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Greece and the Troika: Lessons from international best practice cases of successful price (and wage) adjustment

Ansgar Belke () and Daniel Gros

No 694, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: This paper reviews cases of successful price and wage adjustment, which are often regarded as constituting best practice, Australia, Latvia and the newly-formed German states and contrasts them with the Greek experience under the Troika Program. Latvia stands out as having had the quickest adjustment in wages. By contrast, before the crisis, Greek wages appeared to have been largely insensitive to labour market conditions but this changed with the program. We find that the reaction of wages to unemployment in Greece under the program was increasingly similar to that observed in Germany and Portugal (a case which has attracted less attention). A priori it is likely that the change in wage behaviour in Greece was due to the labour market reforms imposed under the program. But this cannot be proven beyond doubt.

Keywords: Phillips Curves; price and wage adjustment; internal devaluation; Australia; Greece; Latvia; Portugal; West vs. East Germany (search for similar items in EconPapers)
JEL-codes: E31 F49 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2017
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Related works:
Journal Article: Greece and the Troika – Lessons from International Best Practice Cases of Successful Price (and Wage) Adjustment (2017) Downloads
Working Paper: Greece and the Troika – Lessons from international best practice cases of successful price (and wage) adjustment (2017) Downloads
Working Paper: Greece and the Troika – Lessons from international best practice cases of successful price (and wage) adjustment (2017) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:694

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