The 2012 Greek Retrofit and Borrowing Costs in the European Periphery
37 Pages Posted: 7 Aug 2023 Last revised: 10 Aug 2023
Patrick Bolton
Imperial College London; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)
Xuewen Fu
University College London - Department of Economics; University College London - School of Management
Mitu Gulati
University of Virginia School of Law
Ugo Panizza
Graduate Institute of International and Development Studies (IHEID) - Department of Economics; CEPR
Date Written: August 4, 2023
Abstract
This article examines the impact of Greece retroactively, via legislation, changing the terms in hundreds of billions of euros worth of Greek government bonds governed by domestic Greek law. As the abrogation of gold clauses in US government bonds by the US Congress in 1933 had been, the Greek action was decried as violative of the rule of law and sure to negatively impact the future ability of Euro area sovereigns to borrow. We test whether the Greek action had negative spillovers on European government debt markets. We find no evidence of increased borrowing for even the most peripheral European economies from the Greek action.
Keywords: Greece, Retrofit, 2012 Restructuring, Sovereign Bonds, Local Law Advantage, Spillovers, European Union
JEL Classification: F33, F34, G1, G15, K12
Suggested Citation: Suggested Citation
Patrick Bolton
Imperial College London ( email )
South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom
Centre for Economic Policy Research (CEPR)
London
United Kingdom
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
European Corporate Governance Institute (ECGI)
c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Xuewen Fu
University College London - Department of Economics ( email )
Drayton House, 30 Gordon Street
30 Gordon Street
London, WC1H 0AX
United Kingdom
University College London - School of Management ( email )
Gower Street
London, WC1E 6BT
United Kingdom
Mitu Gulati (Contact Author)

University of Virginia School of Law ( email )
580 Massie Road
Charlottesville, VA 22903
United States
Ugo Panizza
Graduate Institute of International and Development Studies (IHEID) - Department of Economics ( email )
Geneva Avenue de la Paix 11A
Geneva, 1202
Switzerland
CEPR
London
United Kingdom
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