The Greek Great Depression from a neoclassical perspective

Dimitris Papageorgiou and Stylianos Tsiaras

No 286, Working Papers from Bank of Greece

Abstract: This paper follows the great depression methodology of Kehoe and Prescott (2002, 2007) to study the importance of total factor productivity (TFP) in the Greek economic crisis over the period 2008-2017. Using growth accounting and the neo- classical growth model, the paper shows that exogenous changes in TFP are crucial for the Greek depression. The theoretical model reproduces quite well the decline in economic activity over 2008-2013 and the subsequent period of slow recovery found in the data. Nevertheless, it is less successful in predicting the magnitude of the decline in output and the labour factor. In addition, including financial frictions and risk shocks into the neoclassical growth model, does not significantly improve the model’s performance.

Keywords: Great Depression; Greece; Growth Accounting; DSGE (search for similar items in EconPapers)
JEL-codes: D81 E44 E52 E58 G01 G21 G33 (search for similar items in EconPapers)
Pages: 38
Date: 2021-02
New Economics Papers: this item is included in nep-cwa, nep-dge, nep-eec, nep-fdg and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:bog:wpaper:286

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