[T]he Troika programme did not cause Ireland’s austerity; it eased it. Ninety per cent of the job losses had happened by the time the Troika arrived. By providing loans when the private market would not, the programme allowed the government to make the fiscal adjustments in a more orderly and gradual manner. The choice of what taxes and spending measures to target was largely one for the government. The Troika had suggestions, some of which they pressed vigorously, but for the most part they were content with any reasonable choice of measures as long as the net impact on the government’s deficit was sufficient.
The Irish crisis: Lessons for small central banks
By: Patrick Honohan – Trinity College Dublin
Chodorow-Reich and al. develop a dynamic general equilibrium model to assess quantitatively the sources of the boom and bust that Greece went through from 2007 to 2016. They find that:
- Both lower external demand for traded goods and contractionary fiscal policies accounted for the largest fraction of the Greek depression.
- Declining total factor productivity, reflecting lower utilization of factors, contributed to the amplification of the depression.
The Macroeconomics of the Greek Depression
Authors: Gabriel Chodorow-Reich, Loukas Karabarbounis, Rohan Kekre
From: Harvard University, University of Minnesota, University of Chicago Booth School of Business