Opa! Did EU Entry Contribute to the Greek Crisis?

Alexi Thompson, Koichi Yamaura

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Department of Agricultural Economics, Kansas State University, Manhattan, USA.

DOI: 10.4236/me.2013.410071                

Abstract

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.

Keywords

Greek Crisis; Time Series; Gregory and Hansen Cointegration Test

Conflicts of Interest

The authors declare no conflicts of interest.

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