Stylized Facts of Greek Business Cycles: New Evidence from Aggregate and Across Regimes Data

Abstract

This study addresses stylized facts of the Greek economy over the period 1960-2003. The findings conveyed the procyclicality of consumption, while it is smoother than income. Investment and government expenses are more volatile than income. Prices are countercyclical, lending support to real business cycles. Real wages are procyclical, indicating that labor market developments are explained by shocks that shift the labor demand curve. By making allowances for changes in the regime, the empirical analysis provides supports to the same conclusions. The study also provides evidence about the identification of shocks related to the business cycle. The results showed that it is real shocks that drive the economy, implying that demand management policies do not work.

Keywords: Business cycles, stylized facts, real wages, variance decompositions, Greek economy

JEL Classification: E24, E32, C32