Development and Underdevelopment in the History of Economic Thought

The Eurozone and the Greek crisis: A history of economic thought approach

Psalopoulos Michalis, IMF and University of Athens

The purpose of this paper is to take stock of the Eurozone and the Greek crisis, from a history of economic thought perspective. I discuss the existing economic paradigm in international political economy thinking that prevailed globally from the 1990ies up to the global economic crisis. I investigate the peculiarities of economic thought in European institutions. I proceed to analyze the shift in economic thought and policy that occurred after the Lehman collapse, with special reference to its reflection in the response of governments and international organizations to avert a global economic meltdown from 2008 to 2010. I then continue to discuss the renewed reversal in economic ideas that occurred because of the Greek crisis and the Eurozone crisis in general, distinguishing between the approach of the European Institutions and the economic ideas within the IMF. In a final section I draw conclusions about the power of certain economic ideas and question their validity as the global economy, having not experienced the worst in the past decade, is moving, according to recent forecasts, toward new global imbalances.

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Keywords: Eurozone, Greece, Crisis