The Analytics of the Greek Crisis
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Speaker
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Prof. Dimitri Vayanos
Professor of Finance, Head of the Department of Finance; Director of Paul Woolley Centre for the Study of Capital Market Dysfunctionality, LSE
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Chair
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Dr Vassilis Monastiriotis
Associate Professor in the Political Economy of South East Europe, LSE
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Date
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Tuesday, 8 November 2016
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Venue
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LSE, Old Building, Room: OLD 3.21,
Houghton Street, London WC2A 2AE
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Time
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18:00-19:30
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Poster
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The event was broadcasted live on Livemedia http://www.livemedia.com/vayanos
Abstract
In this Research Seminar, Professor Dimitri Vayanos provided an empirical and theoretical analysis of the Greek Crisis of 2010. His presentation was based on research conducted by the latter together with Pierre-Olivier Gourincha (UC Berkeley, NBER and CEPR Group Chief Economist ) and Thomas Philippon (NYU Stern and NBER, which resulted in the publication of the GreeSE paper No.100 - ‘’The Analytics of the Greek Crisis’’.
In this research paper the authors first benchmark the crisis against all episodes of sudden stops, sovereign debt crises, and lending boom/busts in emerging and advanced economies since 1980. The decline in Greece’s output, especially investment, is deeper and more persistent than in almost any crisis on record over that period. They then propose a stylized macro-finance model to understand what happened. They find that a severe macroeconomic adjustment was inevitable given the size of the fiscal imbalance; yet a sizable share of the crisis was also the consequence of the sudden stop that started in late 2009. Their model suggests that the size of the initial macro/financial imbalances can account for much of the depth of the crisis. When they simulate an emerging market sudden stop with initial debt levels (government, private, and external) of an advanced economy, they obtain a Greek crisis. Finally, in recent years, the lack of recovery appears driven by elevated levels of non-performing loans and strong price rigidities in product markets.
Biography
Dimitri Vayanos is Professor of Finance at the London School of Economics, where he also heads the Department of Finance and directs the Paul Woolley Centre for the Study of Capital Market Dysfunctionality. He received his undergraduate degree from Ecole Polytechnique in Paris and his PhD from MIT. Prior to joining the LSE, he was faculty member at Stanford and MIT. His research, published in leading economics and finance journals, such as the Journal of Finance, the Journal of Financial Economics, the Quarterly Journal of Economics, the Review of Economic Studies, and the Review of Financial Studies, focuses on financial markets, and especially on what drives market liquidity, why asset prices can differ from assets’ fundamental values, why bubbles and crises can occur, and what are appropriate regulatory and policy responses. He is a Fellow of the British Academy, a Research Fellow at CEPR and a former Director of its Financial Economics program, a Research Associate at NBER, a former Director of the American Finance Association, and a former Managing Editor of the Review of Economic Studies.
PHOTOS
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