The fiscal crisis as a crisis in trust

Michael Haliassos

No 25, SAFE Policy Letters from Leibniz Institute for Financial Research SAFE

Abstract: Neither Northerners are willing to invest in a South they perceive as unwilling to undertake necessary structural reforms, nor are Southerners willing to invest in their countries in a climate of austerity and policy uncertainty imposed, in their view, by the North. This results in a vicious cycle of mistrust. However, as the author argues, big steps in the direction of reforms may provide just enough thrust to break out of this vicious cycle, propel southern countries - and especially Greece - to a much happier future, and promote the chances for more balanced economic performance in North and South.

Keywords: fiscal crisis; household liquidity; economic reforms; Greece (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-eec and nep-soc
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