Institutional changes in the euro-zone and the greek debt crisis.

Authors

  • Nicholas Tsounis
  • George Polychronopoulos

Keywords:

Monetary policy, Euro-zone, External Debt, Greece, E520, E580

Abstract

This study attempts to quantify the effects of the implicit restrictive monetary policy, exercised by the European Central Bank (ECB) in Greece, during the world financial crisis. An autoregressive distributed lags (ARDL) testing ap-proach is used to verify the existence of a long-run relationship between GDP, total money supply and government expenditure in the Greek economy from 2002 to 2013. The main findings suggest that the institutional settings of the ECB should allow the use of monetary policy during periods of monetary crisis. Money supply in the Greek economy is in a positive relationship to the GDP. If the institutional settings of the ECB were different, allowing money supply to remain stable during the crises, a significant portion of the GDP decline would have been averted.

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Published

2015-11-12

Issue

Section

Articles