the alternative policy of ine gsee for the greek economy ...megaron athens international conference...
TRANSCRIPT
The Alternative Policy of INE GSEE
for the Greek Economy to Exit the Crisis
Europe at the Crossroads:
A Union of Austerity or Growth Convergence?
Levy Economics Institute
Megaron Athens International Conference Centre,
Athens, Greece
November 21-22, 2014
George Argitis
*Scientific Director of Institute of Labour, GSEE
-1.8
-1.2
-0.6
0.0
0.6
1.2
1.8
2.4
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
hedge
speculative
ponzi
ultra ponzi
Pro
jectio
ns
Figure 1: Solvency Regimes
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-1.2
-0.6
0.0
0.6
1.2
1.8
2.4
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
SSI
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speculative
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ultra ponzi
Pro
jectio
ns
Figure 2: The Solvency Index for the
Greek Government Sector
-1.8
-1.2
-0.6
0.0
0.6
1.2
1.8
2.4
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
SSI
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speculative
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ultra ponzi
Pro
jectio
ns
Figure 3: The Solvency Index
for the Greek Government Sector, 2014-2020
-4
-2
0
2
4
6
8
Pe
rce
nta
ge
(%
)
Baseline growth path
Figure 4: IMF’s Expected Growth Rate
(Baseline Scenario)
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-2
0
2
4
6
8
Pe
rce
nta
ge
(%
)
The growth path for Debt sustainability
Baseline growth path
Figure 5: The Growth Rate that Satisfies
the Solvency Condition
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-2
0
2
4
6
8
Pe
rce
nta
ge
(%
)
The growth path for Debt sustainability
Baseline growth path
30% decrease in IP
Figure 6: The Target Growth Rate –30%
Fall in Interest Payments
-4
-2
0
2
4
6
8
Pe
rce
nta
ge
(%
)
The growth path for Debt sustainability
Baseline growth path
50% decrease in IP
Figure 7: The Target Growth Rate -50%
Fall in Interest Payments
-1.8
-1.2
-0.6
0.0
0.6
1.2
1.8
2.4
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
SSI30
SSI
hedge
speculative
ponzi
ultra ponzi
Pro
jectio
ns
Figure 8: Solvency Index – 30% Decrease
in Interest Payments
-1.8
-1.2
-0.6
0.0
0.6
1.2
1.8
2.4
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
SSI50
SSI30
SSI
hedge
speculative
ponzi
ultra ponzi
Pro
jectio
ns
Figure 9: Solvency Index – 50% Decrease
in Interest Payments
Figure 10: The Solvency Index
-1.8
-1.2
-0.6
0.0
0.6
1.2
1.8
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
SSI
SSI(100bps)
SSI(200bps)
SSI(300bps)
hedge
speculative
ponzi
ultra ponzi
Pro
jectio
ns
The Policy Proposal of INE-GSEE
An Alternative Approach to Debt Sustainability
that depends on the strategy “sustainable primary
surplus – sustainable public debt”.
An Employment of Last Resort approach to the
sustainability of primary surplus and to the
stimulus of domestic demand
Re-regulation of the Labor Market
-4
-2
0
2
4
6
8
Pe
rce
nta
ge
(%
)
Sustainability growth path
Baseline growth path g of ps 2,5%
g of ps 2%
Figure 11: The Target Growth Rates
Figure 12: IMF’s Baseline Scenario
0
2
4
6
8
10
12
2015* 2016* 2017* 2018* 2019* 2020*
Interest payments Primary Surplus (TROIKA)
Bil
lio
n E
uro
s (€
)
Figure 13: Interest Payments Adjustment to 2,5%
of GDP Primary Surplus
0
2
4
6
8
10
12
2015* 2016* 2017* 2018* 2019* 2020*
Interest payments Adjusted Primary Surplus (Adjusted at 2,5%)
Bil
lio
n E
uro
s (€
)
An overall of 48,6% decrease in Interest Payments would be required
Figure 14: Interest Payments Adjustment
to 2,0 Primary Surplus of GDP
0
2
4
6
8
10
12
2015* 2016* 2017* 2018* 2019* 2020*
Interest payments Adjusted Primary Surplus (Adjusted at 2%)
Bil
lio
n E
uro
s (€
)
An overall of 58,9% decrease in Interest Payments would be required
The Policy Proposal of INE-GSEE
An Alternative Approach to Debt Sustainability
that depends on the strategy “sustainable primary
surplus – sustainable public debt”.
An Employment of Last Resort approach to the
sustainability of primary surplus and to the
stimulus of domestic demand
Re-regulation of the Labor Market
Thanks for your attention