Forecasting Fiscal Variables: Only a Strong Growth Plan Can Sustain the Greek Austerity Programs - Evidence from Simultaneous and Structural Models

24 Pages Posted: 16 May 2013

See all articles by Nicholas Apergis

Nicholas Apergis

University of Piraeus; University of Derby

Arusha V. Cooray

Embassy of Sri Lanka, Oslo

Date Written: May 2013

Abstract

The goal of the present paper is to investigate not only the dynamics of the Greek public debt, but also the appropriate measures required for achieving fiscal consolidation. The empirical estimation is carried out using a macroeconomic dataset spanning the period 1980-2008 and both the 3SLS methodological approach on a theoretical model and the structural VAR methodology to perform forecast tests and to calibrate the future paths of the public debt variable up to 2020. The results suggest that only an aggressive growth policy could permit the country to achieve debt sustainability. The results are expected to have important implications to policy makers for designing effective macroeconomic policy in terms of achieving sustainable levels of public debt.

Keywords: primary balance, public debt, structural modeling, Greece

JEL Classification: E62, C51, C30, E27

Suggested Citation

Apergis, Nicholas and Cooray, Arusha V., Forecasting Fiscal Variables: Only a Strong Growth Plan Can Sustain the Greek Austerity Programs - Evidence from Simultaneous and Structural Models (May 2013). Available at SSRN: https://ssrn.com/abstract=2265694 or http://dx.doi.org/10.2139/ssrn.2265694

Nicholas Apergis

University of Piraeus ( email )

Karaoli and Dimitriou 80
80 KARAOLI & DIMITRIOU STREET
Piraeus, Attiki 18534
Greece

University of Derby ( email )

Kedleston Road
Derby, Derbyshire DE22 1GB
United Kingdom

Arusha V. Cooray (Contact Author)

Embassy of Sri Lanka, Oslo ( email )

Norway

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