The Challenge of Trade Adjustment in Greece

Author:

Arkolakis Costas,Doxiadis Aristos,Manolis Galenianos

Abstract

Greece's trade deficit declined by 10 percent of gross domestic product (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 percent, rather than drop by 5 percent 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. The chapter concludes that the business environment and firm size distribution in Greece are also hindering the necessary adjustment.

Publisher

The MIT Press

Cited by 5 articles. 订阅此论文施引文献 订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献

1. Greece Before and After the Euro: Macroeconomics, Politics and the Quest for Reforms;SSRN Electronic Journal;2021

2. The Greek Pension Reforms: Crises and NDC Attempts Awaiting Completion;Progress and Challenges of Nonfinancial Defined Contribution Pension Schemes: Volume 1. Addressing Marginalization, Polarization, and the Labor Market;2019-10-21

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4. Why Grexit Cannot Save Greece (But Staying in the Euro Area Might);SSRN Electronic Journal;2017

5. Exchange Rate Bands of Inaction and Play -- Hysteresis in Greek Exports to the Euro Area, the US and Turkey -- Sectoral Evidence;SSRN Electronic Journal;2015

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