Seven Years of Austerity and the Greek Dra(ch)ma: Three Economists’ Views and a Comment

Abstract

In this paper we summarize the opinion of three renowned economists, namely Paul De Grauwe, Paul Krugman and Joseph Stiglitz, on the eurozone crisis as well as the Greek case. In particular all three expressed in one way or another their reservations about the single currency. On one side De Grauwe and Stiglitz highlighted the design failures of the eurozone and on the other Krugman argued that the creation of the common currency was a terrible mistake. In support of their claims we provide evidence of the negative consequences of the austerity measures that were implemented by the troika on the Greek economy for a period covering 2010–2014. After five years of austerity, Greece among others experienced significant deflationary dynamics, deep recession, high unemployment rates, that are among the highest in Europe and an increase of the percentage of the people at risk of poverty or social exclusion. More specifically, GDP per capita growth shrank on average by 5.85% in the period 2010–2013 while the unemployment rate reached 25.5% in 2015. Even more remarkable is the fact that the youth unemployment rate reached 52.4% in 2014. Finally, 14% of the population cannot meet its medical needs due to the high cost of treatment.