"Twin deficits" in Greece in search of causality

Michalis Nikiforos, Laura Barbosa de Carvalho and Christian Schoder

No 143-2014, IMK Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: The paper discusses the trajectories of the Greek public deficit andsovereign debt between 1980 and 2010 and its connection to thepolitical and economic environment of the same period. We payspecial attention to the causality between the public and the externaldeficit in the period after 1995, the post-Maastricht treaty period.We argue that, due to the European monetary unification processand the adoption of the common currency, causality ran fromthe external deficit to the public deficit. This hypothesis is testedeconometrically using both Granger Causality and Cointegrationanalyses. We find empirical support for this hypothesis.

Keywords: Greece; crisis; public debt; twin deficits; imbalances (search for similar items in EconPapers)
JEL-codes: E62 F21 F34 F41 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2014
New Economics Papers: this item is included in nep-cba, nep-mac and nep-opm
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: “Twin deficits” in Greece: in search of causality (2015)
Working Paper: “Twin deficits” in Greece: in search of causality (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:imk:wpaper:143-2014

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