The Contribution of Sectoral Productivity Differentials to Inflation in Greece

Gibson, Heather D.; Malley, Jim

doi:10.1007/s11079-007-9071-3

Cited by 24 publications

(6 citation statements)

References 21 publications

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“…It should be stressed that in the case of non-tradable services, the inflation differential is sufficient to document the discrepancy between supply and demand, but the emergence of such a differential for goods as well suggests the peculiarity of the case of Greece. Therefore, the evidence at hand would make it more appropriate to label Greece as a unique case of 'quasi Balassa-Samuelson', where exports are replaced by EU-transfers and domestic credit expansion through external public and private borrowing, and the price level is pushed upwards both in the goods and in the services sector, which would actually be in line with the conclusions of recent research on the topic (Gibson 2007;Pelagidis and Toay, 2007). The increase of the goods deficit follows as a natural consequence in this case, as increases in demand are satisfied by competitive and available imported goods as there is no sufficient domestic supply of goods that can compete with the imports.…”

Section: Essupporting

confidence: 61%

Greece’s Sudden Faltering Economy: From Boom to Bust With Special Reference to the Debt Problem

Desli

Pelagidis

2012

The Euro Crisis

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In this paper, we deal with theoretical propositions and empirical evidence that are needed to explain the paradox of rapid GDP growth in the face of the dismal competitiveness of the Greek economy during 1995-2008. We show how Greece's economy structural weaknesses have hit the domestic economy and we investigate their impact on the current turmoil of the economy. We show that the previous favourable global economic environment acted as a locomotive to domestic growth, and now that it is gone, structural problems of poor governance, low competitiveness and a ballooning public deficit and debt, have come to the surface. Also, in the context of debt sustainability we look at the recent actions to reduce debt that are taken by the Growth and Stability Program. We construct five scenarios regarding the level of public debt at the end of the 2011-2015 period that is commonly accepted that Greece will return to global financial markets to finance its debt. We find that only under a very optimistic scenario of robust growth of the economy based on structural and institutional reforms that boost productivity, significantly improve competitiveness, and boost the financial sector as described in the Growth and Stability Program along with a successful privatization of 50 billion euros the public debt to gdp ratio can reach the 60% threshold that the financial markets find comfortable. We offer a specific explanation of the current unfortunate state of the economy and we briefly suggest avenues of necessary progressive reforms to overcome it.

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Section: Essupporting

confidence: 61%

Greece’s Sudden Faltering Economy: From Boom to Bust With Special Reference to the Debt Problem

Desli

Pelagidis

2012

The Euro Crisis

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“…In more detail, in the 6-variable SVAR we substitute real GDP and REER for the log of non-tradable real output and the log of the tradable real output. We allocate sectors to the non-tradable and tradable sectors following Eurostat (2008), and earlier studies like Gibson and Malley (2008), and Benetrix and Lane (2010). That is real output in the non-tradable sector is the sum of the real value added in the following NACE Rev.2 sections (Eurostat, 2008):…”

Section: Sectoral Effectsmentioning

confidence: 99%

Fiscal policy, net exports, and the sectoral composition of output in Greece

Tagkalakis¹

2014

Int Econ Econ Policy

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This paper investigates the effects of fiscal policy shocks on net export performance and the sectoral composition of output in Greece in the post 2000 period. A reduction in government spending (or a tax hike) exerts a negative response on output which reduces import demand. A cut back in government spending boosts exports through the labour cost competitiveness channel further improving net exports. Tax hikes in particular on social security contributions and other indirect taxes reduce export performance. Although real aggregate output declines following a cut in government spending, the tradable sector output responds positively, further improving net exports.

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“…In an study for Asian economies Ito, Isard and Symansky (1997) show that the relation between real exchange rates and economic growth in the B-S hypothesis holds for Japan, South Korea, Taiwan, Hong Kong and Singapore, but it is not significant for Thailand, Indonesia, and Malaysia. Finally, Gibson and Malley (2007) examine the Greek case, finding that some proportion of the variation on relative tradable prices is explained by changes in sector productivities.…”

Section: Tnt Prices and Tfp Theoretical And Empirical Backgroundmentioning

confidence: 99%

The Balassa-Samuelson Hypothesis and Elderly Migration

Montealegre¹,

Acosta²,

González³

2014

Ensayos sobre Política Económica

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We present a model with two Overlapping Generations (young and old) and two final goods: a) a tradable good that is produced using capital and labor, and b) a non-tradable good that is produced using labor as unique input. We maintain the fundamental assumption of perfect factor mobility between sectors so the model is consistent with the Balassa-Samuelson hypothesis. On top of this, we allow for one of the two generations (the elderly) to migrate between economies. Given the general equilibrium structure of our model, we can examine the effect of the propensity to save on migration and the relative price of the non-tradable good. In this setting, we find that the elderly have incentives to migrate from economies where productivity is high to economies with low productivity because of the lower cost of living (in more general terms, the elderly migrate from wealthy countries to countries with lower incomes). We also find that, for countries with lower incomes, elderly migration has a positive effect on wages and capital accumulation.

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The Contribution of Sectoral Productivity Differentials to Inflation in Greece

Abstract: Balassa–Samuelson effect, Greece, Inflation, Productivity, E31, F36, F41,

Cited by 24 publications

References 21 publications

Greece’s Sudden Faltering Economy: From Boom to Bust With Special Reference to the Debt Problem

Greece’s Sudden Faltering Economy: From Boom to Bust With Special Reference to the Debt Problem

Fiscal policy, net exports, and the sectoral composition of output in Greece

The Balassa-Samuelson Hypothesis and Elderly Migration

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