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Economic crisis in the European periphery: An assessment of EMU membership and home policy effects based on the Greek experience

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  • Bitros, George C.
  • Batavia, Bala
  • Nandakumar, Parameswar

Abstract

In this paper we examine the evidence on the impacts on the Greece economy of enhanced transfer assistance from the EMU as well as that of the domestic policies of the Greek government. A simple macroeconomic model is constructed to incorporate the issues related to the formation of the economic and financial crisis in Greece, and to analyze the impacts of Greek government's domestic policies. The model's solution is employed to highlight the outcomes that we believe could be related to EMU membership and Greek government policies after assuming membership. Our finding is that intervention by the Greek government either worsened the harmful impacts of the transfers, or altered the outcomes in a deleterious fashion; the policies which were put in place were of a nature leading unavoidably to a severe economic crisis and eventual bankruptcy.

Suggested Citation

  • Bitros, George C. & Batavia, Bala & Nandakumar, Parameswar, 2016. "Economic crisis in the European periphery: An assessment of EMU membership and home policy effects based on the Greek experience," The North American Journal of Economics and Finance, Elsevier, vol. 36(C), pages 312-327.
    • Handle: RePEc:eee:ecofin:v:36:y:2016:i:c:p:312-327
    DOI: 10.1016/j.najef.2016.02.002
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    More about this item

    Keywords

    Economic crises; Economic integration; Balance-of payments deficits; Budget deficits and indebtedness; Structural imbalances;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • F15 - International Economics - - Trade - - - Economic Integration
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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