This paper combines dynamic input-output price models with Thirlwall’s extended model of balance of payments constrained growth to estimate the effect of a switch to drachma on domestic income. The findings suggest that a return to national currency would not necessarily deepen the recession,...

This paper presents empirical estimates of the effects of a return to devalued drachma on the cost-inflation rate in the Greek economy. The results show moderate effects and the potential for substantial improvements in the balance of goods and services.