Monday, 5 November 2012

Are we going Greek?



In May 2010, the troika announced a rescue plan for Greece. Ireland followed in November 2010. In May 2011 it was time for Portugal to be bailed out. In July 2012, Spain received special assistance for its banks - more is expected to come.

One of the main questions concerning these economies is: How similar is their evolution? In other words, if we look at one of them, will we be able to say what happened, or what is happening, or what will happen to the other economies?

Greece has been at the centre of the euro area sovereign debt crisis. Private holders of Greek bonds have already suffered a haircut. Exit from the eurozone is openly discussed. In Portugal, many voices have expressed concern at the possibility that austerity measures will make Portugal tread in Greece's footsteps. Nuno Garoupa, for instance, wrote that Portugal lags Greece by eighteen months.

In this webpage we report data on the bailed-out economies in order to allow the evaluation of the similarities among them. The closer other countries replicate Greece's path, the closer the euro will be to its end.

At the time of writing, the indicators presented below show that Greece stands out for its worse performance among this group of countries, except for private debt - where Ireland reports the largest ratio to GDP - and for the net international investment position - where Portugal performs worse.

(with Pedro Bação, University of Coimbra)

3 comments:

  1. I would think that ultimately matters for the welfare of a state is total debt, i.e. Government + Households + Corporate.

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  2. Thanks Francesco - we'll add it to the webpage.

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