Essays on Whether Institutions Like IMF and EU Are Helping or Hindering Economy Recovery in Greece Report

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The paper "Whether Institutions Like IMF and EU Are Helping or Hindering Economy Recovery in Greece" is a perfect example of a report on macro and microeconomics. An economic  crisis is in most cases followed by governments defaulting to pay their debt obligations. As the economic crisis came to an end, it was followed by a threat of a sovereign debt crisis. Greece is facing a sovereign debt after the economic crisis (Schmidt, 2010). In 2010, the International Monetary Fund (IMF) and the European Union (EU) endorsed about $145 billion as a financial package to Greece aiming to avoid Greece default.

The move would also ensure that the crisis did not spread to other European countries. EU added about $636 billion as financial assistance to the venerable countries in Europe (Abboushi, 2011). Despite the financial assistance to Greece, the threat of its financial crisis and economic downturn is real (Lane, 2012). This essay will discuss whether institutions like the IMF and EU are helping or hindering economic recovery in Greece. This will be discussed incorporating economic deficit. Greece current economic crisis is associated with both domestic and international factors.

Domestically, there was high government spending, corruption, issues of tax evasions and system rigidity (Schmidt, 2010). These led to the debt accumulating to for a long time. On the international side, Greece adoption of Euro and the EU rules also contributed to the debt crisis. Domestically, government expenditure was higher than the growth of their revenues. This led to huge budget deficits which were above the EU threshold (Lane, 2012). Democratic deficit is associated with the EU and other bodies due to complexity of their operations which make it hard for the citizen to access them.

The financial crisis was also contributed to this weakness of the EU system of governance. Despite the fact that Euro remains strong, EU economies have been sluggish since the financial crisis. EU has deviated from their goal of promoting economic growth to the European countries towards polarization among members. Euro had been a symbol of the union success but with the failure of the Greece economy, it has become a symbol of failure for EU. The Greece crisis shows the effects of the democracy deficit through inability of democracy to respond and solve the international problems (Buiter & Rahbari, 2010).

References

Abboushi, S. (2011). Analysis and outlook of the Greek Financial Crisis. Journal of Global Business Management, 7(1), 1-8.

Buiter, W. H., & Rahbari, E. (2010). Greece and the fiscal crisis in the EMU. Centre for Policy Research Paper (Policy Insight No. 51).

Chamley, C. P., & Pinto, B. (2011). Why official bailouts tend not to work: An example motivated by Greece 2010. The Economists' Voice, 8(1).

Gocaj, L., & Meunier, S. (2013). Time will tell: the EFSF, the ESM, and the Euro Crisis. Journal of European Integration, 35(3), 239-253.

Gros, D., & Mayer, T. (2010). How to deal with sovereign default in Europe: Create the European Monetary Fund now!. CEPS Policy Brief, (202).

Haidar, J. I. (2012). Sovereign credit risk in the euro zone. World Economics, 13(1), 123-136.

Katsimi, M., & Moutos, T. (2010). EMU and the Greek crisis: The political-economy perspective. European Journal of Political Economy, 26(4), 568-576.

Lane, P. R. (2012). The European sovereign debt crisis. The Journal of Economic Perspectives, 26(3), 49-67.

Schmidt, V. A. (2010). European Union's Eurozone Crisis and What (Not) to Do about It, The. Brown J. World Aff., 17(1), 199.

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