The dramatic events of the past week have brought again into question Greece’s participation in the Eurozone. Will Greece manage to stay in the Eurozone or will it have to exit? Should Greece seek to exit? More generally, what are the costs and benefits for Greece to continue being part of the Eurozone?
An early post on this blog by Harris Dellas argues that it made good economic sense for Greece to join the EMU, and that the cost of exiting the Euro would be substantial without any significant countervailing benefits. Costas Azariadis argues instead in a new post that on balance Greece would be better off exiting the Euro because its debt burden is not sustainable even under the new haircut, and because a devaluation would bring growth benefits. More contributors to this blog will express their views on this extremely important question over the next few months.