A Small Macro-Econometric Model for Greece: Implications About the Sustainability of the Greek External Debt

33 Pages Posted: 13 Jul 2011 Last revised: 15 Jul 2011

See all articles by Dimitrios Asteriou

Dimitrios Asteriou

Hellenic Open University

Dionysis Antonios Lalountas

University of Patras

Costas Siriopoulos

Zayed University, College of Business; University of Patras - Business Administration

Date Written: July 13, 2011

Abstract

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).

Keywords: debt, greek debt crisis, macro-econometric model

JEL Classification: E10, E17, H63, H68

Suggested Citation

Asteriou, Dimitrios and Lalountas, Dionysis Antonios and Siriopoulos, Costas, A Small Macro-Econometric Model for Greece: Implications About the Sustainability of the Greek External Debt (July 13, 2011). Available at SSRN: https://ssrn.com/abstract=1884905 or http://dx.doi.org/10.2139/ssrn.1884905

Dimitrios Asteriou (Contact Author)

Hellenic Open University ( email )

Bouboulinas 57-59
Patra, 26222
Greece

Dionysis Antonios Lalountas

University of Patras ( email )

Patras
Greece

Costas Siriopoulos

Zayed University, College of Business ( email )

P.O. Box 144534
Abu Dhabi
United Arab Emirates

University of Patras - Business Administration ( email )

Patras
Greece

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