Greece: An Exit Strategy for a Failing Economy
Greece: An Exit Strategy for a Failing Economy
Group 30:
Viktoria Pilinko
Toms Andersons
Jekabs Jurdzs
Kipras Kazlauskas
Edgaras Marcinkus
Macroeconomics
The Stockholm School of Economics in Riga
April 19, 2012
1. Abstract
In this report the authors look at the current macroeconomic situation of Greece. The report provides an insight on the combined effects of the global financial crisis and the European sovereign debt crisis on the Greek economy. A selection of statistical data on the main macroeconomic variables has been included to facilitate understanding of the overall health of the economy. The report reflects how the inherent problems present in the economy have escalated since the adoption of the Euro, causing unsustainable levels of government debt. The authors of the report stress how the impairment on Greece to automatically adjust its competitiveness through changes in the exchange rate throughout the recession has ultimately resulted in the need for international aid. The report goes on to show how the austerity measures undertaken by the government to be eligible for receiving assistance from the European Central Bank (ECB) and the International Monetary Fund (IMF) have played a role in deepening the economy’s recession, and highlights how destructive would a continuation of the existing trends be for the economy. In the final part of the report the authors provide their view on a possible exit strategy for Greece that takes into account the previously described situation together with the potential dangers associated with this plan. The authors also provide with examples of similar cases previously and argue for why the suggested strategy of leaving the European Monetary Union (EMU) is necessary and the optimal way for Greece. Table of Contents
2. Introduction
It is the opinion of the authors that the effect of the current economic policy undertaken by the government is only deteriorating the state of the Greek economy
Group 30:
Viktoria Pilinko
Toms Andersons
Jekabs Jurdzs
Kipras Kazlauskas
Edgaras Marcinkus
Macroeconomics
The Stockholm School of Economics in Riga
April 19, 2012
1. Abstract
In this report the authors look at the current macroeconomic situation of Greece. The report provides an insight on the combined effects of the global financial crisis and the European sovereign debt crisis on the Greek economy. A selection of statistical data on the main macroeconomic variables has been included to facilitate understanding of the overall health of the economy. The report reflects how the inherent problems present in the economy have escalated since the adoption of the Euro, causing unsustainable levels of government debt. The authors of the report stress how the impairment on Greece to automatically adjust its competitiveness through changes in the exchange rate throughout the recession has ultimately resulted in the need for international aid. The report goes on to show how the austerity measures undertaken by the government to be eligible for receiving assistance from the European Central Bank (ECB) and the International Monetary Fund (IMF) have played a role in deepening the economy’s recession, and highlights how destructive would a continuation of the existing trends be for the economy. In the final part of the report the authors provide their view on a possible exit strategy for Greece that takes into account the previously described situation together with the potential dangers associated with this plan. The authors also provide with examples of similar cases previously and argue for why the suggested strategy of leaving the European Monetary Union (EMU) is necessary and the optimal way for Greece. Table of Contents
2. Introduction
It is the opinion of the authors that the effect of the current economic policy undertaken by the government is only deteriorating the state of the Greek economy
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