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Capital mobility and macroeconomic volatility: evidence from Greece

  • Anastasios, Pappas

This paper focuses on the impact of full capital account liberalization on macroeconomic volatility in Greece. According to the standard neoclassical model, such liberalization is to be desired because, among other advantages, it may reduce macroeconomic volatility. The link between macroeconomic volatility and capital account openness in the Greek economy is investigated by applying a simple three-month rolling standard deviation of real GDP growth and real final (total) consumption growth combined with more formal econometric methods such as Granger causality test and multivariate regressions. There is no strong evidence for a stable relation between macroeconomic volatility and variables of financial openness. Thus other factors, such as exchange rate volatility and exogenous shocks rather than a full liberalization of capital movements, seem to be related to macroeconomic growth volatility in the Greek economy.

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File URL: https://mpra.ub.uni-muenchen.de/29106/5/MPRA_paper_29106.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 29106.

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Date of creation: Jun 2010
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Publication status: Published in Journal of Economic Asymmetries 1.7(2010): pp. 101-121
Handle: RePEc:pra:mprapa:29106
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  17. Helmut Reisen, 1999. "After the Great Asian Slump: Towards a Coherent Approach to Global Capital Flows," OECD Development Centre Policy Briefs 16, OECD Publishing.
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