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Tuesday, January 13, 2015

Is Greece’s debt really so unsustainable? | The Exchange

Is Greece’s debt really so unsustainable? | The Exchange :

Lorenzo Bini Smaghi

Lorenzo Bini Smaghi is a former member of the executive board of the European Central Bank and a visiting scholar at Harvard’s Weatherhead Center for International Affairs and at the Istituto Affari Internazionali in Rome

Overall, Greece’s debt does not look as bad as the simple “175 per cent of GDP” ratio would suggest. The request for a substantial debt cancellation can thus hardly be justified on the basis of sustainability alone. It seems rather to be aimed at creating the room for financing a more expansionary fiscal policy.

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