Harvard Professors Study on Greece’s Recovery

ELLADACRISIS10_510_355Harvard professors, Kenneth Rogoff and Carmen Reinhart, estimate that the time required for the recovery of the lost revenue during a banking crisis is about eight years. The two professors studied the cases of 100 banking crises that occurred during the last two centuries.

According to their study — excerpts of which were published in Bloomberg — out of the 12 countries that were hit from the 2008 crisis, only Germany and the U.S.A managed to regain the capital they had before the crisis.

Studying the per capita gross domestic product of Greece, Netherlands, Italy, Portugal and Spain, the two professors record the continuation of its retreat in 2013, while for the remaining five countries the per capita income either didn’t increase or didn’t increase enough to reach previous levels.

As reported out of the 100 economies studied, the 43 plunged into recession for a second time. That’s why the two professors point out that perhaps governments are required to “adopt some of the approaches that have been relegated to the emerging markets over the last few decades,” in order to accelerate recovery. Such policies should include debt restructuring, faster inflation and the introduction of capital controls.

Finally they warn that “Delays in accepting that desperate times call for desperate measures keeps raising the odds that, as documented here, this crisis may in the end surpass in severity, the depression of the 1930s in a large number of countries.”