​Tuesday
17 May 2016
at 10.30–11.30

Michael Funke (Hamburg University)
Greece’s Three-Act Tragedy: A Simple Model of Grexit vs. Staying Afloat inside the Single Currency Area

Abstract
Against the backdrop of the Greek three-act tragedy, we present a theoretical framework for studying Greece’s recent debt and currency crisis. The model is built on two essential blocks: first, erratic macroeconomic policymaking in Greece is described using a stochastic regime-switching model; second, the euro area governments’ responses to uncertain macroeconomic policies in Greece are considered. The model’s mechanism and assumptions allow either for a Grexit from the euro area or, conversely, the avoidance of Greece’s default against its creditors. The model also offers useful guidance to understand key drivers of the long-winded negotiations between the Syiza government and the euro area governments.

BOFIT seminars
The seminars are open to all economists interested in the subject areas covered.
Please register in advance at bofit@bof.fi or by phone +358 10 831 2268.

Seminars will be held on Tuesdays at 10.30-11.30 unless otherwise indicated.
Visitors will be escorted from Rauhankatu 19 B (kirjasto bibliotek) entrance to the seminar room.

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