The article was published in www.voxeu.org on March 18, 2011,
Giancarlo Corsetti , Michael P., Devereux , John Hassler , Gilles Saint-Paul , Hans-Werner Sinn, Jan-Egbert Sturm , Xavier Vives
By the third quarter of 2009 Greece had experienced the smallest drop in GDP relative to its peak level in 2008 among all Eurozone countries. It appeared that the country would be able to weather the global economic crisis with only a small dent on its stellar growth performance over the last decade. However, during the spring of 2010, it became clear that this performance was based on an unsustainable public and private spending spree that was reflected in the double-digit government budget and current account deficits. The Greek government was in serious financial trouble and needed massive support. In May 2010, a gigantic rescue package was put together by the European Commission, the ECB, and the IMF, in order to help Greece and reduce the risk of contagion to other EU member states.
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Giancarlo Corsetti , Michael P., Devereux , John Hassler , Gilles Saint-Paul , Hans-Werner Sinn, Jan-Egbert Sturm , Xavier Vives
Will the Greek rescue package be enough or is restructuring inevitable? In this column, members of the European Economic Advisory Group argue that even if the sovereign debt crisis is resolved, Greece must deal with its unsustainable current-account deficit. This requires an unenviable choice between internal and external depreciation and a government strong enough to take on the country’s rife tax evasion.
By the third quarter of 2009 Greece had experienced the smallest drop in GDP relative to its peak level in 2008 among all Eurozone countries. It appeared that the country would be able to weather the global economic crisis with only a small dent on its stellar growth performance over the last decade. However, during the spring of 2010, it became clear that this performance was based on an unsustainable public and private spending spree that was reflected in the double-digit government budget and current account deficits. The Greek government was in serious financial trouble and needed massive support. In May 2010, a gigantic rescue package was put together by the European Commission, the ECB, and the IMF, in order to help Greece and reduce the risk of contagion to other EU member states.
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