Explaining why “Austerians” and “Keynesians” and policy makers disagree on the approach to be taken to the Greek crisis.

Your task is to write an essay not exceeding 2500 words explaining why these two groups of economic commentators and policy makers disagree on the approach to be taken to the Greek crisis.

Your essay should include the following:

• An introduction to the Greek crisis giving some of the main causes and facts. DO NOT SPEND TOO LONG ON THIS. This section should account for no more than about 20% of the essay.

• A brief statement of the “Austerian” position. The main elements can be found in the article by Paul Krugman cited on page 4 of this document, but you will get credit for any additional research or use of economic theory. This section should account for no more than about 20% of the essay.

• An explanation of the “Keynesian” position using the Keynesian model (this includes the Keynesian Cross model, the IS-LM model and the AD-AS model). This is the main section and should account for about 60% of the essay.

• At least three line diagrams, although equations may also be used. If you do not include diagrams in your essay, you will not receive a pass mark.

• A brief conclusion containing a summary of your main points and highlighting any issues you did not have time to address. You may wish to include your own opinion here.

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