Thema Konjunktur

The Greek Crisis: A Greek Tragedy? Editorial

The Prologue to the Greek Crisis

This paper analyzes the prologue to the Greek tragedy—in particular, the long period of slow growth after Greece joined the European Union and the short period of very strong growth following its adoption of the euro—and deduces reform proposals. Ultimately, a growth strategy should contain three interrelated bundles of measures: First, an improvement of the institutional environment, which currently ...

Saving Greece Once Again: Have We Reached the Root of the Crisis?

In 2010, the first economic adjustment program began offering a blueprint for economic recovery and a feasible way for Greece to emerge from the crisis. The authors show that Greece neither overcame its structural weaknesses nor developed export industries as a driver of growth in the course of reforms, and they conclude that Greece’s sectoral structures still mirror a low level of industrial development ...

The Costs of Greece's Fiscal Consolidation

This policy brief reexamines the effects of the Greek austerity experiment on its economy via a counterfactual analysis. We combine the fiscal multipliers from the meta regression analysis in Gechert and Rannenberg (2014) to the fiscal consolidation measures that have been implemented in Greece between 2010 and 2014. We estimate that austerity explains almost the entire collapse of Greek GDP after ...

Wealth Taxation of Real Estate During the Greek Crisis: The Perils of Ignoring Market Signals

During the Greek crisis the wealth tax on real estate (WTRE) was increased four-fold as a percentage of GDP in order to boost fiscal revenues. This increase contributed to an essentially complete freeze of the real estate market, a considerable drop in real estate prices, and a substantial deepening of the recession. Using conservative assumptions, we calculate that the WTRE increases unemployment ...

Taxing Wealth and Only Wealth in an Advanced Economy with an Oversized Informal Economy and Vast Tax Evasion: The Case of Greece

Greece has the largest underground economy in the eurozone and one of the largest in Europe and the OECD countries. On the other hand, Greece is notoriously known for its sizable and widespread tax evasion primarily because of the large number of self employed and its wide geographical distribution. As documented by many studies, the two depend on a corrupted, inefficient and ineffective public administration. ...

Product Market Reforms in Greece: Unblocking Investments and Exports

While Greece’s poor record on investment and exports predates the crisis, the deep economic recession has made addressing long-standing weaknesses a priority. This paper takes a closer look at selected structural reforms that are critical for bolstering investments and exports in Greece. We investigate the areas of licensing, competition, professions, land use, and trade facilitation. In all areas ...

The Greek Economic Crisis, Labor Markets and Policies

The historic decision at the Euro Summit on July 12, 2015, to continue supporting Greece as a member of the EU and the euro family, provided Greece the chance to return to growth and sustainability, provided it takes the necessary steps to continue with its reforms. Jointly the Greek government with its partners (European Commission, European Central Bank and the International Monetary Fund), agreed ...

From Financial to Real Economic Crisis: Evidence from Individual Firm-Bank Relationships in Germany

What began as a financial crisis in the United States in 2007–2008 quickly evolved into a massive crisis of the global real economy. We investigate the importance of the bank lending and firm borrowing channel in the international transmission of bank distress to the real economy - in particular, to real investment and labor employment by nonfinancial firms. We analyze whether and to what extent firms ...

Greece in Economic Crisis: The Case of Health and Education

In 2010 the Greek economy entered a deep economic crisis. This was the result of an accumulation of structural problems in the economy, including overspending and loss of competitiveness during the previous decades, translating into persistently large budget and trade deficits. In 2015, under its third EU and IMF bailout, Greece has entered a spiral of depression that has led to its economy shrinking ...