Greece’s debt is 180% of GDP, which seems to make it insolvent without large primary surpluses. This column argues that since restructuring lowered the interest burden to just 2% of GDP, Greece is solvent – or would be with nominal GDP growth of just 2%. The ECB’s misdiagnosis has caused an unnecessary banking crisis. The solution is to accept that Greek debt is sustainable, so the austerity programme can be relaxed and liquidity support provided to the Greek banking sector.
Two financial crises at the ‘sub federal’ are currently taking place – one in the Commonwealth of Puerto Rico, and the second one in Greece. This column highlights some surprising similarities between them, as well as the main differences. The Eurozone is a voluntary union of states which remain sovereign. But if Greece were part of the US, it could not hold a referendum, and its budget would be drawn up by a federal bankruptcy court. The key political difference is not austerity, but the fact that Greece’s debt is mainly to official creditors, who are ideal targets for political pressure.
If more firms are established in developing countries, more jobs are created. But which type of firm creates the most jobs? This column presents evidence from Tunisian suggesting that once you’re established as a new and promising firm, it’s harder than it should be to grow and create jobs. Weak firm dynamics and imperfections in the market prevent the best firms from flourishing.
Fear of stigmatisation might lead to hiding of behaviours and actions. This column presents evidence that stigma concerns can play a role in health seeking behaviour in the case of mental health. In particular, survey respondents under-report mental health conditions 36% of the time when asked about mental health conditions, and about 20% of the time when asked about prescription drug use. Conditions such as diabetes and cardiovascular diseases are less likely to be under-reported.
Sadly, a large number of crimes are committed by ex-prisoners on their first day of release. This column presents evidence showing that on any given day the number of inmates released from incarceration significantly affects the number of offenses committed on that day. ‘First-day recidivism’ can be eliminated by an increase in the gratuity provided to prisoners at the time of their release. It’s much cheaper than any other option.
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