IDEAS home Printed from https://ideas.repec.org/a/gam/jworld/v3y2022i4p43-782d931049.html
   My bibliography  Save this article

Discussing EU Policies and Mechanisms towards the COVID-19 Pandemic Crisis: A Case Study of Greece

Author

Listed:
  • Nikolaos Apostolopoulos

    (Department of Management Science and Technology, University of Peloponnese, 22100 Tripoli, Greece)

  • Marios Psychalis

    (Department of Economics and Business, Neapolis University Pafos, Pafos 8010, Cyprus)

  • Panagiotis Liargovas

    (Department of Management Science and Technology, University of Peloponnese, 22100 Tripoli, Greece)

Abstract

This paper discusses the effectiveness of EU economic measures towards the pandemic crisis in the case of Greece. As the pandemic crisis was an exogenous and symmetric crisis, EU member states decided to take supply and demand side measures to tackle economic recession. Not only the Recovery plan for Europe (NGEU), but also the Escape Clause, as well as non-standard monetary measures, were implemented in order to achieve growth. Furthermore, fiscal expansion, as well as common debt extraction, using green and social bonds led to higher government spending and sovereign debt. The paper’s research question is “Could fiscal expansion mitigate the economic consequences of pandemic crisis?” In other worlds, the research gap which this paper tries to fill is that for the contemporary EU response to two different crises, the economic and the pandemic. Our analysis, by using a comparative approach, shows that government spending and fiscal expansion is effective in the short-run, as the temporary measures led to higher GDP growth rates and lower unemployment rates, but in the long-run demand side measures led to higher inflation and higher sovereign debt.

Suggested Citation

  • Nikolaos Apostolopoulos & Marios Psychalis & Panagiotis Liargovas, 2022. "Discussing EU Policies and Mechanisms towards the COVID-19 Pandemic Crisis: A Case Study of Greece," World, MDPI, vol. 3(4), pages 1-11, October.
    • Handle: RePEc:gam:jworld:v:3:y:2022:i:4:p:43-782:d:931049
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2673-4060/3/4/43/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2673-4060/3/4/43/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Friedman, Benjamin M., 1983. "Monetary policy with a credit aggregate target," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 18(1), pages 117-147, January.
    2. Foster, James E & Frierman, Michael, 1990. "Learning Rational Expectations: Classical Conditions Ensure Uniqueness and Global Stability," Economica, London School of Economics and Political Science, vol. 57(228), pages 439-453, November.
    3. Barnett, A H, 1980. "The Pigouvian Tax Rule under Monopoly," American Economic Review, American Economic Association, vol. 70(5), pages 1037-1041, December.
    4. Dornbusch, Rudiger, 1990. "The New Classical Macroeconomics and Stabilization Policy," American Economic Review, American Economic Association, vol. 80(2), pages 143-147, May.
    5. Abad, Pilar & Chuliá, Helena & Gómez-Puig, Marta, 2010. "EMU and European government bond market integration," Journal of Banking & Finance, Elsevier, vol. 34(12), pages 2851-2860, December.
    6. Claeys, Peter & Vašíček, Bořek, 2014. "Measuring bilateral spillover and testing contagion on sovereign bond markets in Europe," Journal of Banking & Finance, Elsevier, vol. 46(C), pages 151-165.
    7. Liargovas, Panagiotis & Psychalis, Marios, 2022. "Phillips Curve: The Greek Case," European Review, Cambridge University Press, vol. 30(2), pages 244-261, April.
    8. António Afonso & Miguel St. Aubyn, 2009. "Macroeconomic Rates Of Return Of Public And Private Investment: Crowding‐In And Crowding‐Out Effects," Manchester School, University of Manchester, vol. 77(s1), pages 21-39, September.
    9. Stéphane Lhuissier & Benoît Mojon & Juan Rubio-Ramírez, 2020. "Does the Liquidity Trap Exist?," Working Papers 2020-04, FEDEA.
    10. Trabandt, Mathias & Uhlig, Harald, 2011. "The Laffer curve revisited," Journal of Monetary Economics, Elsevier, vol. 58(4), pages 305-327.
    11. Friedman, Milton, 1982. "Monetary Policy: Theory and Practice," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 14(1), pages 98-118, February.
    12. Efraim Benmelech & Nitzan Tzur-Ilan, 2020. "The Determinants of Fiscal and Monetary Policies During the Covid-19 Crisis," NBER Working Papers 27461, National Bureau of Economic Research, Inc.
    13. Poh Wong & Yuen Ho & Erkko Autio, 2005. "Entrepreneurship, Innovation and Economic Growth: Evidence from GEM data," Small Business Economics, Springer, vol. 24(3), pages 335-350, January.
    14. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    15. Maria Caporale, Guglielmo & Pittis, Nikitas, 1999. "Is Europe an Optimum Currency Area? Business Cyc1es in the EU," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 14, pages 169-202.
    16. Panagiotis Liargovas & Vasilis Pilichos, 2022. "Is EU Fiscal Governance Effective? A Case Study for the Period 1999–2019," Economies, MDPI, vol. 10(8), pages 1-17, July.
    17. Bańkowski, Krzysztof & Ferdinandusse, Marien & Hauptmeier, Sebastian & Jacquinot, Pascal & Valenta, Vilém, 2021. "The macroeconomic impact of the Next Generation EU instrument on the euro area," Occasional Paper Series 255, European Central Bank.
    18. Friedman, Milton, 1982. "Monetary Policy: Theory and Practice: A Reply," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 14(3), pages 404-406, August.
    19. Paul De Grauwe, 2013. "The European Central Bank as Lender of Last Resort in the Government Bond Markets," CESifo Economic Studies, CESifo Group, vol. 59(3), pages 520-535, September.
    20. John Marangos, 2002. "A Political Economy Approach to the Neoclassical Model of Transition," American Journal of Economics and Sociology, Wiley Blackwell, vol. 61(1), pages 259-276, January.
    21. Makin, Anthony J. & Layton, Allan, 2021. "The global fiscal response to COVID-19: Risks and repercussions," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 340-349.
    22. Maria Minniti, 2008. "The Role of Government Policy on Entrepreneurial Activity: Productive, Unproductive, or Destructive?," Entrepreneurship Theory and Practice, , vol. 32(5), pages 779-790, September.
    23. Ablam Estel Apeti & Jean-Louis Combes & Xavier Debrun & Alexandru Minea, 2021. "Did Fiscal Space Foster Covid-19's Fiscal Stimuli ?," Post-Print hal-03351634, HAL.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maxime MENUET & Alexandru MINEA & Patrick VILLIEU, 2017. "Public Debt, Endogenous Growth Cycles and Indeterminacy," LEO Working Papers / DR LEO 2467, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    2. Pedro R. D. Bom & Aitor Goti, 2018. "Public Capital and the Labor Income Share," Sustainability, MDPI, vol. 10(11), pages 1-17, October.
    3. Alessandra Cepparulo & Gilles Mourre, 2020. "How and How Much? The Growth-Friendliness of Public Spending through the Lens," European Economy - Discussion Papers 132, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    4. Jonathan Benchimol & André Fourçans, 2016. "Nominal income versus Taylor-type rules in practice," Working Papers hal-01357870, HAL.
    5. Alejandro Cunat & Szabolcs Deak & Marco Maffezzoli, 2022. "Tax Cuts in Open Economies," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 45, pages 83-108, July.
    6. Maxime Menuet & Alexandru Minea & Patrick Villieu, 2018. "Deficit, monetization, and economic growth: a case for multiplicity and indeterminacy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(4), pages 819-853, June.
    7. Joseph Mawejje & Nicholas M. Odhiambo, 2022. "Macroeconomic determinants of fiscal policy in East Africa: a panel causality analysis," Journal of Economics, Finance and Administrative Science, Emerald Group Publishing Limited, vol. 27(53), pages 105-123, February.
    8. Selahattin Imrohoroglu, 2017. "Replacing Income Taxation with Consumption Taxation in Japan," CIGS Working Paper Series 17-008E, The Canon Institute for Global Studies.
    9. Naudé, Wim, 2011. "Entrepreneurship is Not a Binding Constraint on Growth and Development in the Poorest Countries," World Development, Elsevier, vol. 39(1), pages 33-44, January.
    10. Alexander W. Salter & William J. Luther, 2019. "Adaptation and central banking," Public Choice, Springer, vol. 180(3), pages 243-256, September.
    11. Afonso, António & Furceri, Davide, 2010. "Government size, composition, volatility and economic growth," European Journal of Political Economy, Elsevier, vol. 26(4), pages 517-532, December.
    12. Păun Cristian, 2010. "Banii, băncile centrale, politica monetară şi reglementarea sistemului bancar modern," Revista OEconomica, Romanian Society for Economic Science, Revista OEconomica, issue 02, June.
    13. Ghassan, Hassan B. & Alhajhoj, Hassan R., 2009. "اختبار أثر مزاحمة الإنفاق الحكومي للإستثمار الخاص في الاقتصاد السعودي عبر المعاينة المعادة [Crowding out Test of Government Expenditures to Private Investment in Saudi Arabia using Bootstrapping]," MPRA Paper 54453, University Library of Munich, Germany, revised 2009.
    14. Nelson, Edward, 2013. "Friedman's monetary economics in practice," Journal of International Money and Finance, Elsevier, vol. 38(C), pages 59-83.
    15. Gebhard Kirchgässner, 2016. "Voting and Popularity," CREMA Working Paper Series 2016-08, Center for Research in Economics, Management and the Arts (CREMA).
    16. Hansen, Gary & İmrohoroğlu, Selahattin, 2018. "Replacing income taxation with consumption taxation in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 48(C), pages 15-28.
    17. Michael Dotsey, 1991. "Open Market Operations in Australia: A US Perspective," The Economic Record, The Economic Society of Australia, vol. 67(3), pages 243-256, September.
    18. Akhand Akhtar Hossain, 2015. "The Evolution of Central Banking and Monetary Policy in the Asia-Pacific," Books, Edward Elgar Publishing, number 14611.
    19. Thomas Mayer, 2003. "The Monetarist Policy Debate: An Informal Survey," Working Papers 299, University of California, Davis, Department of Economics.
    20. Catherine Laffineur & Saulo Dubard Barbosa & Alain Fayolle & Emeran Nziali, 2017. "Active labor market programs’ effects on entrepreneurship and unemployment," Small Business Economics, Springer, vol. 49(4), pages 889-918, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jworld:v:3:y:2022:i:4:p:43-782:d:931049. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.