G20

The Greek debt crisis simplified and updated and cut to the bone

Greece’s government must cut spending and improve tax revenue in order to greatly reduce or eliminate its need to borrow, reduce the cost of its output (via domestic deflation or leaving the Euro and depreciating a new currency) in order to restore the external balance between its imports and exports, and to reduce the impediments to economic efficiency and productivity growth so that its economy can grow more rapidly. How did it get in such a mess? What role was and is played by its use of the Euro? And what are its options?

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