Dimitrios Tsomocos - ‘Global Imbalances and Greece's Exit from the Crisis’

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Date: Wednesday 7 February 2018
Time: 18:00 -19:30
Speaker:  Dimitrios Tsomocos  
Talk Title: ‘Global Imbalances and Greece's Exit from the Crisis’
Location: Ramsden Room, St Catharine's College

All are welcome. The seminar series is supported by the Cambridge Journal of Economics and the Economics and Policy Group at the Cambridge Judge Business School.

Speakers

Dimitrios P. Tsomocos is a Professor of Financial Economics at Saïd Business School and a Fellow in Management at St Edmund Hall, University of Oxford. His main areas of expertise include: Banking and regulation, Incomplete asset markets, Systemic risk and Financial instability. He co-developed the Goodhart - Tsomocos model of financial fragility in
2003 while working at the Bank of England. The impact has been significant and more than ten central banks have calibrated the model.
Professor Tsomocos provided testimony to House of Lords for the Economic and Financial Affairs and International Trade Sub Committee's report, 'The future of economic governance in the EU'. He has worked with central banks in countries including England, Bulgaria, Colombia, Greece, Korea and Norway to implement the Goodhart - Tsomocos model and advise them on issues of financial stability. He also serves as a Senior Research Associate at the Financial Markets Group at the London School of Economics. Prior to joining the Saïd Business School in 2002, Professor Tsomocos was an economist at the Bank of England. He holds a BA, MA, M.Phil., and a PhD from Yale University.

Talk Overview
The global capital imbalances constituted a primary factor for the Eurozone debt crisis and amplified the divergence between the core countries and the periphery. For the case of Greece there exist three 'alternative' mainstream explanations of the crisis and the subsequent recession: The Greek (political and institutional inefficiency), the European (institutional incompetence and extended corruption) and the I.M.F. (debt overhang, necessity of “hard” budget constraints, public investments and expansionary monetary policy). The two academic strands that dominate the debate are the one of the importance of debt overhung and rational expectations and the one of heterogeneous general equilibrium models. We argue that the exit from the crisis warrants:

  1. Debt restructuring and nationalisation of N.P.L.s
  2. Reduction of public sector profligacy and institutional efficiency
  3. Public investments and investments for internationally traded goods
  4. Tax relief (corporate and property taxation)
  5. Re-stabilisation of market expectations and creditworthiness.