Share This Article:

Opa! Did EU Entry Contribute to the Greek Crisis?

Abstract Full-Text HTML Download Download as PDF (Size:219KB) PP. 659-661
DOI: 10.4236/me.2013.410071    4,480 Downloads   5,743 Views  


This paper focuses on possible underlying causes of the current Greek debt. The Gregory and Hansen residual-based cointegration test is to test Greek deficit sustainability with annual data from 1988 to 2012. This cointegration test identifies structural breaks when they are unknown a priori. Estimated results reveal a break in 1996. The break in 1996 coincides with the election of Simitis as prime minister, suggesting that the current debt problem may be due to increased government expenditure associated with the tenure of Simitis rather than due to EU entry.

Conflicts of Interest

The authors declare no conflicts of interest.

Cite this paper

A. Thompson and K. Yamaura, "Opa! Did EU Entry Contribute to the Greek Crisis?," Modern Economy, Vol. 4 No. 10, 2013, pp. 659-661. doi: 10.4236/me.2013.410071.


[1] M. Weisbrot and J. Montecino, “More Pain, No Gain for Greece: Is the Euro Worth the Costs of Pro-Cyclical Fiscal Policy and Internal Devaluation?” Center for Economic and Policy Research (CEPR), 2012.
[2] K. Margarita and M. Thomas, “EMU and the Greek Crisis: The Political-Economy Perspective,” European Journal of Political Economy, Vol. 26, No. 3, 2010, pp. 568-576.
[3] M. Lynn, “Bust: Greece, the Euro and the Sovereign Debt Crisis,” John Wiley & Sons, Hoboken, 2010.
[4] M. Arghyrou and D. Tsoukalas, “The Greek Debt Crisis: Likely Causes, Mechanics and Outcomes,” World Economy, Vol. 34, 2011, pp. 173-191.
[5] S. Fountas and J. Wu, “Are the Greek Budget Deficits Too Large?” Applied Economic Letters, Vol. 3, No. 7, 1996, pp. 487-490.
[6] A. W. Gregory and B. E. Hansen, “Residual-Based Tests for Cointegration in Models with Regime Shifts,” Journal of Econometrics, Vol. 70, No. 1, 1996, pp. 99-126.
[7] R. F. Engle and C. W. J. Granger, “Co-Integration and Error Correction: Representation, Estimation and Testing,” Econometrica, Vol. 55, No. 2, 1987, pp. 251-276.
[8] C. Hakkio and M. Rush, “Is the Budget Deficit ‘Too Large’?” Economic Inquiry, Vol. 29, No. 3, 1991, pp. 429-445.
[9] EuroStat.

comments powered by Disqus

Copyright © 2019 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.