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312 JOHN SPRAOSductivity. The latter is changed exogenously to reflect a guesstimate of theinvestment-productivity relation. The exogenous productivity growth affectsthe price level via the price equation. This is how the growth (or supply-side)effect impacts on the real exchange rate. Under the assumptions underlyingthe table, its price-raising implications, following the withdrawal of all EUtransfers, are outweighed by the price-lowering demand-side effect. But thebalance is very narrow and the negative sign of the inflation rate is notrobust. It turns positive with a modest change in the exogenous intervention.Nevertheless, the message is still strongly consistent with the hypothesiseddominance of the classical effect. The evidence lies in the external currentaccount balance. The balance recorded in the table improves by some twoper cent of GDP but this is the balance in goods and services. The overallcurrent account balance, including transfers, experiences a substantial deterioration,given that EU transfers of the order of 4 per cent of GDP arebeing withdrawn. Implicit in the external deficit is a significant real depreciation;it is needed to restore equilibrium. By its size, this is the dominant, theoverriding, feature and remains that way for any variations of total factorproductivity that can be reasonably inserted to reflect (the withdrawal of)EU structural funding.The combination of a small relative price change and a large currentaccount deficit is understandable. The model, having had its parametersestimated from data covering a period during most of which a flexible nominalexchange rate performed an equilibrating function, is prone to switch tovolume changes when the exchange rate cannot be manipulated under a currencyunion. This is reflected in the big drop in real GDP —four per cent inthe first year— as well as in the current account imbalance.ReferencesBalassa, B. 1964. “The Purchasing Power Parity Doctrine: a Reappraisal.” Journal ofPolitical Economy: 584-96.Bergstrand, J. H. 1991. “Structural Developments of Real Exchange Rates andNational Prices.” American Economic Review: 325-34.Brakman, S., and C. Van Marrewijk. 1998. The Economics of International Transfers.Cambridge, U.K.: Cambridge University Press.Brissimis, S.N., and J.A. Leventakis. 1989. “The Effectiveness of Devaluation: aGeneral Equilibrium Assessment with Reference to Greece.” Journal of PolicyModeling: 247-71.Committee for the Examination of Long Term Economic Policy. 1997. Decelerationof Inflation and Incomes Policy (in Greek).
EU Transfers and Greece’s Real Exchange Rate: A Naked Eye View 313De Gregorio, J.,A. Giovannini, and H.C. Wolf. 1994. “International Evidence ofTradeables and Non-tradeables Inflation.” European Economic Review: 1225-49.De Menil, G. 1994. “Comments.” On De Gregorio et al. European Economic Review:1250-56.Duesenberry, J.S. 1949. Income, Saving and the Theory of Consumer Behavior.Cambridge Mass.: Harvard University Press.Friedman, M. 1957. A Theory of the Consumption Function. Princeton: PrincetonUniversity Press.Garganas, N.C. 1992. The Bank of Greece Econometric Model of the Greek Economy.Athens: Bank of Greece.Georgakopoulos, T. 1993. “Trade and Welfare Effects of Common Market Membership:an Ex post Evaluation for Greece.” Economia Internazionale: 360-76.Johnson, H.G. 1956. “The Transfer Problem and Exchange Stability.” Journal ofPolitical Economy: 212-25.Keynes, J.M. 1929. “The German Transfer Problem.” Economic Journal: 1-7.Maroulis, D.K. 1992. Problems and Prospects of Greek Exports. Athens: Centre forPlanning and Economic Research (in Greek).Ministry of National Economy. 2001. Main National Accounts Aggregates of the GreekEconomy, 1960-1999.Samuelson, P.A. 1947. Foundations of Economic Analysis. Cambridge Mass.:Harvard University Press.––––––. 1964. “Theoretical Notes on Trade Problems.” Review of Economics andStatistics: 145-64.Swagel, P. 1999. “The Contribution of the Balassa-Samuelson Effect to Inflation:Cross-Country Evidence.” IMF, Staff Country Report 99/138: 28-48.Torvik, R. 2001. “Learning by Doing and the Dutch Disease.” European EconomicReview: 285-306.Van Wijnbergen, S. 1984. “The ‘Dutch Disease’: a Disease After All.” EconomicJournal: 41-55.Viner, J. 1937. Studies in the Theory of International Trade. London, U.K.: GeorgeAllen and Unwin Limited.Winters, L.A. 1985. International Economics. London, U.K.: George Allen andUnwin.Zombanakis, G. 1997. “Is the Greek Exporters’ Price Policy Asymmetric?”. GreekEconomic Review: 65-80.
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GREECE’SECONOMICPERFORMANCEand PR
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ABOUT THE COIN ILLUSTRATED ON THE C
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Copyright © Bank of Greece and The
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viPREFACEnomic developments and pol
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viiiCONTENTSThe Determination of Wa
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xCONTENTS2-5. Primary Budget Surplu
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xiiCONTENTS8B-3. Benefits and Costs
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xivCONTENTS2-2. General Government
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xviiiCONTENTS11-9. Interbank Deposi
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xxTHE CONTRIBUTORSas Research Assoc
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xxiiTHE CONTRIBUTORSfor two spells
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xxivTHE CONTRIBUTORSJohn F. Helliwe
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xxviTHE CONTRIBUTORS2000. Prior to
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xxviiiTHE CONTRIBUTORSPlutarchos Sa
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The ContributorsxxxiUniversal Servi
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xxxivLUCAS D. PAPADEMOSMoreover, ec
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xxxviLUCAS D. PAPADEMOSwhich gave i
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xxxviiiLUCAS D. PAPADEMOSSecond, th
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IntroductionRalph C. Bryant, Nichol
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Introduction 3still experiencing a
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Introduction 5(general government)
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Introduction 7did generate employme
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Introduction 9Table π-2. Greece: S
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Introduction 11Table I-3. Potential
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Introduction 13
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Introduction 15
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Introduction 17sector borrowing req
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Introduction 19The electoral cycle
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Introduction 21Whereas Greece’s a
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Introduction 23deficits of moderate
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Introduction 25tious inference from
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Introduction 27The legal and regula
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Introduction 29spillover effects fr
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Introduction 31The challenge facing
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Introduction 33ing pensions, public
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Introduction 35rate of increase. Se
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Introduction 37however, that judgme
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Introduction 39from other European
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Introduction 41The final paper in t
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1MonetaryRegimes andInflation Perfo
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Monetary Regimes and Inflation Perf
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2GreekFiscal and BudgetPolicy and E
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Greek Fiscal and Budget Policy and
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3EconomicGrowth in Greece:Past Perf
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Economic Growth in Greece: Past Per
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4TheDetermination of Wageand Price
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The Determination of Wage and Price
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238 S. BRISSIMIS, N. MAGGINAS, G. S
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364 AXEL BÖRSCH-SUPAN AND PLATON T
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9TheGreek LabourMarketGary Burtless
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The Greek Labour Market 455and prod
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The Greek Labour Market 457little p
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The Greek Labour Market 459butions
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The Greek Labour Market 461on the r
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The Greek Labour Market 463ation of
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The Greek Labour Market 465It seems
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The Greek Labour Market 467
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The Greek Labour Market 469Although
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The Greek Labour Market 471tled to
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The Greek Labour Market 473incomes
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The Greek Labour Market 475were als
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The Greek Labour Market 481ulation
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The Greek Labour Market 483This is
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The Greek Labour Market 485Table 9-
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The Greek Labour Market 487Nonethel
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The Greek Labour Market 489differen
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The Greek Labour Market 491poverty
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The Greek Labour Market 493Organisa
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The Greek Labour Market 495employme
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The Greek Labour Market 497It would
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10Product Market Reform inGreece: P
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Product Market Reform in Greece: Po
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11Greek Banking at the Dawnof the N
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604 CONFERENCE PARTICIPANTSANDREAS
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IndexI. AuthorsAlberola, E., 357-58
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Index 609Hafer, R., 56, 94Hall, S.
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Index 611Rajnes, D. M., 449, 451Ram
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Index 613Barro-Gordon model, 100Bas
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Index 615Golden Rule, 110Government
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Index 617Personal income tax: 113-1
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In recent years, Greece has emerged
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