The neoclassical and Keynesian standpoint and policy implications regarding the Greek Financial Crisis

Abstract

PurposeThe purpose of this paper is to discover the contradistinctions between the neoclassical and Keynesian paradigms of economics regarding the Greek Financial Crisis.Design/methodology/approachThe answers to the questions and policies regarding the Greek Financial Crisis cannot be derived by using economic analysis alone; they also depend on the perception of social reality and ethical issues. Based on the assumptions about economic behavior, the answers and policies inevitably reflect the observer's assessment of each economic and non-economic performance dimension, as well as the significance assigned to those performance dimensions. Different views on “social reality” and “what is a good society?” are associated with distinct paradigms and a particular set of social values, which have implications for economic policy formulae. These give rise to alternative answers and policies to the Greek Financial Crisis, based on different assumptions, different methods of analysis and different goals.FindingsOverall, in contradistinction, the two paradigms recommend quite distinct policies tackling the Greek Financial Crisis, and at the end, both paradigms have different perspectives on ethics and moral fundamentals regarding debt.Originality/valueStudents of the global financial crisis will benefit from this unique approach in testing the two alternative paradigms, between the neoclassical and Keynesian, concerning the Greek Financial Crisis.