Testing the Kumara Swamy Theorem of Inflationary Gap in the Cypriot and Greek Economies – Research Findings

Abstract:     
Due to the international crisis in the global economy the Euro zone economy is expected to grow with significantly lower rates. Moreover, inflation is accelerated internationally, due to increases in oil prices and food prices. In this paper we have attempted to investigate if the Kumara Swamy theorem of inflationary gap is applicable in the Cypriot and Greek economies. We tested the Theorem for the period 2004-2009 and we obtained favorable results mainly for the Cypriot economy.

Keywords: Greek Economy, Cypriot Economy, Inflationary Gap

JEL Classification: C82, E31, E51, E63, G01, N15

Accepted Paper Series