The GrExit Paradox

In this paper we consider whether the potential of Greece's exit (GrExit) from the Eurozone has an impact on Greece's economic adjustment program and vice versa. In particular, we ask the question whether the “GrExit” d iscussion is leading into a Catch-22 situation: Greece is expected to default if it does not follow through with the economic adjustment program, when, at the same time, the economic adjustment program appears to be an unsustainab le strategy for revers ing the Greek economic downfall.Our find ings are based on analyzing the literature regard ing (a) the possibility and consequences of a Greek exit from the Eurozone, (b) the viab ility of the Greek economy given the adjustment program, and (c) the magnitude of the discussion regarding Greece's troubled economy before and during the crisis period.