Is the Greek crisis one of supply or demand?

Greece’s “supply” problems have been present since its accession to the European Union in 1981; the “demand” problems caused by austerity and wage cuts have compounded the structural problems. This paper discusses the severity of the demand contraction, examines product market reforms, many of which have not been implemented, and their potential impact on competitiveness and the economy, and labor market reforms, many of which have been implemented but due to their timing have contributed to the collapse of demand. The paper argues in favor of eurozone-wide policies that would help Greece recover and of linking reforms with debt relief.