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The Greek Economy: Which Way Forward?

Author

Listed:
  • Mark Weisbrot
  • David Rosnick
  • Stephan Lefebvre

Abstract

In the past 6 years the Greek economy has gone through a massive adjustment at a steep price. The economy finally grew in 2014, by 0.6 percent, but the recovery is weak, slow and fragile. This paper argues that prolonged mass unemployment and reduced living standards, brought about by years of recession and budget cuts, are unnecessary, and that a robust recovery is feasible. It presents an alternative macroeconomic scenario with a moderate fiscal stimulus, which brings the economy much closer to full employment over the next five years, with a lower net debt than currently projected by the IMF. This alternative is just one of many possible scenarios, some of which might include debt cancellation, or more help from the European Central Bank in maintaining low interest rates, especially in light of its recently announced quantitative easing program. The current program, which forecasts a weak recovery with many downside risks, as well as continued mass unemployment in the years ahead, should be replaced with policies that offer a much stronger and faster recovery.

Suggested Citation

  • Mark Weisbrot & David Rosnick & Stephan Lefebvre, 2015. "The Greek Economy: Which Way Forward?," CEPR Reports and Issue Briefs 2015-04, Center for Economic and Policy Research (CEPR).
    • Handle: RePEc:epo:papers:2015-04
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    File URL: http://www.cepr.net/documents/greek-economy-2015-01.pdf
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    References listed on IDEAS

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    1. International Monetary Fund, 2014. "Benin: Sixth Review Under the Extended Credit Facility Arrangement and Request for a Waiver of Nonobservance of a Performance Criterion," IMF Staff Country Reports 2014/150, International Monetary Fund.
    2. World Bank, 2015. "World Development Indicators 2015," World Bank Publications - Books, The World Bank Group, number 21634.
    3. International Monetary Fund, 2014. "Jamaica: Sixth Review Under the Arrangement Under the Extended Fund Facility," IMF Staff Country Reports 2014/359, International Monetary Fund.
    4. International Monetary Fund, 2014. "Greece: Fifth Review Under the Extended Arrangement Under the Extended Fund Facility, and Request for Waiver of Nonobservance of Performance Criterion and Rephasing of Access," IMF Staff Country Reports 2014/151, International Monetary Fund.
    5. International Monetary Fund, 2014. "Pakistan: Third Review Under the Extended Arrangement and Request for Waiver of Nonobservance of Performance Criterion, and Request for Modification of Performance Criteria," IMF Staff Country Reports 2014/184, International Monetary Fund.
    6. Mark Weisbrot & Juan Antonio Montecino, 2012. "More Pain, No Gain for Greece: Is the Euro Worth the Costs of Pro-Cyclical Fiscal Policy and Internal Devaluation?," CEPR Reports and Issue Briefs 2012-07, Center for Economic and Policy Research (CEPR).
    7. Mark Weisbrot & Rebecca Ray, 2011. "Latvia's Internal Devaluation: A Success Story?," CEPR Reports and Issue Briefs 2011-25, Center for Economic and Policy Research (CEPR).
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    Citations

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    Cited by:

    1. Symeon Mavridis, 2018. "Greece’s Economic and Social Transformation 2008–2017," Social Sciences, MDPI, vol. 7(1), pages 1-14, January.
    2. Pitsoulis, Athanassios & Schwuchow, Soeren C., 2017. "Holding out for a better deal: Brinkmanship in the Greek bailout negotiations," European Journal of Political Economy, Elsevier, vol. 48(C), pages 40-53.

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    More about this item

    Keywords

    greece; greek elections; greek economy; syriza; employment; Europe;
    All these keywords.

    JEL classification:

    • F - International Economics
    • F01 - International Economics - - General - - - Global Outlook
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • E - Macroeconomics and Monetary Economics
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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