The Greek Recovery: A Miracle Waiting to Happen?

The significance of economic convergence (symmetry) and flexibility in the markets of goods, services and labour as prerequisites necessary for the long-term sustainability of the EMU has been established by the theory of optimum currency areas, initially developed in the 1960s and by research carried out in the 1990s during the run-up to the EMU.

Research by Michael Arghyrou since 1998, solo and in co-operation with other colleagues, has provided evidence substantiating that these prerequisites are not met in the euro zone area in general, and Greece in particular. By contrast, Mr Arghyrou’s research indicates that since the launch of the euro in 1999, EMU countries have become increasingly divided into two groups: A core group of competitive, surplus-creating economies and a peripheral group including countries accumulating unsustainable public and/or external debts.

His research has highlighted the unsustainable nature of these intra-EMU economic imbalances and revealed the EMU’s vulnerability in the event of a major economic shock. Following the onset of the EMU sovereign debt crisis, Mr Arghyrou’s research has provided theoretical justification and empirical evidence identifying intra-EMU macro-imbalances as the main driving force of the EMU crisis. The research also provides theoretical and empirical support for the importance of private expectations in the initiation and escalation of the crisis, and it has also analysed the importance of contagion/spill-over effects to EMU countries.

During his visit to CESifo, Michael Arghyrou will concentrate of offering a single, comprehensive account of the Greek debt crisis and its wider significance for the euro area. What were the causes of the Greek debt crisis? What was the crisis trigger-point and what have been its channels of transmission, internal and external? Has the crisis management, both within and outside Greece, been adequate and what policy lessons have we learned from it? Was it in Greece’s and its EMU partners’ best interests to help Greece stay in the euro and how will the Greek (and other euro-periphery countries) economic upheavals shape economic governance in the single currency area? Which reforms (at country and union level) are necessary for the euro’s long-term sustainability and how should questions, including fiscal/banking union, moral hazard and debt legacy, be addressed?

Michael Arghyrou’s research interests are mainly in the areas of international macroeconomics and finance, European Economics and the Greek economy. He has published two research monographs on the Greek economy and numerous articles on the aforementioned research areas in leading journals including the Canadian Journal of Economics, Oxford Economic Papers, Review of International Economics, Economics Letters, Journal of Macroeconomics, Journal of International Financial Markets, Institutions & Money and others.

He is internationally recognised as an expert on the Greek debt crisis, providing numerous commentaries to major international media including the BBC, CNN, Sky News, Voice of America, Bloomberg Radio, Washington Post, Reuters, ABC News, Russia Today etc. He also provides regular commentary and opinion articles to reputable Greek media including SKAI TV, Kathimerini and others.

Mr Arghyrou is a graduate of the Athens School of Economics and Business (BSc Economics, 1993) and holds MSc (1994) and PhD (1998) degrees in Economics from the University of London (Queen Mary). He is currently a Reader in Economics at Cardiff Business School, UK. He has held visiting research positions at the European Commission (DG ECFIN) and the European Central Bank (Fiscal Policies Division).