Welcome

This blog publishes articles by leading academic economists on issues relevant to economic policy and reforms in Greece. The crisis in Greece is also a time of opportunity: ambitious reforms can be undertaken that will not only stave off bankruptcy, but also modernize Greece’s economy and raise the productivity and incomes of Greek citizens on a sustainable basis. The articles in this blog aim to offer constructive proposals and impartial analysis of potential, proposed or implemented reforms that are based on the principles of modern economics and on lessons from recent cutting-edge research.

The editors of this blog do not necessarily endorse the opinions expressed by other contributors to the blog, the agenda of any political party, or the views of those who link or otherwise refer to the blog and its contents. Comments that do not concern the ideas and arguments published in this blog, but consist of personal attacks will be deleted.

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How To Solve The Greek Public Debt Problem

How To Solve The Greek Public Debt Problem

In an article in ESTIA, Prof. Nicholas Economides discusses how issuing new bonds and using the moneys exclusively for investment will solve the Greek sovereign debt problem. Additionally he proposes reducing interest rates and making them constant, as well as lengthening the debt maturity of 75 years. Read more…

Posted in Banking and finance, Economic research, Europe, Macroeconomics, Public finance | Tagged , , , , | 1 Comment

Greek and EU Economic Crisis

Professor Nicholas Economides of the Stern School of Business NYU and the Haas School of Business UC Berkeley presented on May 28, 2014 at KEPE his proposals for the reduction of the Greek public debt, growth, and structural reforms for the Greek economy. Read More…

Posted in Banking and finance, Economic development, Education, General, Justice, Uncategorized | 2 Comments

Looking Beyond the Greek Crisis

Transcript of presentation delivered at the conference

Growth and Employment in Europe Session. Panel I

By Yannis M. Ioannides Megaron, Athens, May 12, 2014

Organized by Lucas Papademos

Slides

Introduction

I want to start by comparing the evolution of Greek GDP, after the onset of the crisis, first with Portugal and Ireland, the other two Eurozone countries that also received assistance from the Troika. I don’t need to belabor the severity of the crisis to this audience, but “a picture is worth a thousand words!” It is comparably severe to the US Great Depression, 1929–1938, and much more severe to the Finnish Great Depression of 1990–1997. I will explain why these comparisons are important. But crises do end, with help from policy, and we know from past and recent experience that when they end the economy looks quite different. Continue reading

Posted in Economic development, Economic research, Education, Europe, Labour market, Macroeconomics, Product market | Leave a comment

The Fiscal Crisis is a Crisis in Trust

The sources of the fiscal crisis have been different, but the prescribed measures amount to two: achieve budget surpluses to start reducing the size of the debt, and undertake the necessary reforms to create or boost the productive base, so as to make repayment of the debt possible and compatible with acceptable living standards. If we manage to hit only the first bird, the other may well fly away.    Read More…

This is a talk delivered at the Megaron Plus event on Unemployment and Growth, which was organized by Lucas Papademos and took place in Athens on May 12, 2014.
Posted in Economic development, Education, General, Macroeconomics, Public finance, Public sector productivity, Uncategorized | Leave a comment

Bank of Greece: Selection of New Governor

Στο άρθρο αυτό ο Ηλίας Παπαϊωάννου περιγράφει μία απλή πρόταση για την επιλογή της διοίκησης της Τράπεζας της Ελλάδος, μέσω ενός ανοικτού διεθνούς διαγωνισμού με ανεξάρτητους κριτές-αξιολογητές υπό την εποπτεία μίας ad hoc ανεξάρτητης και διεθνώς αναγνωρισμένης επιτροπής αξιολόγησης. Περισσότερα εδώ.

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The Greek Crisis: Origins and Implications

This paper argues that the deep causes of the Greek and Eurozone crisis are the large external imbalances (trade deficits) of the countries of the European periphery. Their fiscal imbalances exacerbated but did not cause the crisis and therefore fiscal adjustment is a necessary but not sufficient condition for economic recovery. For their economies to grow the countries in crisis, and especially Greece, need to regain competitiveness which will lead to rebalancing of the external account. Read more

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Greece should issue new bonds before the European elections

In an article published in Kathimerini, on February 9, Prof. Nicholas Economides proposes that Greece issue new 5-year bonds immediately, that is, before the European elections. This would be the first time Greece would issue bonds since its crisis in 2009 and subsequent bankruptcy. Economides argues that the time is ripe for such an issue that will be well-accepted by financial markets at a 5-6% coupon. Economides notes a number of advantages of such an issue, including (1) solving short term liquidity problems; (2) allowing Greece to invest in new projects that would grow the economy and create jobs; (3) show to all that Greece has finally got out of the crisis, and attract foreign and domestic investment; and (4) end the dependence of Greece to the Brussels bureaucracy. Economides underlines the risk that moneys from the new bonds may not be invested but rather given as cash to pensioners, as was the realized primary surplus. He also warns that there is a need for temperance and a firm hand once the EU supervision ends so that Greece does not deteriorate to its old corrupt habits and go bankrupt again.

See Kathimerini in Greek: http://www.kathimerini.gr/752934/opinion/epikairothta/politikh/h-ellada-na-vgei-stis-agores-prin-apo-tis-eyrwekloges

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Attracting Top Research and Innovation Performers: A Way Out of the Greek Crisis

Alexander Kritikos and Odysseas Kartalos argue forcefully that, for Greece, the way out of the current economic crisis is not austerity but a long-term plan focusing on innovative industries with high added value. However, in comparison to other countries in the EU currency union, the country has invested very little in developing a knowledge-based economy. Still, the weakly performing Greek innovation system has important “hidden” assets, including niches of strong academic research, some small hi-tech companies that manage to compete at international level and an impressive diaspora.

The Greek authorities need to use the next EU programming period, beginning in 2014, to invest into high-class research with the major aim of attracting top research and innovation performers. The paper proposes how such initiatives could be designed, taking into account the broader challenges the EU is facing with regards to the international competition in science and technology. More…

Posted in Economic development, Economic research, Education, Product market | 1 Comment

Reprisals Remembered: German-Greek Conflict and Car Sales during the Euro Crisis

by Vicky Fouka

Universitat Pompeu Fabra, Department of Economics and Business, Barcelona, Spain. vasiliki.fouka@upf.edu

and

Hans-Joachim Voth

CREI and Universitat Pompeu Fabra, Barcelona, Spain. jvoth@crei.cat

During the Greek debt crisis after 2010, the German government insisted on harsh austerity measures. This led to a rapid cooling of relations between the Greek
and German governments. We compile a new index of public acrimony between
Germany and Greece based on newspaper reports and internet search terms. This
information is combined with historical maps on German war crimes during the
occupation between 1941 and 1944. During months of open conflict between German
and Greek politicians, German car sales fell markedly more than those of cars from
other countries. This was especially true in areas a ected by German reprisals during
WorldWar II: areas where German troops committed massacres and destroyed entire
villages curtailed their purchases of German cars to a greater extent during con ict
months than other parts of Greece. We conclude that cultural aversion was a key
determinant of purchasing behavior, and that memories of past con ict can a ect
economic choices in a time-varying fashion. These fi ndings are compatible with
behavioral models emphasizing the importance of salience for individual decision-
making.  english_version

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A debate between German and Greek economists on growth and austerity in Greece

On 10 July 2013, an interesting debate on the Greek crisis took place between Daniel Gros, the director of the Brussels-based research institute CEPS, Gikas Hardouvelis, professor of Finance at the University of Piraeus and Chief economist at Eurobank, and Aristos Doxiadis, a venture capitalist. The debate was organized by IOBE, a Greek research institute, and the Athens office of Konrad Adenauer Stiftung, a German research institute.  The speakers’ presentations can be found at the Konrad Adenauer Stiftung site: http://www.kas.de/griechenland/en/publications/34976/, as well as here (Doxiadis, Gros, Hardouvelis). All presenters agreed on the diagnosis of the severity of the Greek depression, which has been going on for the last 6 years. But they disagreed on the policy mix going forward. In particular, Greece-based presenters felt that additional austerity measures in the short run would be counterproductive and would deepen the crisis, but Daniel Gros strongly endorsed such measures. Gikas Hardouvelis gives his take on the event. Continue reading

Posted in Banking and finance, Economic development, Europe, Labour market, Product market, Public finance, Public sector productivity | 1 Comment