Forecasting fiscal variables: Only a strong growth plan can sustain the Greek austerity programs - Evidence from simultaneous and structural models

Nicholas Apergis and Arusha Cooray

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: The goal of the present paper is to investigate not only the dynamics of the Greek public debt, but also the appropriate measures required for achieving fiscal consolidation. The empirical estimation is carried out using a macroeconomic dataset spanning the period 1980-2008 and both the 3SLS methodological approach on a theoretical model and the structural VAR methodology to perform forecast tests and to calibrate the future paths of the public debt variable up to 2020. The results suggest that only an aggressive growth policy could permit the country to achieve debt sustainability. The results are expected to have important implications to policy makers for designing effective macroeconomic policy in terms of achieving sustainable levels of public debt.

Keywords: primary balance; public debt; structural modeling; Greece (search for similar items in EconPapers)
JEL-codes: C30 C51 E27 E62 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2013-05
New Economics Papers: this item is included in nep-eec, nep-for, nep-mac and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2013-25

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