No Eurozone Country Has Done More 'Austerity' Than Greece

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Includes: ADRU, DBEU, DBEZ, DEUR, DEZU, DRR, EDOM, EEA, EPV, ERO, EUFL, EUFN, EUFS, EUFX, EUO, EURL, EZU, FEEU, FEP, FEU, FEUZ, FEZ, FIEE, FIEU, FLEE, FXE, GREK, GSEU, HEDJ, HEZU, HFXE, IEUR, IEV, PTEU, RFEU, UEUR, ULE, UPV, URR, VGK
by: Lars Christensen

It is often said that Greece is to blame for its own fiscal problems. That to some extent is correct, but no other country in the eurozone has tightened fiscal policy more than Greece since 2011.

The real reason for Greece's public finance crisis has been the collapse in nominal GDP since 2008 rather than overly easy fiscal policy.

And nominal GDP would never have dropped as much had Greece not been in the euro. Greece had a monetary crisis (a nominal GDP collapse), which turned into a debt crisis. The crisis never was a result of overly easy fiscal policy.

That is not an excuse for not doing reforms, but it is important when talking about the performance of different countries to study the data rather than to blame national stereotypes.

PS: Note what country has done the least fiscal austerity since 2011 - Estonia which is often said to be 'fiscally conservative.'