High unemployment and fiscal austerity during the Great Recession have led to significant migration outfl ows in those European countries that suffered a deep deterioration of their economy, Greece being the most obvious case. This paper introduces endogenous migration in a small open economy...

This paper studies the role of emigration in a deep recession when the government implements fiscal consolidation. We build a small open economy New Keynesian model with matching frictions and emigration of the labour force. Our simulations for the Greek Depression show that fiscal austerity...