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Greece and the Troika – Lessons from international best practice cases of successful price (and wage) adjustment


  • Ansgar Belke
  • Daniel Gros


This paper reviews cases of successful price and wage adjustment, which are often regarded as constituting best practice, – Australia, Latvia and the German new states and contrasts them with the Greek experience under the Troika Programs. Latvia stands out as having had the quickest adjustment in wages. By contrast, before the crisis, Greek wages appeared to have been largely insensitive to labour market conditions but this changed with the program. We find that the reaction of wages to unemployment in Greece was under the program similar to that observed in Germany and Portugal (a case, which has attracted less attention). A priori it is likely that the change in wage behaviour in Greece was due to the labour market reforms imposed under the program. But this cannot be proven beyond doubt.

Suggested Citation

  • Ansgar Belke & Daniel Gros, 2017. "Greece and the Troika – Lessons from international best practice cases of successful price (and wage) adjustment," ROME Working Papers 201707, ROME Network.
  • Handle: RePEc:rmn:wpaper:201707

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    References listed on IDEAS

    1. Uwe Hassler & Michael Neugart, 2003. "Inflation-unemployment tradeoff and regional labor market data," Empirical Economics, Springer, vol. 28(2), pages 321-334, April.
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    3. Gros, Daniel & Alcidi, Cinzia & Belke, Ansgar & Coutinho, Leonor & Giovannini, Alessandro, 2014. "Implementation of the Macroeconomic Adjustment Programmes in the Euro Area: State-of-Play," CEPS Papers 9017, Centre for European Policy Studies.
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    5. Ansgar Belke & Tobias Böing, 2014. "Sacrifice Ratios for Euro Area Countries: New Evidence on the Costs of Price Stability," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 47(4), pages 455-471, December.
    6. Gros, Daniel & Alcidi, Cinzia & Belke, Ansgar & Coutinho, Leonor & Giovannini, Alessandro, 2014. "State-of-play in implementing macroeconomic adjustment programmes in the euro area," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100407, Verein für Socialpolitik / German Economic Association.
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    8. repec:eee:ecmode:v:67:y:2017:i:c:p:338-345 is not listed on IDEAS
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    More about this item


    Phillips curves; price and wage adjustment; internal devaluation; Australia; Greece; Latvia; Portugal; West vs. East Germany;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F49 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Other

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