Paolo Manasse, 27 January 2015

With the large Syriza victory in Greece, thoughts turn to forthcoming debt restructuring talks. This column argues that Greece is unlikely to get a large restructuring. Using a Rubinstein bargain approach to generate a back-of-the-envelope estimate, Greece would get some breathing room but not much. Rather than running a structural primary surplus of the order of 5% of potential output, as envisaged in the IMF projection, Greece could get away with a number close to 3.75%.

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