The deal that may make or break the eurozone

It is no secret that the top priority of the new Greek government will be to negotiate a reduction in the country’s debt – as well as to broker softer terms on the austerity conditions forced by its creditors. Until as recently as the wee hours of Thursday, I thought that this would be unethical. Here is the […]

European Doldrums

European economies are faltering.  The German economy contracted in the second quarter, as did those of France and Italy. Growth in Spain and the Netherlands was not enough to offset the slowdown in the Eurozone’s largest members.  An escalation in the confrontation with Russia would send shockwaves rippling from the Ukraine westwards that world worsen the situation. […]

Hard Work and External Help: How to Successfully Conduct Macroeconomic Adjustment With Official Assistance

What are the factors that ensure a successful and durable completion of a financial assistance programme? Past experience with IMF-supported adjustment programmes underlines the importance of external conditions but also of fiscal consolidation, financial repair and structural reforms. These findings vindicate the strategy pursued in recent adjustment programmes in the euro area: putting the fiscal […]

The Currency/Jobs Connection in Greece

Negotiations between the Greek government and its international lenders were finally resolved in mid-March, after seven long months. In January, Prime Minister Antonis Samaras made a celebratory announcement projecting a small, primary budget surplus of €1.5b last year.  Also recently announced: European Union co-funding for a long-delayed €7.5b road construction project in 2014. Sounds good. […]

Privatizations and Debt : Lessons From The Greek Fiasco

 In the midst of the European Debt Crisis, it is tempting to think that high-debt countries could alleviate the recessionary impact of the budget consolidation process by selling (poorly managed) assets and stakes in their state owned enterprises (SOEs), and by using the proceeds to buy back their debts. In addition to providing a cushion […]

Eurozone Sovereign Debt: All Quiet on the Southern Front

After a wild ride in 2011-2012, interest rates have settled down on European sovereign debt. For now. Yields on long-term government bonds, Jan 2009 to Nov 2013. Data source: Eurostat. Greek yields fell sharply following the PSI agreement in March 2012, a de facto default that ended up reducing the value of Greek’s debt by 20%. But as […]

Germany and the Euro-Surrealpolitik

This articles reviews the theory behind Optimum Currency Areas and the lack of willingness in the European Union and particularly of Germany to lead the process of political and fiscal unions. With Britain maintaining its euro-skeptical status and France and Italy immersed in political crisis, there remains little hope that the Eurozone will ever become […]

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