ABSTRACT
The Greek crisis was the combined outcome of an exogenous shock hitting a country with long-standing macroeconomic imbalances and structural rigidities. Among Eurozone countries, Greece stands out for years of fiscal mismanagement and reform inertia that made its economy vulnerable to exogenous shocks, foreign capital fluctuation and a domestic consumption led boom-and-bust cycle. Prior to the crisis, it was politically irrational for consecutive Greek governments to implement radical reforms that could jeopardize their ties with client groups. Accumulated growing fiscal imbalances and structural distortions laid the foundations of the subsequent Greek crisis, which broke up in the aftermath of the 2008 global financial crisis, first as a recession and a liquidity crisis, and then as a deeper depression. The scale and nature of Greece's economic adjustment since 2009 harmed many party-affiliated groups and inflicted considerable political damage on both PASOK and New Democracy. PASOK experienced an exodus of middle-ranking politicians and union leaders and was heavily discredited by corruption scandals.
