Greece itself must take charge to roll out necessary reforms

The answer to Greece’s economic woes lies in it adopting the right structural reforms as no amount of debt restructuring or debt forgiveness, will suffice to achieve prosperity, says Edmund S Phelps 

SOME economists overlook the modern idea that a country’s prosperity depends on innovation and entrepreneurship. They take the mechanistic view that prosperity is a matter of employment, and that employment is determined by “demand” – government spending, household consumption, and investment demand.

Looking at Greece, these economists argue that a shift in fiscal policy to “austerity” – a smaller public sector – has brought an acute deficiency of demand and thus a depression. But this claim misreads history and exaggerates the power of government spending.