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The Bail-Out! Positive Political Economics Of Greek-Type Crises In The Emu

  • CHRISTIAN FAHRHOLZ

    ()

    (School of Economics and Business Administration and Graduate Program, "Global Financial Markets", Friedrich-Schiller-University, Jena, Carl-Zeiss-Strasse 3, D-07743 Jena, Germany)

  • CEZARY WÓJCIK

    ()

    (Polish Academy of Sciences and Warsaw School of Economics, Al. Niepodległości 164, 02-554 Warsaw, Poland)

The Greek bail-out was highly controversial. An oft-heard assessment is that (i) the bail-out was a mistake, (ii) the political haggling over it was irrational. Contrary to this view, our analysis suggests that, given EMU's present political-economic set-up, (i) the bail-out was unavoidable and (ii) the lengthy process of political haggling leading to it was understandable. We have based our analysis on a political-economic, game-theoretic model that helps to understand why and how the parties involved in the Greek crisis arrived at the bail-out and on what conditions the final solution depended.

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Article provided by World Scientific Publishing Co. Pte. Ltd. in its journal Journal of International Commerce, Economics and Policy.

Volume (Year): 03 (2012)
Issue (Month): 02 ()
Pages: 1250010-1-1250010-18

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Handle: RePEc:wsi:jicepx:v:03:y:2012:i:02:p:1250010-1-1250010-18
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