The example of Greece shows that “well-targeted deregulatory reforms can help lay the foundation for more sustained and robust economic growth by expanding the productive capacity of the economy,” Stephen Miran, a member of the board of governors of the US Federal Reserve System, has told an Athens audience.
Miran made the remarks in a lecture at the National Gallery-Alexandros Soutsos Museum, which he delivered at the invitation of the Delphi Economic Forum.
Introducing the speaker, US Ambassador Kimberly Guilfoyle described him as “one of the most important and influential economic thinkers in Washington, one who [US President Donald Trump] relies on.”
Speaking on the topic of “The Implications of Deregulation for Monetary Policy,” Miran said that Greece’s recovery from the 2009 financial crisis “was only possible after the Greek people implemented substantial and painful reforms, including alleviating suffocating overregulation in many sectors.”
“In addition to the other reforms embraced by Greece, deregulation freed businesses to compete domestically and internationally and promoted individuals’ access to the economy,” he said. “The range of reforms has included liberalizing product and service markets, easing licensing and administrative burdens, opening previously restricted processions and increasing labor market flexibility.”
He said that while it is challenging to quantify how these deregulatory actions have affected the economy, there was little doubt that they have supported a “remarkable return to economic growth and higher living standards. Macroeconomic stability has returned to Greece. Unemployment has fallen to its lowest level since the global financial crisis and investment and exports have rebounded.”
“Product and labor market reforms helped restore competitiveness, reduce unit labor costs and encourage firm entry,” he said. “Greece has come a very long way in impressing the whole world in its recovery.”
Miran also used Greece’s example to call on the US central bank to cut interest rates, warning that “if the Federal Reserve fails to reduce policy rates in response to deregulation, there will be adverse consequences.”
“Greece’s experience testifies to this. Had the ECB not implemented exceptionally loose monetary policy, and effectively accommodated Greece’s structural reforms, the outcome for Greece would have been quite different [and] the outcome for the eurozone would have been quite different,” he said.
In a question and answer session with Kathimerini Executive Editor Alexis Papahelas, Miran described Greece as a “huge success story.”
“The growth in Greece seems to be very dynamic and very strong compared to other parts of the eurozone and other parts of the world,” he said.
Miran’s term as a Fed governor ends on January 31. He is serving at the central bank while on leave from his role as a top economic adviser to President Trump, who has repeatedly pressed the central bank to deliver big rate cuts.