We review the events that led to the May 2010 and July 2011
bailout agreements. We interpret the bailouts as outcomes of
political-economy equilibria. We argue that these equilibria were
likely not on the Pareto frontier, and sketch political-economy arguments for why collective policymaking in the Euro area may lead to suboptimal outcomes.
"The Political Economy of the Greek Debt Crisis: A Tale of Two Bailouts."
American Economic Journal: Macroeconomics,
Central Banks and Their Policies
International Lending and Debt Problems
National Budget; Budget Systems
National Debt; Debt Management; Sovereign Debt