The challenge of trade adjustment in Greece. / Arkolakis, Costas; Doxiadis, Aristos; Galenianos, Manolis.

Beyond austerity: Reforming the Greek economy. MIT Press, 2017.

Research output: Chapter in Book/Report/Conference proceedingChapter

Forthcoming

Abstract

Greece’s trade deficit declined by 10% of GDP between 2007 and 2012, removing one of the great economic imbalances of the pre-crisis years. However, this reduction was achieved exclusively through import compression while exports fell over that period, thereby worsening the economic crisis. This chapter studies Greece’s export underperformance in comparison to Ireland, Portugal and Spain as well as Greece’s own pre-crisis experience.
The main findings are that (1) given past performance, Greece’s exports should have increased by 25%, rather than drop by 5% between 2007 and 2012; (2) labor markets have adjusted to the new economic environment; (3) product markets did not adjust, hindering the recovery of competitiveness; (4) export underperformance is responsible for a third of the decline in GDP since 2007. We find that the business environment and firm size distribution in Greece are also hindering the necessary adjustment.
Original languageEnglish
Title of host publicationBeyond austerity
Subtitle of host publicationReforming the Greek economy
PublisherMIT Press
ISBN (Electronic)9780262339209
ISBN (Print)9780262035835
Publication statusAccepted/In press - 1 Aug 2017

ID: 28301531