Greece's best approach to its crisis would be to overhaul its economic policy to favor growth-oriented, business-friendly measures, according to Stanford economist John B. Taylor, reported Stanford News Service.
Taylor, the George P. Shultz Senior Fellow in Economics at the Hoover Institution, said that the origins of the Greek debt crisis can be found in economic and political mistakes by that country as well as by the European financial community.
On July 5, Greek voters rejected the terms of an international bailout.
Clifton B. Parker of the Stanford News Service interviewed Taylor on the Greek crisis. Taylor analysed the economic situation in Greece and how the country get to this point during the interview.
He said three factors - economic policies, the interest rate set by the European Central Bank (the ECB), and International Monetary Fund's (IMF) move to loan more money to Greece in 2010 without first insisting on the Greek debt being sustainable.
“Greece's economic policies – regulatory, rule of law, budget, tax – have been very poor. In fact, their policies are the worst in Europe, according to the Heritage Foundation index, and on a par with many poor sub-Saharan African countries. This factor alone explains much of Greece’s poor economic growth,” said Taylor in the interview.
Taylor says that Greece's best approach to its damaged economy is to radically change its economic policy in a pro-growth direction. He suggests making it easier to start up new businesses, while holding the line on tax increases and reducing governmental influence in the economy.
Read the whole interview here.