The 2012 Greek Retrofit and Borrowing Costs in the European Periphery
18 Pages Posted: 7 Aug 2023 Last revised: 10 Aug 2023
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