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Currency Devaluation, External Finance and Economic Growth: A Note on the Greek Case

Author

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  • Mariolis, Theodore

Abstract

This paper combines dynamic input-output price models with Thirlwall’s extended model of balance of payments constrained growth to estimate the effect of a switch to drachma on domestic income. The findings suggest that a return to national currency would not necessarily deepen the recession, although a rather large nominal devaluation, i.e. in excess of 57%-60%, is necessary for the recovery.

Suggested Citation

  • Mariolis, Theodore, 2013. "Currency Devaluation, External Finance and Economic Growth: A Note on the Greek Case," MPRA Paper 45257, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:45257
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    File URL: https://mpra.ub.uni-muenchen.de/45257/1/MPRA_paper_45257.pdf
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    References listed on IDEAS

    as
    1. Anthony P. Thirlwall, 2011. "The Balance of Payments Constraint as an Explanation of International Growth Rate Differences," PSL Quarterly Review, Economia civile, vol. 64(259), pages 429-438.
    2. Anthony P. Thirlwall, 2011. "Balance of payments constrained growth models: history and overview," PSL Quarterly Review, Economia civile, vol. 64(259), pages 307-351.
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    Cited by:

    1. Theodore Katsanevas, 2015. "The Eurozone Crisis and the Structured Grexit as the Proper Alternative for Greece," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 32-47.
    2. Mariolis, Theodore & Soklis, George, 2014. "The Sraffian Multiplier for the Greek Economy: Evidence from the Supply and Use Table for the Year 2010," MPRA Paper 60253, University Library of Munich, Germany.

    More about this item

    Keywords

    Drachma Devaluation; Greek Economy; Dynamic Input-Output Price Models; Thirlwall’s Model;

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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