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

Author

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  • 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)

Abstract

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.

Suggested Citation

  • Christian Fahrholz & Cezary Wójcik, 2012. "The Bail-Out! Positive Political Economics Of Greek-Type Crises In The Emu," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(02), pages 1-18.
    • Handle: RePEc:wsi:jicepx:v:03:y:2012:i:02:n:s179399331250010x
    DOI: 10.1142/S179399331250010X
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    Cited by:

    1. Christian Fahrholz & Andreas Freytag, 2012. "A Way to Solve the Euro pean Balance of Payments Crisis? Take a Chance on Market Solutions!," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(1), pages 77-82, February.
    2. Elsayyad, May & Konrad, Kai A., 2012. "Fighting multiple tax havens," Journal of International Economics, Elsevier, vol. 86(2), pages 295-305.
    3. Fahrholz, Christian & Wójcik, Cezary, 2013. "The Eurozone needs exit rules," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4665-4674.
    4. Wolfgang Schäuble & Jürgen Stark & Clemens Fuest & Christian Fahrholz & Michael Eilfort & Verena Mertins, 2011. "EU-Rettungsschirm: Folgt der Einstieg in eine Transferunion?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 64(03), pages 03-20, February.
    5. Christian Fahrholz & Andreas Freytag, 2012. "A Way to Solve the Euro pean Balance of Payments Crisis? Take a Chance on Market Solutions!," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(SPECIALIS), pages 77-82, February.
    6. Christian Fahrholz & Andreas Freytag, 2011. "Ein Lösungsweg für die europäische Zahlungsbilanzkrise? Mehr Markt wagen!," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 64(16), pages 73-78, September.

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    More about this item

    Keywords

    Bail-out; negative externality; political economics; game theory; euro; EMU; JEL Classifications: E62; JEL Classifications: F33; JEL Classifications: H77; JEL Classifications: C70;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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