How to Resolve the Fiscal Problems of Southern Europe?

The Southern European fiscal mess has triggered the crisis on the continent. In January 2010, the European Commission discovered falsifications of the Greek budget statistics (Arganda and Caselli 2012). It undermined investors’ confidence in the country’s debt securities. A sharp increase in bond rates forced Brussels to rescue Greece from default. The Greek government received […]

Chronicles of a European Winter: Harsh Times in Greece

This is the first segment of an ongoing project, Eurowinter, to record the human toll of austerity policies in Europe. It focuses on the suffering Greece, as told by Greeks themselves. The pace might strike some as languid, but if you stick with it, it makes sense. The filmmakers are acting as witnesses, giving their subjects, who are mainly men still […]

The Decline of Southern Europe

“Europe is back!” is the new, though cautious, market mantra. Certainly, Europe will ultimately recover, but it will be a different Europe. Current hopes are inflated, as evidenced by the erosion of Southern Europe. The second quarter GDP figures for the euro-area economies indicated growth, for the first time in 18 months. Some fund managers […]

Better Economic News Out of Greece Masks Clouds on the Horizon

The latest GDP number out of Greece looks more promising than in the past (assuming it is to be trusted). The GDP contracted by only 0.2% (SA) from the previous quarter and 4.6% on a year-over-year basis.   Source: Eurostat                                […]

The EU Labor Market Casts a Shadow

Harping on about disequilibrium in Europe’s labor market is hardly surprising, given high and in fact gradually rising unemployment. Even though the region should have been recovering for couple of years now, the rate for the EU-27 currently stands at 11%, with Greece and Spain displaying the worst results, with 26.9% of their labor force […]

New Evidence for Greece’s Fiscal Multiplier Debate

In this unstable global economic environment, the effectiveness of fiscal policy in stimulating the real economy is very crucial. But these effects are still under question in both theoretical and empirical perspectives. The most important issue is what determines the size and the sign of the fiscal impact, i.e the exchange rate regime, the phase […]

Greece and the Troika: Summer Break

The Greek government has reached agreement with the Troika (European Central Bank, European Commission, and IMF) on a set of policies putting its program back on track and opening the door for €8.1 billion in tranches over the summer, which should finance the government until September.  To get this done involves moving forward lending originally scheduled for later […]

The Second Battle Of Thermopylae

According to legend and some historians, by making a stand in the Thermopylae pass 300 brave Spartans valiantly saved the day for the entire Greek army in the face of a Persian force of overwhelming strength and manpower. More than 2,000 years later some 11 million Greeks might be considered to have carried out a rather similar operation […]

Why Cyprus Matters

Cyprus measures 0.2 percent of the Eurozone economy.  A proposed rescue package is only €17 billion, of which perhaps €9 billion will be used to recapitalize banks weighed down by bad loans and losses on the Greek government debt.  A new government has signaled its commitment to reform, and creditors want to get a deal […]