Foreign and Public Deficits in Greece: In Search of Causality

Michalis Nikiforos, Laura Barbosa de Carvalho and Christian Schoder

Economics Working Paper Archive from Levy Economics Institute

Abstract: The paper discusses the trajectories of the Greek public deficit and sovereign debt over the last three decades and its connection to the political and economic environment of the same period. We pay special attention to the causality between the public and the foreign deficit. We argue that from 1980 to 1995 causality ran from the public deficit to the foreign deficit, but that due to the European monetary unification process and the adoption of the common currency, causality has reversed since. This hypothesis is tested and verified econometrically using both Granger Causality and Cointegration analyses.

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)
Date: 2013-08
New Economics Papers: this item is included in nep-eec, nep-mac and nep-pke
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:lev:wrkpap:wp_771

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