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The Political Economy of the Greek Debt Crisis: A Tale of Two Bailouts

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  • Silvia Ardagna
  • Francesco Caselli

Abstract

We review the events that led to the May 2010 and July 2011 bailout agreements. We interpret the bailouts as outcomes of political-economy equilibria. We argue that these equilibria were likely not on the Pareto frontier, and sketch political-economy arguments for why collective policymaking in the Euro area may lead to suboptimal outcomes.

Suggested Citation

  • Silvia Ardagna & Francesco Caselli, 2014. "The Political Economy of the Greek Debt Crisis: A Tale of Two Bailouts," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(4), pages 291-323, October.
    • Handle: RePEc:aea:aejmac:v:6:y:2014:i:4:p:291-323
    Note: DOI: 10.1257/mac.6.4.291
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    More about this item

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G01 - Financial Economics - - General - - - Financial Crises
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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