards the development of the country. The results are more or less known. An almost bankrupt country, facing serious dilemmas about its future, in addition to what seems to be an intrinsic inability to carry out a bold structural reforms program that is necessary for its long-term survival. Finally, it is a firm idea that Greece should realise and explore its full potential by reviewing pragmatically its past mistakes, its history and a number of legal structures.


No. 1, January 2008 

No. 2, February 2008 

No. 3, March 2008 

No. 4, April 2008

No. 5, May 2008

No. 6, June 2008

No. 7, July 2008

No. 8, August 2008