TY - JOUR
T1 - The Macroeconomics of the Greek Depression†
AU - Chodorow-Reich, Gabriel
AU - Karabarbounis, Loukas
AU - Kekre, Rohan
N1 - Publisher Copyright:
© 2023 American Economic Association. All rights reserved.
PY - 2023/9
Y1 - 2023/9
N2 - 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.
AB - 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.
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U2 - 10.1257/aer.20210864
DO - 10.1257/aer.20210864
M3 - Article
AN - SCOPUS:85171741527
SN - 0002-8282
VL - 113
SP - 2411
EP - 2457
JO - American Economic Review
JF - American Economic Review
IS - 9
ER -