The impact of the Recovery and Resilience Facility on the Greek economy

Dimitrios Malliaropulos, Dimitris Papageorgiou, Melina Vasardani and Evangelia Vourvachaki
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Melina Vasardani: Bank of Greece
Evangelia Vourvachaki: Bank of Greece

Economic Bulletin, 2021, issue 53, 7-28

Abstract: This study assesses the potential macroeconomic impact of the stimulus and the structural reforms supported by the Recovery and Resilience Facility (RRF) on the Greek economy. The set-up is a Dynamic Stochastic General Equilibrium (DSGE) model that is augmented to account for the main features of Greece’s plan under the RRF framework. The results suggest that the full and timely implementation of the Recovery and Resilience Plan (RRP) implies significant benefits for the Greek economy. Real GDP, private investment and employment can potentially increase by 6.9%, 20% and 4%, respectively, by 2026. Tax revenues also increase, creating fiscal space that can be used to further boost economic activity. The implementation of the structural reforms included in the RRP is necessary for maintaining important benefits also in the long run. The results indicate that the potential increase in long-run GDP from selected quantifiable reforms ranges between 6% and 9.9%, with gains extending to other macro variables.

Keywords: Recovery and Resilience Facility; fiscal policy; structural reforms (search for similar items in EconPapers)
JEL-codes: E27 E6 O4 O52 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:bog:econbl:y:2021:i:53:p:7-28

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