Abstract
SummaryThe thesis topic "The Impact of the Fiscal Crisis on the Greek Social Security System" (the "system") focuses on the debt crisis of the 2010s as a decisive cause of the change in the "system". However, we considered that it is not possible to explore in depth its transformation over time without an open macroeconomic (holistic) analysis. Thus, we sought theoretically and empirically to analyze the "big picture" of the causal transformation of "transfer payments for social security", which we chose as a dependent or purpose variable of the "system", and which is included in Greek fiscal policy. The limits of the latter are provided in the existing provisions of the European Union (EU) to which the country belongs for the sample period 1995-2023. The thesis is structured in three essays of which the first two were published in the Journal of Risk and Financial Management by MDPI (2022 and 2024), while the third is expected to be published in special volume "Risk Management Challen ...
SummaryThe thesis topic "The Impact of the Fiscal Crisis on the Greek Social Security System" (the "system") focuses on the debt crisis of the 2010s as a decisive cause of the change in the "system". However, we considered that it is not possible to explore in depth its transformation over time without an open macroeconomic (holistic) analysis. Thus, we sought theoretically and empirically to analyze the "big picture" of the causal transformation of "transfer payments for social security", which we chose as a dependent or purpose variable of the "system", and which is included in Greek fiscal policy. The limits of the latter are provided in the existing provisions of the European Union (EU) to which the country belongs for the sample period 1995-2023. The thesis is structured in three essays of which the first two were published in the Journal of Risk and Financial Management by MDPI (2022 and 2024), while the third is expected to be published in special volume "Risk Management Challenges for Sustainability and Wellbeing" by EMERALD as a selected article (after the usual peer review) by the Geust Editors of the International Conference on Applied Business and Economics 2024 (ICABE 20th edition) in which we participated continuously for the last three years 2022-2024. The theoretical framework to which this thesis contributes, with analysis, interpretation and policy proposals of five research questions, is that of "financialization" (Javidanrad, 2024); (Mader, Philip, Daniel Mertens, and Natascha van der Zwan, 2020). In particular, the "finance-led growth regime" (Boyer, 2000) and our proposed "financial fragility hypothesis" (FFH) are used, in which we synthesized (1) the "financial instability hypothesis" (FIH, (Minsky, 1986) as (2) modified for international effects by (Arestis and Glickman, 2002) (eFIH, extended financial instability hypothesis, 2002) and (3) the "Eurozone fragility hypothesis" (EZFH, De Grauwe, 2012). We use the deductive methodology (Andersen and Hepburn, 2022; Drakopoulos et al, 2015) in three stages: (1) we formulate the research question (RQ) based on the preceding theory analysis, (2) we interpret the causal relations of the question (this stage is usually included in the discussion section), and (3) we statistically and mainly econometrically test whether the considered theoretical causes and effect (public social payments) relations are compatible with our sample data. The empirical models we specified using the above methodology were estimated with linear [ARDL(p, q)] and non-linear [NARDL(p, q)] autoregressive distributed time lag models. The multiple tests to which we subjected the estimated models could not falsify the research questions we posed. Thus, from our findings, generally in line with the relevant literature, we found that:1. RQ1: There are long-run or stable equilibrium relationships between the level of social security payments and the relevant variables expressing aspects of the gradually financializing Greek economy. 2. RQ2: There are long-run or stable equilibrium relationships between the level of social security payments and relevant variables reflecting aspects of the gradually financializing Greek public sector (general government). 3. RQ3: The transition mechanisms from short-term to long-term equilibrium of the previous two questions arise from one-way, two-way and reverse Granger causality relations. RQ4: The financial fragility hypothesis is consistent with Greece's long-term public social spending in the sample period 1995q1-2022q4. 5. RQ5: The observed effects of the determinants of the financial fragility hypothesis and the financial-led growth model are non-linear and, specifically, asymmetric on public social spending in Greece over the sample period 1995q1-2022q4. The overall conclusion and contribution of the thesis to the international literature could be titled as follows:"It is the financialization of the Greek economy (and especially the general government) that determines the sustainability of public social security (PSS) spending". The policy recommendations follow effortlessly from the contribution of the thesis. As long as, governments "control" financialization, they will be able to address the long-term sustainability of social security spending (PSS). As an illustration, they can exploit our findings from the long-run (cointegrating) relationships of the dependent variable PSS, which turned out to be either positive, with 1/the change in the yield on 10-year government bonds, 2/the rate of change in public debt, 3/the money basis-supply, 4/short-term international capital flows, as well as 5/discretionary fiscal policy, 6/ the 'snowball effect', 7/credit to the non-financial sector, 8/outstanding debt of the non-financial sector, 9/long-term borrowing of the domestic sector from abroad, 10/asset prices(housing, Athens stock exchange general share price index), and especially with asymmetric (non-linear), 1/the declining relative profitability of the financial/non-financial sector (automatic stabilizer -AS-); 2/the declining long-term borrowing of the domestic private sector from abroad (AS), 3/the declining path of stock exchange index (AS), 4/the increasing net lending by the general government (fiscal balance surplus, anti-AS), 5/the increasing external debt of the country (AS).negative, with 1/ the fiscal space (fiscal budget, or government debt), 2/ the rate of change of the FTSE large-cap index in Athens stock exchange, as well as 3/ the ratio of the gross operating surplus (profitability) of the non-financial/financial sector, 4/private investments, 5/real GDP growth rate, 6/current account improvement, 7/net lending by the general government (surplus fiscal budget,), and especially with asymmetric (non-linear), 1/the decreasing credit to the non-financial sector, 2/the positive rate of change in nominal GDP, 3/the downward trend in the snowball effect. The main limitation of the thesis stems from its purpose given in its title. We did not analyze the sustainability of Greek public social spending compared to other countries, e.g. in the European region. We focused and deepened only on the relationship between PSS - Greek financialization. These limitations may constitute suggestions for further research in the future.
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