However, I also observe that the GIPSI economies would be trapped in contexts of debt deflation and low competitiveness even if the ECB would have acted as lender of last resort of the governments.
6) The ability of the narrative to depict the macroeconomic dynamics of the GIPSI cases is discussed in Cesaratto (2012) and Bagnai (2012).
However, in fact, instead of a gradual process, the contracting phase can be an abrupt fall triggered, for instance, by a sudden stop of capital flows induced by contagion effects, as it happened in a number of emerging markets and in the GIPSI cases.
In the Eurozone economies, the exchange rate risk has had no role in the portfolio decisions leading to capital outflows (at least until the GIPSI critical processes were well advanced, when the possibility of Greece abandoning the euro and issuing a new currency became visible).
As in the emerging markets cases, a large proportion of the financing needs of the GIPSI governments must necessarily be covered with funds from the market, even after adjustments have been made in the public accounts.
b) Grupo de investigacion en Psiquiatria GIPSI
, Clinical instructor, Department of Psychiatry, University of California, Los Angeles, California, Estados Unidos