Greek myths

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Abstract:

The stories that we tell about the economy are part of the political battle. As Keynes pointed out, and as we have recently been reminded by George Akerlof and Robert Shiller, 'animal spirits' play a part in economics – that is, perception influences reality, since we do not know all we need to know to make rational decisions in conditions of uncertainty. Hence the importance of narrative in arguments over economics. The dominant narrative surrounding Greece's difficulties is unpicked: it ignores the Greek government's long-term failure to collect taxes, and the role of the banks in increasing Greek exposure while betting on its failure; instead, it emphasises the usual story of over-expenditure on public services. This narrative is then brought into play to sustain a general argument in favour of cutting back on public expenditure throughput Europe.

Keywords: ANIMAL SPIRITS; BANKING; BEHAVIOURAL ECONOMICS; GREECE; PUBLIC SPENDING

Document Type: Research Article

DOI: http://dx.doi.org/10.3898/136266210792307023

Publication date: August 11, 2010

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