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The Greek economy is unlikely to benefit from further devaluation

Gros, Daniel, Alcidi, Cinzia, (2015), “The Greek economy is unlikely to benefit from further devaluation”, Ceps publications, 3 Ιουλίου

Μartin Wolf offers an excellent analysis of how the Greek voter may feel about Sunday’s referendum. There is no good option: either be engulfed in the chaos
following the rejection of the programme, exit and collapse of the economy or accept another programme. On one account, however, Mr Wolf’s gentle optimism may be disappointed. He suggests that the cost of exiting might be temporary and offset by the benefits of the ensuing devaluation in terms of increased competitiveness and exports. This is indeed what one would expect from a small open economy, where the export sector is important and benefits from lower domestic costs.

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