Capital mobility and macroeconomic volatility: evidence from Greece

Anastasios Pappas

MPRA Paper from University Library of Munich, Germany

Abstract: This paper focuses on the impact of full capital account liberalization on macroeconomic volatility in Greece. According to the standard neoclassical model, such liberalization is to be desired because, among other advantages, it may reduce macroeconomic volatility. The link between macroeconomic volatility and capital account openness in the Greek economy is investigated by applying a simple three-month rolling standard deviation of real GDP growth and real final (total) consumption growth combined with more formal econometric methods such as Granger causality test and multivariate regressions. There is no strong evidence for a stable relation between macroeconomic volatility and variables of financial openness. Thus other factors, such as exchange rate volatility and exogenous shocks rather than a full liberalization of capital movements, seem to be related to macroeconomic growth volatility in the Greek economy.

Keywords: Volatility; Capital mobility; Gross domestic product; Consumption; Growth (search for similar items in EconPapers)
JEL-codes: E32 E44 F30 F36 F41 (search for similar items in EconPapers)
Date: 2010-06
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Citations: View citations in EconPapers (1)

Published in Journal of Economic Asymmetries 1.7(2010): pp. 101-121

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Related works:
Journal Article: Capital Mobility and Macroeconomic Volatility: Evidence from Greece (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:29106

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