How important are Greece’s exports to its economic growth? An empirical analysis of the relationship between Greek exports and foreign regional income.

Abstract

This study examines the relationship between Greek exports and foreign real income. I employ data from 1995:I untill 2019:IV and use static as well as dynamic analyses in order to quantify the long run relationship between foreign economic activity and Greek exports. I use OLS, Fully Modified OLS and VECM in order to estimate income and price elasticities. I find that the aggregate foreign income is positive and statistically significant and ranges from 2% to 5.8%. For the augmented model, this includes Greece’s main trading partners, it is that Germany, Italy, the US and the rest of the European countries have positive and significant elasticities while the rest are not significant and have negative coefficients. From the dynamic analysis I also find that the aggregate foreign income, the income of European countries and the UK have positive relationship with Greek exports in the short-run.