Advertisement

An Empirical Study on Greece’s Current Account Determinants Before and After the Outbreak of the Global Financial Crisis

  • Platon Monokroussos
  • Dimitrios D. Thomakos
Part of the Palgrave Macmillan Studies in Banking and Financial Institutions book series (SBFI)

Abstract

The empirical study presented in this chapter employs cointegration techniques and a vector correction model (VECM) to identify and analyze the main drivers of Greece’s current account in recent years and, especially, in the period following the outbreak of the global financial crisis. Our results provide broad-based support to the key findings of a number of earlier studies on the determinants of the current account. Specifically, the trend deterioration in the country’s external imbalance in 1999–2008 can be traced back to a number of developments related to: (a) the EU convergence progress and closer integration in world goods and financial markets; (b) domestic authorities’ response to the policy challenges arising from participation in the single currency area; and (c) the structural characteristics and idiosyncrasies of the Greek economy.

Keywords

Current Account Euro Area Real Exchange Rate Real Interest Rate Global Financial Crisis 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Arghyrou, Michael and George E Chortareas (2006), Real exchange rates and current account imbalances in the Euro Area, Mimeo, Cardiff Business School.Google Scholar
  2. Arghyrou, Michael and George E Chortareas (2008), Current Account Imbalances and Real Exchange Rates in the Euro Area, Review of International Economics, 16, 747–764.Google Scholar
  3. Barnes, Sebastian, Jeremy Lawson and Arthur Radziwill (2010), Current Account Imbalances in the Euro Area: A Comparative Perspective, OECD Economics working paper, ECO/WKP(2010)82.Google Scholar
  4. Berger, Herger and Nitsch Volker (2010), The Euro’s Effect on Trade Imbalances, IMF working paper, WP/10/226.Google Scholar
  5. Blanchard, Olivier and Francesco Giavazzi (2002), Current Account Deficits in the Euro Area. The End of Feldstein-Horioka Puzzle?, MIT Department of Economics working paper No. 03-05.Google Scholar
  6. Brissimis, S.N., M.D. Delis and E.G. Tsionas (2010), Technical and Allocative Efficiency in European Banking, European Journal of Operational Research, 204, 153–163.Google Scholar
  7. Buiter, Willem H. (1979), Time Preference and International Lending and Borrowing in an Overlapping-Generations Model, NBER working paper No. 352.Google Scholar
  8. Eichengreen, Barry (2010), Imbalances in the Euro Area, University of California, Berkeley.Google Scholar
  9. Giavazzi, Francesco and Luigi Spaventa (2010), Why the Current Account May matter in a Monetary Union: Lessons from the Financial Crisis in the Euro Area, Centre of Economic Policy Research discussion paper No. 8008.Google Scholar
  10. Lane, Philip and Gian Maria Milesi-Ferretti (2002), External Wealth, the Trade Balance, and the Real Exchange Rate, IMF working paper WP/02/51.Google Scholar
  11. Mansoorian, Arman (1998), Habits and Durability in Consumption, and the Dynamics of the Current Account, Journal of International Economics, 44, 69–82.Google Scholar
  12. Obstfeld, Maurice and Kenneth Rogoff (1994), The Intertemporal Approach to the Current Account, NBER working paper No. 4893.Google Scholar
  13. Sachs, Jeffrey (1984), The Current Account in the Macroeconomic Adjustment Process, BBER working paper No. 796.Google Scholar
  14. Schmitz, Birgit and Jurgen von Hagen (2011), Current Account Imbalances and Financial Integration in the Euro Area, Journal of International Money and Finance, 20(8), 1676–1695.Google Scholar
  15. Tornell, Aaron and Lane Philip R. (1998), Are Windfalls a Curse? — A Non-representative Agent Model of the Current Account, Journal of International Economics, 44, 83–112.Google Scholar

Copyright information

© Platon Monokroussos and Dimitrios D. Thomakos 2015

Authors and Affiliations

  • Platon Monokroussos
  • Dimitrios D. Thomakos

There are no affiliations available

Personalised recommendations