A Small Macro-Econometric Model for Greece: Implications About the Sustainability of the Greek External Debt
Hellenic Open University
Dionysis Antonios Lalountas
University of Patras
University of Patras - Business Administration
July 13, 2011
This paper develops a small-scale macro-econometric model for Greece. The model will be used in order to examine the impact of macroeconomic policies on the real sector of the economy during the very difficult adjustment period that the Greek economy is currently facing. The model combines short-run Keynesian dynamics with a consistent neoclassical supply side. In this version potential output is given by a constant returns-to-scale Cobb-Douglas type production function. In most cases the short-run dynamics are modeled through an Error Correction Mechanism (ECM) which assumes the presence of adjustment costs in order to smooth-out the long-run equilibrium. A public sector side is also used in order to examine the impact of various shocks on public finance (specifically public debt).
Number of Pages in PDF File: 33
Keywords: debt, greek debt crisis, macro-econometric model
JEL Classification: E10, E17, H63, H68working papers series
Date posted: July 13, 2011 ; Last revised: July 15, 2011
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