The 2012 Greek Retrofit and Borrowing Costs in the European Periphery

37 Pages Posted: 7 Aug 2023 Last revised: 10 Aug 2023

See all articles by Patrick Bolton

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

Bolton, Patrick and Fu, Xuewen and Gulati, Mitu and Panizza, Ugo, The 2012 Greek Retrofit and Borrowing Costs in the European Periphery (August 4, 2023). Virginia Public Law and Legal Theory Research Paper No. 2023-55, Virginia Law and Economics Research Paper No. 2023-14, Available at SSRN: https://ssrn.com/abstract=4531944 or http://dx.doi.org/10.2139/ssrn.4531944

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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