Sustainability of the Greek Government Net Borrowing: An Analytical and Comprehensive Exposition - Theoretical Economics Letters

TEL > Vol.6 No.4, August 2016

Sustainability of the Greek Government Net Borrowing: An Analytical and Comprehensive Exposition ()

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DOI: 10.4236/tel.2016.64081 1,761 Downloads 2,443 Views

Author(s)

Anna Maria Mouza

Affiliation(s)

Department of Business Administration, Technological Educational Institute of Central Macedonia, Serres, Greece.

ABSTRACT

This paper aims to investigate the sustainability of the general Greek government net borrowing, applying novel techniques for both to determine the order of integration of a difference stationary series and to specify the final form of the co-integration equation. Co-integration analysis was applied, and robust rules of thumb are suggested taking into account the individuality of the case under consideration. The empirical application revealed that the Greek debt is not sustainable. Further, we introduce consistent planning methods to obtain optimal time paths for both government revenue and spending, so as sustainability of the debt to become a feasible task under certain assumptions. Finally, we suggest a policy making approach on macrolevel combining co-integration with optimal control.

KEYWORDS

Debt Sustainability, Autocorrelation, Homoscedasticity, Co-Integration, Greek Debt

Share and Cite:

Mouza, A. (2016) Sustainability of the Greek Government Net Borrowing: An Analytical and Comprehensive Exposition. Theoretical Economics Letters, 6, 768-782. doi: 10.4236/tel.2016.64081.

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