The Schäuble-Feldstein Grexit plan13 July, 2015 at 16:31 | Posted in Economics | Leave a comment
German finance minister Wolfgang Schäuble obviously contemplates the possibility of a temporary Greek euro-exit.
Actually, Martin Feldstein — Harvard professor of economics — proposed that option already four yeas ago:
A temporary leave of absence from the eurozone would allow Greece to achieve a price-level decline relative to other eurozone countries, and would make it easier to adjust the relative price level if Greek wages cannot be limited. The Maastricht treaty explicitly prohibits a eurozone country from leaving the euro, but says nothing about a temporary leave of absence (and therefore doesn’t prohibit one). It is time for Greece, other eurozone members, and the European Commission to start thinking seriously about that option.
And even more, I think there are overwhelmingly good reasons to question if the euro really is a worthwhile experiment at all …