The Macroeconomics of the Greek Depression

Gabriel Chodorow-Reich, Loukas Karabarbounis, Rohan Kekre

Research output: Contribution to journalArticlepeer-review

2 Scopus citations


Greece experienced a boom until 2007, followed by a collapse of unprecedented magnitude and persistence. We assess the sources of the boom and the bust, using a rich estimated dynamic general equilibrium model. External demand and government consumption fueled the boom in production, whereas transfers fueled the boom in consumption. Different from the standard narrative, wages and prices declined substantially during the bust. Tax policy accounts for the largest fraction of the bust in production, whereas uninsurable risk accounts for the bust in consumption and wages. We assess how the composition of fiscal adjustment and bailouts affected the crisis.

Original languageEnglish (US)
Pages (from-to)2411-2457
Number of pages47
JournalAmerican Economic Review
Issue number9
StatePublished - Sep 2023

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