Greek multiplier does look greater than one!

Greek government spending down since 2009 and Greek GDP per capita down during the same period!

Greek interest payments did not shoot up until the crisis, and prior to htat were about 10% of government expenses.  So, I give this one to the IMF, who said they have a multiplier of 1.3.


So what happened? Greece is a small nation trying to live among France, Germany and Italy.  These heavy weights can carry long term debt, Greece cannot. Term mismatch, and it happened because the ECB is not a fair currency bank.

Multipliers tell us how symmetric and centered is the correlation matrix, it says nothing about whether the economy is nutty or sane.  Greek is more like an independent Los Angeles County, the optimum economic unit, in Arnold Kling's view.  They will have high and stable correlations with the economy, efficiently bad or good; but efficient.

Keynesians, of course, will misinterpret this, trying to work backwards from the aggregate.  But in Greece, the people know what the government can and cannot do, the imprecision is already established in the correlation. So a Keynesian working from the Greek government out will just foul up, and mostly be ignored.