IMF: “Fiscal policies can help boost countries’ long-term growth prospects”


Due to vacation I have been lying low, basically missing out on commenting on the Greek drama. There is not much to say anyway, except that this is about democracy (sovereignty) versus (neoliberal) Europe. The euro basically is build on the idea that government cannot borrow from the central bank and hence faces a hard budget constraint. This means that sovereignty, defined by a government that can do policy-wise what it wants (after all, it was elected by popular vote) by accessing liquidity whenever it needs do (from the central bank if nothing else is available), went out of the window. Now Tsipras, the Greek prime minister, has no economic instruments to fight unemployment (no access to more money) but his voters first priority is lower unemployment. With their own currency, the Greek government would be able to deliver that. With the troika, the Greeks depend on the good will of…

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