Financial crisis in Greece
The simple model that is proposed by some economists concerning Greek crisis combines three tors. First, deteriorating macroeconomic fundamentals over the period 2001-09, mirrored in an external competitiveness deficit coupled with an unsustainable path for fiscal finances. Second, a shift in market expectations pricing a possible exit of Greece from the EMU, mainly due to the lack of commitment of Greek authorities to undertake unpopular structural reforms. Third, the pricing by markets of a (previously non-existent) default risk that follows the with-drawal of an implicit guarantee on Greek debt by other EMU countries (mainly Germany).