Partisan Politics in Greece from 1974 to the Economic Crisis and Beyond

Abstract

This paper presents the main features of the Greek political landscape during the period 1974–2008 and examines whether the governing ideology of the country’s main political parties is correlated with specific fiscal and monetary policy patterns. The descriptive analysis reveals two key findings. First, the data indicates ideological differences in fiscal policy during the pre-1993 period, with PASOK governments exhibiting higher public spending and deficits, while the conservative New Democracy (ND) demonstrated greater fiscal restraint. Monetary policy during this period also appears to follow ideological differences. Second, in the post-1993 period, two trends emerged that do not seem to be ideologically driven. From 1994 to 2001, both major political parties in Greece focused on joining the Economic and Monetary Union, aligning their policies with the Maastricht Treaty. This resulted in a decrease in government expenditure and an increase in total revenue, even under the left-wing PASOK government that was in office during that period. However, after Greece joined the eurozone, external constraints such as the Stability and Growth Pact did not effectively enforce fiscal discipline. From 2001 onward, there was an increase in expansionary fiscal policies, even under the right-wing ND government, suggesting that government ideology had minimal influence on fiscal variables during this period. Greece provides an intriguing example of how partisan politics can intersect with international institutional and policy constraints. (JEL codes: H2 and H1)