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The Greek Economic Crisis and the Experience of Austerity: A Strategic Analysis

Author

Listed:
  • Dimitri B. Papadimitriou
  • Michalis Nikiforos
  • Gennaro Zezza

Abstract

Employment in Greece is in free fall, with more than one million jobs lost since October 2008--a drop of more than 28 percent. In March, the "official" unemployment rate was 27.4 percent, the highest level seen in any industrialized country in the free world during the last 30 years. In this report, Levy Institute President Dimitri B. Papadimitriou and Research Scholars Michalis Nikiforos and Gennaro Zezza analyze the economic crisis in Greece and offer policy recommendations to restore growth and increase employment. This analysis relies on the Levy Institute's macroeconomic model of the Greek economy (LIMG), a stock-flow consistent model similar to the Institute’s model of the US economy. Based on the LIMG simulations, the authors find that a continuation of austerity policies would decrease GDP and increase unemployment. They find recent International Monetary Fund and European Commission projections for the Greek economy overly optimistic, and recommend a recovery strategy, similar to the Marshall Plan, to increase public consumption and investment—a strategy centered on an expanded direct public-service job creation program.

Suggested Citation

  • Dimitri B. Papadimitriou & Michalis Nikiforos & Gennaro Zezza, 2013. "The Greek Economic Crisis and the Experience of Austerity: A Strategic Analysis," Economics Strategic Analysis Archive sa_jul_13, Levy Economics Institute.
  • Handle: RePEc:lev:levysa:sa_jul_13
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    File URL: http://www.levyinstitute.org/pubs/sa_gr_7_13.pdf
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    References listed on IDEAS

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    1. Ardagna, Silvia, 2004. "Fiscal Stabilizations: When Do They Work and Why," Scholarly Articles 2580047, Harvard University Department of Economics.
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    Cited by:

    1. Soldatos, Gerasimos T., 2014. "A Fiscal-Monetary Policy Scheme against Greek Indebtedness and Impoverishment - Un programma di politica fiscale-monetaria contro l’indebitamento e l’impoverimento della Grecia," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 67(2), pages 243-261.
    2. C.J. Polychroniou, 2013. "A Failure by Any Other Name: The International Bailouts of Greece," Economics Policy Note Archive 13-06, Levy Economics Institute.
    3. repec:nov:artigo:v:25:y:2015:i:spe:p:777-802 is not listed on IDEAS
    4. Michalis Nikiforos & Dimitri B. Papadimitriou & Gennaro Zezza, 2015. "The Greek Public Debt Problem," Economics Policy Note Archive 15-2, Levy Economics Institute.
    5. C Alexiou & J G Nellis, 2016. "A post-mortem of austerity: the Greek experience," Economic Issues Journal Articles, Economic Issues, vol. 21(2), pages 1-32, September.
    6. George PETRAKOS, 2014. "Economic Crisis In Greece. European And Domestic Market And Policy Failures," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 39, pages 9-33.
    7. repec:ddj:parsro:y:2015:i:1:p:3-12 is not listed on IDEAS
    8. repec:eee:rujoec:v:1:y:2015:i:4:p:419-438 is not listed on IDEAS
    9. Michaelis Nikiforos, 2018. "Distribution-led growth through methodological lenses," FMM Working Paper 24-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    10. Dimitri B. Papadimitriou & Greg Hannsgen & Michalis Nikiforos & Gennaro Zezza, 2013. "Rescuing the Recovery: Prospects and Policies for the United States," Economics Strategic Analysis Archive sa_oct_13, Levy Economics Institute.
    11. Dimitri B. Papadimitriou & Michalis Nikiforos & Gennaro Zezza, 2014. "Is Greece Heading For a Recovery?," Economics Strategic Analysis Archive sa_dec_14, Levy Economics Institute.
    12. Heinz Handler, 2013. "Fiscal Multipliers in the Crisis," WIFO Monatsberichte (monthly reports), WIFO, vol. 86(12), pages 977-984, December.

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