Saving Greece’s economy

Travel Photos - GreeceGreece is preparing a bond issue aimed at restructing its economy as the European Union is pushing the country to adopt new austerity measures to cut its crippling budget deficit.  Economics Professor Laurence Kotlikoff, as he explains in his blog, says there’s a way in his view for Greece to to devalue without devaluing. 

“The government can implement wage and price controls for, say, the next three months, with these controls covering not just the growth in wages and prices over the next three months, but also their initial levels … [then] the German and French governments could commit to servicing some fraction (say 30 percent) of Greece’s current public and private external debt with the understanding that this servicing ceases if Greece misses it’s spending and tax rate targets.”

Contact Laurence Kotlikoff, 617-353-4002, kotlikoff@bu.edu

One Comment

Mortgage Toronto posted on March 4, 2010 at 10:37 am

Greece should never have let it get out of hand to begin with. I heard other nations in the EU have high debt as well like spain, portugal and ireland.

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