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Greece: The Sudden Stop That Wasn’t

by Aaron Tornell & Frank Westermann

With economists’ eyes fixed squarely on Greece, this column tries to solve a puzzle. Since 2008, tens of billions of euros have fled Greek bank accounts. Yet somehow the country still has a current-account deficit. Where has this money come from?

Normally, things don’t work like this for nations in crisis. Greece has experienced severe capital flight yet its current-account deficit has remained almost unchanged; its international reserves are little changed. On net, €24 billion of private capital left the country between 2008 and 2010, but Greece still managed to accumulate a €85 billion current-account deficit – 12% of GDP.

Where has the money come from? The answer can be found by looking at the balance of payments statistics.

Posted by行政3 October 20113 October 2011Posted inEconomics, Eurozone, International Economic dataTags: Aaron Tornell, account deficit, bailout, ECB, euro, Eurozone, Frank Westermann, Greece, IFO Institute, IMF
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