Petrakis (ed ) a new growth model for the greek economy; requirements for long term sustainability (2016)

A NEW GROWTH MODEL FOR THE GREEK ECONOMY REQUIREMENTS FOR LONG-TERM SUSTAINABILITY EDITED BY PANAGIOTIS E PETRAKIS A New Growth Model for the Greek Economy Panagiotis E Petrakis Editor A New Growth Model for the Greek Economy Requirements for Long-Term Sustainability Editor Panagiotis E Petrakis National Kapodistrian University of Athens Athens, Greece ISBN 978-1-137-58943-9 ISBN 978-1-137-58944-6 DOI 10.1057/978-1-137-58944-6 (eBook) Library of Congress Control Number: 2016952427 © The Editor(s) (if applicable) and The Author(s) 2016 This work is subject to copyright All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed The use of general descriptive names, registered names, trademarks, service marks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made Printed on acid-free paper This Palgrave Macmillan imprint is published by Springer Nature The registered company is Nature America Inc New York LIST OF CONTRIBUTORS—SHORT BIOS David Amiel graduated in economics from the École Normale Supérieure and Paris School of Economics He is also a former Procter Fellow from Princeton University David Benček is an economist at the Kiel Institute for the World Economy and member of its Economic Policy Center His current research focuses on debt sustainability, the political economy of institutional change and the application of agent-based computational models Zsolt Darvas is a senior fellow at the Brussels-based think tank Bruegel, at the Institute of Economics of the Hungarian Academy of Sciences and at the Corvinus University of Budapest Before joining Bruegel in 2008, he worked for the Argenta Financial Research Group in Budapest and the Central Bank of Hungary Evaggelos Drimpetas is an associate professor in the Department of Economic Sciences, Democritus University of Thrace, Greece His work has appeared in various scientific journals and international conferences His research interests are on financial economics, merger and acquisitions, strategic management, corporate governance and international financial markets George Geronikolaou holds a PhD in economics from Aristotle University of Thessaloniki and is currently appointed as a lecturer in Democritus University of Thrace, Department of Economics He has published in refereed journals in the areas of industrial organization and financial economics Michael Haliassos holds the chair for macroeconomics and finance at Goethe University Frankfurt He is founding director of the CEPR Network on Household Finance, is consultant to ECB and ESMA, has been founding director of SAFE, director of CFS for six years and member of the Greek National Council on Research and Technology (ESET) v vi LIST OF CONTRIBUTORS—SHORT BIOS Edward Hugh was a macroeconomist He died on 29 December 2015 He studied economics at the London School of Economics in the late 1960s before going on to master’s and doctoral studies in Manchester He was an expert on the impact of demographic change and migratory processes on economic growth Paul-Adrien Hyppolite is an Arthur Sachs Fellow at Harvard University (Department of Economics) and graduate student from École Normale Supérieure and École Polytechnique (France) He has previously worked at the French Treasury, at the European Commission and inside Lazard’s Sovereign Advisory Group His research interests focus on international macroeconomics and finance Alina Hyz is a Professor of Business Administration at the Department of Accounting and Finance, Technological Educational Institute (TEI) of Piraeus, Greece She holds a PhD in business administration from the University of Lodz Her research interests are focused on business analysis, strategy development, budgeting and finance Harold James is Professor of History and International Affairs and the Claude and Lore Kelly Professor of European Studies at Princeton University He was educated at Cambridge University His books include The German Slump (1986); The End of Globalization: Lessons from the Great Depression (2001); and Making the European Monetary Union (2012) Kyriaki I.  Kafka is an economist and a PhD candidate in economics at the UADPhilEcon Program of the NKUA. In 2011 she joined the Research Committee of the NKUA and works as a scientific partner in the Vocational Distance Training Center of the NKUA. She is the author of several international publications Christos Katris is a PhD candidate at the University of Patras He holds a BSc in statistics from Athens University of Economics and Business and an M.Sc in statistics and operations research from the University of Patras His research interests include time series, forecasting and applied econometrics Konstantinos Konstantakis is a research and teaching associate in economics and econometrics working in the areas of business cycles, applied economics and transportation His articles have appeared in a number of journals, including European Journal of Operational Research, Transportation Research Part E, Open Economies Review and Economic Modelling Kostas Karamanis is Assistant Professor of Economics at the Department of Accounting and Finance of Epirus’ Technological Educational Institute, Greece He received his doctorate in business reengineering from the University of Patras From October 2002 until January 2011, he worked in the Greek Ministry of Employment His main research interests lie in the areas of labor economics, business economics, competition and market deregulation LIST OF CONTRIBUTORS—SHORT BIOS vii Pantelis C.  Kostis is an economist and a PhD candidate in economics at the UADPhilEcon Program of the NKUA.  Since 2008 he is associated with the Research Committee of the NKUA and works as a scientific partner in the Vocational Distance Training Center of the NKUA.  He is the author of several international publications Effrosyni Kouskouna is a fellow of the Greek Society of Actuaries (FHAS) and a member of IAA.  She holds an MSc degree in “Statistical Methods in the Management of Insurance Organizations” from the Athens University of Economics and Business and a BSc in mathematics from the University of Athens She has over 20 years of experience in the insurance market, and from 2009, she works for the NAA Alexander Kritikos is research director at the DIW Berlin At the same time, he is full professor for industrial and institutional economics at the University of Potsdam and a research fellow at the IZA Bonn His research interests are innovation and entrepreneurship research, and experimental and behavioral economics Claus-Friedrich Laaser is a senior economist at the Kiel Institute for the World Economy He is member of the institute’s policy coordination unit His current research topics are trade integration in the EU and the role of infrastructure in the course of economic integration Themistokles Lazarides currently works as an assistant professor in the Business Administration Department, TEI of Western Macedonia, Grevena His research interests focus on corporate governance, financial markets, organizational economics and information asymmetry His work has appeared in various journals and international conferences Paolo Manasse is Professor of Macroeconomics at Bologna University, having taught at Bocconi, Sorbonne, JHU.  He was a Consultant for the OECD, the World Bank, the IADB and the IMF. In 2011 and 2015 he addressed the European Parliament He is an author of many international publications Panayotis Michaelides is Associate Professor of Economics and Econometrics working on business cycles, infrastructure economics, Bayesian econometrics and history of economic thought He has published in Cambridge Journal of Economics, Journal of Evolutionary Economics, European Journal of Operational Research, Transportation Research Part E, Energy Policy, and so on He is in the top 10 % of the most productive and downloaded authors globally Eirini Ozouni studied economics in University of Ioannina, obtaining also a master’s degree Currently, she is completing her doctorate in the School of Economics and Political Sciences in Aristotle University of Thessaloniki, studying economic growth cycles Her experience in research has also been acquired during her professional activity in development consulting viii LIST OF CONTRIBUTORS—SHORT BIOS Sotiris K.  Papaioannou is a research fellow at the Centre of Planning and Economic Research (KEPE) He received his PhD from the Athens University of Economics and Business His current research focuses on the influences of regulations on productivity as well as on the impact of fiscal policy on growth Panagiotis E. Petrakis is Professor of Economics in the Department of Economics of the University of Athens (NKUA), where he also serves as the Director of the International Economics and Development Sector He is the author of more than 26 monographs, the latest published with Palgrave Macmillan and Springer, in topics related to European and Greek growth, crisis, labor market, economic policy and future entrepreneurship He also is the author of numerous (more than 75) research articles in journals such as Small Business Economics, Journal of Banking and Finance, Journal of Business Research, Journal of Socio-Economics, International Entrepreneurship and Management Journal, and so on Thomas Poufinas is a lecturer in the Department of Economics of the Democritus University of Thrace He holds a PhD in financial mathematics from the Ohio State University and a bachelor’s degree in mathematics from the University of Athens His research interests are focused on finance, investments, risk management, actuarial science and their applications Klaus Schrader is a senior economist at the Kiel Institute for the World Economy He is deputy head of the institute’s Economic Policy Center His present research focuses on EU trade integration and the international competitiveness of South and Eastern European countries Eleftherios Spyromitros holds a PhD in economics from the University of Strasbourg He currently serves as an assistant professor in Democritus University of Thrace, Department of Economics His work has been published in refereed journals in the areas of monetary and financial economics Alessio Terzi is an affiliate fellow at Bruegel Prior to this, he has worked for the ECB, DG ECFIN (European Commission), the Scottish Parliament and BMI Research (Fitch Group) Alessio holds a degree in economics from Bocconi University and a master’s in economic policy from the London School of Economics Panagiotis Tsintzos has been currently appointed as a lecturer in Democritus University of Thrace, Department of Economics He holds a PhD in Macroeconomics and has published in international journals in the area of economic growth, fiscal policy and monetary institutional design He has served as an advisor in Greek Public Administration Efthymios Tsionas is Professor of Economics and Econometrics working in the areas of productivity and efficiency analysis, financial econometrics and Bayesian techniques His articles have appeared in various journals, including Review of LIST OF CONTRIBUTORS—SHORT BIOS ix Economic Studies, Journal of the American Statistical Association, Journal of Econometrics and European Journal of Operational Research Dionysis G.  Valsamis is an economist and PhD candidate in economics at the UADPhilEcon Program of the NKUA.  Since 2011 he is associated with the Research Committee of the NKUA and works as a scientific partner in the Vocational Distance Training Center of the NKUA.  He is the author of several international publications Randall L Wray is Professor of Economics at Bard College and senior scholar at the Levy Economics Institute He is coeditor of the Journal of Post Keynesian Economics and his most recent book is Why Minsky Matters: An Introduction to the Work of a Maverick Economist (Princeton University Press, 2016) Grigoris Zarotiadis studied in Johannes Kepler University of Linz Currently, he is an associate professor in the School of Economics and Political Sciences in Aristotle University of Thessaloniki His research covers the fields of international economics, economic development and growth INDEX youth and, 30 Geronikolaou, George, 17 Giavazzi, Francesco, 278 Gil-Alana, Luis, 231 G index, 298 Gini inequality index, 79 Global Competitiveness Report of the World Economic Forum, 38, 308 supply-side reforms and, 90 Global Financial Crisis (GFC), 22, 252, 255–6 globalization, 27, 30 competitiveness and, 103–6 decoupling and, 40 division of labor and, 145–7 euro area and, exports and, 144 extroversion and, flexibility and, 235 government and, 70 growth potential and, 95 innovation status quo and, 179 postmodernism and, 141–4 union and, gold, 258–60 Golden Dawn party, 84 Gompers, Paul, 210, 297–8 Good Corporate Governance Practices, index of, 296 goods, 65, 67 regulation and, 141 government, 1, 84 adjustment programs and, 77 austerity and, 52 Bank of Greece and, 73 conditionality and, 168 corruption and, 255 crisis cycle and, 253 dirigisme and, 180 fiscal multipliers and, 275–8, 280–1 growth and, 256 innovation and, 185 325 job creation and, 256–8 new business models and, 100 new growth models and, 70–1 opposition to, 53 pegged currencies and, 259 redenomination and, 118–19 reform implementation and, 160, 169–70 sovereign debt crisis and, 134 Target2 and, 131–3, 135 GOV_SCORE, 297–8 gravity models, 308–9 gray exit, 21 Great Depression corruption and, 255 crisis cycle and, 252 exports and, 311 globalization and, 30 secular stagnation and, 190 Greek Diaspora, 178, 183–4 Greek Loan Facility (GLF), 131 Greek Statistical Agency, 79 Grexit, 9, 135–8 cost analysis of, 119–23 elections and, 84 government and, 70 new growth models and, 65 non-financial sector and, 124–6 public debt and, 126–31 redenomination and, 115–19 sovereign debt crisis and, 133–5 Target2 and, 131, 133 Gross Domestic Product (GDP), 39, 75–8, 168 See also productivity austerity and, 50, 52 bailout assumptions and, 62 bubble economy and, 74–5 business cycle and, 267, 269 crisis cycle and, 251–2 debt and, 7, 83 decoupling and, 37 demand, 77 326 INDEX Gross Domestic Product (GDP) (cont.) demographics and, 188 EU and, 21 fiscal multipliers and, 16, 276, 279–83, 285 government and, 70 growth and, 81, 97 innovation and, 173 Okun’s Law and, 227–33 post-2007 fall in, 187 sovereign debt and, 289 unemployment and, 13, 225–9 growth, 61–2, 67–71, 99–100, 102–3 adjustment programs and, 275–81 adjustment programs failure and, 87 austerity and, 50–2 bubble economy and, 74 business cycle and, 265 debt and, 108 demographics and, 187, 189–90 development and, 251, 253–6 division of labor and, 146 employment and, 251–5, 257–60 Euro and, 81 exports and, 6, 144–5 fiscal multipliers for, 275–9, 281–5 globalization and, 104 government and, 70–1 idiosyncratic pattern of, 53–4 model construction and, 2–3 neoclassical theory and, 192 potential for, 5, 83–5, 93–7 pre-Euro era and, 74 productive base and, 85 reform implementation and, 157, 159, 169–70 secular stagnation and, 191 short-to-medium term and, 9–10 social security and, 203, 213, 219–22 sovereign debt and, 303 sustainability, transition towards, 62–6 Guatemala, 90 Guell, Maia, 237 H Haliassos, Michael, Hall, Robert, 276 Hansen, Alvin, 191 Harmonized Competitiveness Index, 90–1 Harris, Richard, 225 health system, 11, 193–4, 196 Hellenic Financial Stability Fund (HFSF), 133 Hellenic Statistical Authority, 285 Hodrick-Prescott filter, 13, 227 Hollande, Franỗoise, 25 horizontal features, 146–8, 150–1 horizontal measures, 52 See also structural reforms household consumption, 6, 92–4, 276 See also consumption Household Finances and Consumption Survey, 92, 94 housing, 44 Hugh, Edward, 11 human capital, 96, 104, 106, 152n5, 195 Hungary, 103 Hyz, Alina, 14 I Iliopoulos, Yannis, 96 Ilzetzaki, Ethan, 278 imports, 266, 270, 272 adjustment programs and, 78 euro and, 14, 15 globalization and, 103 job creation and, 257 pegged currencies and, 259 petroleum and, 104 productive base and, 85 INDEX supply-side reforms and, 90, 92 income, 7, 81, 258, 275–6 debt and, 108 flexibility and, 241 rich countries and, service industry and, 151n2 industrialization, 144 inequality, 6, 81, 255, 258 bubble economy and, 74 competitiveness and, 79 employment and, 260 securitization and, 24 infant industry arguments, 147 inflation, 38–9, 190, 192, 206, 257–8, 309–12 information asymmetry, 294 information technology (IT), 173, 179, 181 infrastructure, 3, 28, 109, 258, 260 inimical exit, 117–18 innovation, 10–11, 173–7, 181–5 See also research and development (R&D) status quo and, 177–80 institutions, 1, 10, 73, 176–7, 183–4 See also research institutes crisis of 2008 and, 34 debt and, 106 decoupling and, 4–5, 33, 47–9 employment and, 252 exports and, 309–10 extroversion and, 149 growth and, 54, 255 growth potential and, 96 new growth models and, 67 reform implementation and, 158, 170 regulation and, 141 social security and, 211, 219 insurance, 23, 26, 239, 247 See also social security intellectual property, 181 interest rates, 17, 277–8, 308–11 327 business cycle and, 266 debt and, 107–8 demographics and, 190 globalization and, 103 Grexit and, 135, 138 secondary market and, 106 social security and, 204, 212, 217 structural reforms and, 110 Internal Energy Market 1996 directive, 26 internal organization, 54 International Labor Organization (ILO), 102, 255 International Monetary Fund (IMF), 126, 131, 157–60, 188, 190 conditionality and, 168 CRAs and, 293 decoupling and, 36 elections and, 84 fiscal multipliers and, 283 globalization and, 142 growth potential and, 83 labor mobility and, 194, 197 new business models and, 99 path-dependency and, 191 reform timing and, 163–5 structural reforms and, 110 World Economic Outlook of, 47 investment, 16, 276–7, 279, 281, 283, 285 See also private sector decoupling and, 5, 39, 41, 44 energy and, 28 extroversion and, 149 globalization and, 106 Grexit and, 138 Grexit cost analysis and, 125–6 growth and, 81, 256 growth potential and, 97 innovation and, 175–6, 181 innovation status quo and, 178 job creation and, 257 new business models and, 100 rate of, 191 328 INDEX investment (cont.) social security and, 208, 211, 219–20, 222 structural reforms and, 80, 109, 111 supply-side reforms and, 89 Ioannides, Yiorgis, 96 Iran, 90 Ireland, 4, 34, 37–42, 44–6, 48–9 adjustment programs and, 78 austerity and, 50, 52 banking system and, 292 bank ratings and, 16 conditionality and, 168 crisis cycle and, 253 crisis of 2008 and, 36 globalization and, 103 job program for, 261n1 opposition and, 53 productive base and, 86 reform implementation and, 159, 161–2 sovereign debt and, 289, 291 supply-side reforms and, 92 youth and, 30 Islamic State of Iraq and Syria(ISIS ), 28 Israel, 211 Italy, 26, 289, 291–2, 303 bubble economy and, 74–5 competitiveness and, 79 crisis cycle and, 254 demographics and, 188 innovation status quo and, 178 labor mobility and, 194, 196 migration and, 28 Ivanova, Anna, 159, 161 J Jarque-Bera normality test, 231, 267, 269 Jamaica, 109 James, Harold, 3, 207 Japan, 11, 190–1, 198, 211 JG (Job Guarantee) program, 14, 257–60, 261n3 job creation, 85, 89, 237, 256–8 See also employment job sharing, 240, 242, 246 See also flexibility Johnson, Lyndon B., 257 Juncker, Jean-Claude, 29 K Kafka, Kyriaki, Kansas City, Missouri, 255 Karamanis, Kostas, 14 Katris, Christos, 13, 231 Kelton, Stephanie, 258 Kennedy, John F., 257 “Kennedy” round, 143 Keynesian models, 34, 47, 256, 258, 275–6 globalization and, 142 Keynes, John Maynard, 257 Kiyotaki, Nobuhiro, 266 Knotek, Edward, 226 knowledge spillovers, 177, 181–2 Konstantakis, Konstantinos, 15 Kostis, Pantelis, Kouskouna, Effrosyni, 12 Krimigis, Stamatis, 96 Kritikos, Alexander, 10 Krugman, Paul, 191 Kurita, Takamitsu, 231 Kydland, Finn, 266 L Laaser, Claus-Friedrich, labor, 80, 160, 164–5, 170, 192–3 See also unit labor costs (ULC) austerity and, 52 bubble economy and, 74 competitiveness and, 78 INDEX decoupling and, 49 democratization and, 150 division of, 142, 145–7 exports and, 307–9 extroversion and, 147 flexibility and, 14, 235–9, 243–7 GDP and, 75, GDP boom and, 75 growth and, 81 innovation and, 175, 178, 184 low skills and, 49 markets and, 3, 6, 240–3 mobility of, 194–8 new growth models and, 63 Okun’s Law and, 13, 230, 233 Lampedusa, Italy, 196 land taxes, 25 Latvia, 34, 37, 38, 197 adjustment programs and, 80 labor mobility and, 194, 196 path-dependency and, 193 Lawrence, Christiano, 266 Lazarides, Themistoldes, 16, 291 Least Absolute Deviations, 16 legal frameworks, 117–19 See also regulation Lehman Brothers, 36 leverage, 301 Levine, Ross, 210 Levy Economics Institute, 252, 259 Lewer, Joshua, 145 lex monetae principle, 118 liberalization, 142–3, 265 See also globalization Libya, 28 life expectancy, 11, 189, 205 liquidity, 92–3, 106, 131, 149, 285 Lisbon Treaty (2009), 117 Lithuania, 34, 38, 42 Ljung and Box test, 266 LNG (liquified natural gas), 27 Loan Loss Provision to Net Interest Revenue (llpnir), 301–2 329 local economies, 183 local economy, 146–7 logistics services, 147, 149, 152n4 Logit method, 298–301 London, England, 194 Lucas, Robert, 266 Luxemburg, 291 M Maastricht Treaty, 21, 110 macroeconomic models, 307–12 bank ratings and, 16 bubble economy and, 74 CRAs and, 293 decoupling and, 38–9 evolution in, PIGS and, 17 rebalancing and, 4, 34 reform implementation and, 159 securitization and, 24 sovereign debt and, 292 variables and, 15 Manasse, Paolo, Mann, Frederick, 118 Mann-Whitney test, 13, 226, 230, 233 manufacturing, 68 adjustment programs and, 80 flexibility and, 235 innovation and, 173–4 new business models and, 99 markets, 7, 14, 235–9, 243–7 adjustment programs and, 77 austerity and, 52 bubble economy and, 74 business cycle and, 266 competitiveness and, 79 decoupling and, 47 division of labor and, 146 exports and, 310 extroversion and, 147–8 globalization and, 104, 142 government and, 71 330 INDEX markets (cont.) Grexit and, 123–4 growth and, 81, 95 innovation and, 184 labor and, 3, 6, 194, 196, 240–3 new growth models and, 63 Okun’s Law and, 13, 230, 233 reform implementation and, 160, 170 reforms based on, 6, 80 reform timing and, 164–5 social security and, 204, 209–10, 219, 221 structural reforms and, 80 Maslow’s pyramid of needs, 152n6 Maximum Likelihood, 231 McKinnon p-values, 228 McKinsey report (2012), 177 Mediterranean countries, 104, 226 Memorandum II, 1, 53 Memorandum III, 53 Memorandum of Understanding (May 2010), 53, 84, 93 Merton, Robert, 219 methodology, 16–17 business cycle and, 266–70 CRAs and, 294–9 econometrics and, 298–300 export analysis and, 309–10 flexibility and, 247 Michaelides, Panayotis, 15 microeconomic analysis, 16, 292 microfinance, 149 Middle East, 28 migration, 11–12, 28–9 austerity and, 51 decoupling and, 49 demographics and, 189 flexibility and, 236 labor mobility and, 194–8 path-dependency and, 193 taxes and, 25 union and, youth and, 30 minimum wage, 13, 226, 230, 239, 244, 257–8 Ministry of Employment, 241 Minsky, Hyman, 256–8, 266 mobility, 11, 26, 192–3 globalization and, 141–3 growth potential and, 95 labor and, 194–8 regulation and, 142 social security and, 204 modernization, 7, 106, 109 Moldova, 90 Monacelli, Tommaso, 277 MONA database (Monitoring and Fund Arrangements), 159–61, 163, 168 monetary policy, 190–1, 291 monetary transaction programme, 198 monetary union, 3–4, 22–3, 253–4 adjustment programs and, 77 defense and, 29 demographics and, 11, 188 employment and, 260 exports and, 310 fiscal multipliers and, 277 gray exit from, 21 labor mobility and, 197 optimum areas for, 192 monocultures, 146 Monokroussos, Platon, 47 monopoly, 27 Moody ’s Investors Services, 294–5 moral hazard, 157 Moschieri, Caterina, 292 Mountford, Andrew, 277 multicollinearity, 269 Mundell, Robert, 192, 194 mutual funds, 207, 219 INDEX N National Central Banks (NCB), 45 national characteristics, 236, 239, 242, 247, 253 See also demographics National Council on Research and Technology, 96 nationalism, 4, 84 neoclassical theory, 2, 192, 276, 278 neoliberalism, 146, 151 Netherlands, 92, 175, 177, 254 Net International Investment Positions (NIIP), 36, 45, 53 New Deal program, 260 New Democracy party, 83 “New Growth Model for the Greek Economy, A” conference, 1–2 New Trade Theory, 309 Nigeria, 197 non-financial sector, 123–4 non-performing loans, 92–3, 97 non-tradable goods, 6, 68, 74 North Africa, 28 North America, 50 North American Free Trade Agreement (NAFTA), 142 Northern Europe, 26, 46, 297, 302 North/South variable, 301, 303 Norway, 22 nuclear energy, 27 O Okun, Arthur, 225, 227 Okun’s Law, 3, 13–14, 225–9 GDP and, 230–3 oligarchy, 256 Olympic Games of 2004, 241 one-percent, 256 See also inequality optimal portfolio approach, 219 optimum currency area (OCA), 30 ordinal probit methodology, 299 331 Ordinary Least Squares (OLS), 16, 298, 300–1 Organisation for Economic Co-operation and Development (OECD), 193, 265, 267, 277, 309 innovation and, 175 labor mobility and, 194 new growth models and, 63–4 reform implementation and, 159 social security and, 208–10 structural reforms and, 109 supply-side reforms and, 89 original sin argument, 158 ownership concentration, 92, 298, 300–1, 303, 306n1 Ozouni, Eirini, P Packer, Frank, 297 Papaioannou, Sotiris, 15 Papazoglou, Christos, 308 parallel currency, 259, 261n2 Paris, France, 194 part-time work, 240, 249n2 Pasok party, 83 pay-as-you-go schemes See social security payment imbalances, 39 payments, 53 See also Target2 pegged currency, 14, 258–60 Pencavel, John, 237 Pendergast, Tom, 255 pensions, 6, 11–13, 201 See also social security austerity and, 51 demographics and, 193 labor mobility and, 194–6 reform implementation and, 160–1 reform of, 81 reform timing and, 164–5 332 INDEX Pensions Europe (2015), 209 periodicity, 270 Perotti, Roberto, 277–9 pesos, 116 petroleum, 86, 104 See also gas Phillips curve, 226 Phillips-Perron test, 266 PIGS (Portugal, Ireland, Greece group of countries), 17, 289, 292, 296–7 Pillar II Bonds, 126, 133 Pisani-Ferry, Jean, 161–2, 164 Poland, 30 policy, 15, 183–4, 275, 278, 280 decoupling and, 47 effectiveness of, 276 employment and, 252 exports and, 311 extroversion and, 147 growth and, 97, 255 job creation and, 257 new business models and, 99 structural reforms and, 111 supply-side reforms and, 89 politics, 83–5, 88, 158, 169 austerity and, 51–2 certificate of beliefs in, 86 debt and, 106 debt repayment and, 108 elections and, 84 exports and, 310 geostrategic position and, 146 growth potential and, 97 innovation and, 180, 182, 185 labor mobility and, 195 liquidity and, 93 new business models and, 100 popular acceptance and, 83 sovereign debt and, 289–91 structural reforms and, 111 supply-side reforms and, 89–90 SYRIZA and, 73 union and, 25 politics employment and, 252 portability of benefits, 204, 207 Portugal, 159, 161–3, 165, 167–9 adjustment programs and, 77 austerity and, 50–2 bank ratings and, 16 crisis of 2008 and, 35 decoupling and, 4, 34, 37–41, 44–9 demographics and, 188 exports and, 66–7, 308 innovation and, 176 labor mobility and, 194, 196–7 liquidity and, 92 new growth models and, 62–5, 68–9 opposition and, 53 productive base and, 87 social security and, 220–1 sovereign debt and, 289, 303 structural reforms and, 10 supply-side reforms and, 92 post-crisis era, 193, 233, 307 postmodernism, 141–4 post-war period, 256, 277 Poufinas, Thomas, 12 Poverty, 6, 74, 79, 257–8 pre-crisis era, 62, 76, 173, 190 predictability, 299, 303 pre-Euro era, 74, 77, 81 prices, 6, 78–81, 158–60, 164 bubble economy and, 74–5 division of labor and, 146 exports and, 309 fiscal multipliers and, 276 gas and, 27 GDP and, 76 globalization and, 106 job creation and, 257 supply-side reforms and, 91, 92 private equity, 207–11, 219–21 private sector, 158–9, 169, 253–4 See also investment adjustment programs and, 77 fiscal multipliers and, 277 INDEX Grexit and, 119, 123, 136, 138 growth and, 95, 256 innovation status quo and, 178 job creation and, 257 new growth models and, 68 productive base and, 86 redenomination and, 117–18 social security and, 207 sovereign debt crisis and, 135 structural reforms and, 111 privatization, 99, 109, 235 Probit method, 298–301 product markets innovation and, 11, 175 (see also exports) Productivity, 9, 90, 109, 141–5, 148–51, 158, 191, 192, 208, 210, 225, 275, 277–81 adjustment programs and, 77 base for, 85–7 bubble economy and, 74 competitiveness and, 78 crisis of 2008 and, 34–5 decoupling and, 44 demographics and, 189–90 development and, 145–7 employment and, 255 exports and, 308, 311 flexibility and, 245–7 GDP and, 76 globalization and, 104, 106 growth and, 81, 255 growth potential and, 93, 95 human resources and, 152n5 innovation status quo and, 178 job creation and, 257–8 new business models and, 100 Okun’s Law and, 225 path-dependency and, 192 reform implementation and, 159 secular stagnation and, 190-1 social security and, 204 structural reforms and, 108 333 supply-side reforms and, 87 product markets, 6–7, 80–1, 85, 165, 169–70 product testing, 148 professionalization, 109 promotion strategies, 148 property rights, 181 protectionism, 147–8 public sector, 7, 77–8, 87, 132, 278, 282–4 austerity and, 50–1 capital and, 287n1 contracts and, 148 debt and, 106, 108 decoupling and, 44 demand and, 77 extroversion and, 149 flexibility and, 235, 247 Grexit and, 119, 124, 127–31, 135 growth and, 95, 97 innovation and, 175, 180–1 new business models and, 99, 102 new growth models and, 61 productive base and, 86 reforms and, 158, 160–1, 164–5, 168 sovereign debt crisis and, 134 structural reforms and, 111 Target2 and, 132 pump-priming, 256–7 Putin, Vladimir, 27 Q quality, economies of, 145–51 quality of life, 179–80, 236 quality of management practices, 178 Quartet, the, 10 See also Troika, the R Ramey, Valerie, 278, 287n1 random walk process, 266 334 INDEX ratings bias, 293 See also credit rating agencies (CRAs) rationality, 147 raw materials, 145 real effective exchange rates (REERS), 74–8 real estate, 50, 92–3 rebalancing, 4, 34, 36 recessions, 4, 16, 90, 278, 283, 285 decoupling and, 37, 46 flexibility and, 247 Okun’s Law and, 225 recovery from, 5, 70 structural reforms and, 80, 169 redenomination, 3, 23, 115–19, 130 Grexit and, 123–4, 127–31, 138 juridical framework for, 117–19 sovereign debt crisis and, 134 Target2 and, 131–4 refugees, 28–9 See also migration regulation, 175–6, 180, 182–3, 211 CRAs and, 293, 296–8 decoupling and, 48 flexibility and, 238, 247, 249n3 new business models and, 99 new growth models and, 63 postmodernism and, 141–4 social security and, 205 sovereign debt and, 289 structural reforms and, 109 supply-side reforms and, 89 Reinhart, Carmen, 44 research and development (R&D), 95–7, 98n1, 177–8, 181, 185 See also innovation division of labor and, 146 Research Framework Programme Horizon 2020, 181 research institutes, 10, 180–2, 184 See also institutions Return on Assets (ROA), 16, 298, 301 Return on Equity (ROE), 16, 298, 301 revenue multipliers, 47 reverse direction transfers, 197 Ricardian models, 275–6 risk, 17, 23–4, 26, 294, 308 social security and, 207, 209 Robinson, Joan, 257 Rocholl, Jorg, 209 rolling windows analysis, 15 Romania, 89, 296 Romer, Christina, 278 rule-of-thumb consumers, 276 Russia, 27, 52 Rzoñca, Andrzej, 47 S Sarbanes-Oxley Act, 297 Sargent, Thomas J., 251 savings, 80, 208, 210, 254 savings to investment ratio, 5, 40–2 Scandinavian countries, 192 Schengen accords, 196 Schrader, Klaus, scientific committee (Athens conference), 1–2, 18n1 scientists, 178 second adjustment program, 159–62, 169 GDP assumptions and, 62 timing and, 163, 165, 168 “Second Economic Adjustment Program for Greece, The” Fourth Review, 2014, 80 sectoral balances, 256 secular stagnation, 190–1 securities, 122, 126, 129, 132, 134 ghost debt and, 126 securitization, 24 security See defense self-employment, 241 Senegal, 89 service industry, 4, 40–1, 65, 177 division of labor and, 145 exports and, 151n4 INDEX extroversion and, 150 flexibility and, 235, 240 globalization and, 103–4, 143 income and, 151n2 new business models and, 100, 102 reform timing and, 165 regulation and, 141 supply-side reforms and, 92 Shen, Chung-Hua, 293 shipping and transport, 40, 65, 68, 103–4 new business models and, 100, 102 Slovakia, 103, 116–17 Slovenia, 196 small and medium enterprises (SMEs), 9, 146, 148–9, 151 barriers to, 81 competitiveness and, 79 division of labor and, 146 innovation and, 173–5 securitization and, 24 social security and, 12–13, 203–4, 209, 219–21 structural reforms and, small-and mid-cap index, 221–2 Smith, Adam, 191 social consequences, socialism, 86 social justice, 150 social safety net, 254–5, 259–60 social security, 3, 12, 201–4 See also welfare benefit methodology and, 215–19 calculation notation for, 213–15 contribution to growth and, 219–22 defined benefit plans and, 204–7 flexibility and, 239 funded pension schemes and, 207–11 pay-as-you-go schemes and, 211–15 union and, 26 Solow, Robert, 187, 191, 194 Sotiropoulos, Dimitris, 102 335 Southeast Europe, 265 Southern Europe, 23–4, 26, 46, 297, 303 sovereign debt, 3, 8, 16–17, 294–8 bank ratings and, 289–93, 299–303 crisis and, 115, 118, 131, 133–5 sovereign immunity doctrine, 138 Soviet Union, 29 Spain, 62–5, 68–9, 179 adjustment programs and, 77 banking system and, 292 bank ratings and, 16 crisis cycle and, 255 exports and, 66–7 labor mobility and, 194, 196–7 migration and, 28 productive base and, 86 sovereign debt and, 289, 291, 303 supply-side reforms and, 92 specialization, 181–2 spot pricing, 27 Spyromitros, Eleftherios, 17 stabilization, 8, 85, 107–8, 111, 165 Stand-By Arrangement (SBA), 37 stationarity, 268, 270 stimulus, 276 structural break tests, 15, 266–7, 272 structural funds, 182 structural reforms, 3, 7–8, 11, 157–9, 162–4, 169–70 See also adjustment programs austerity and, 52 benchmarks for, 160–1 bubble economy and, 74 business cycle and, 266 current account balances and, 14 debt and, 108 employment and, 251–2, 254–5 euro membership and, exports and, 307–8, 310 fiscal multipliers and, 285 flexibility and, 235 336 INDEX structural reforms (cont.) globalization and, 106 government and, 70 growth and, 53, 67, 93, 97 immigration and, 11 innovation and, 11, 173, 176, 184 new business models and, 100, 109–11 program conditionality and, reluctance to implement and, 16 sequence of, 80–1 social security and, 205 third bailout and, timing of, 164–8 women and, 11 Student-t innovations, 231 substitution effect, 222 Summers, Larry, 190 supply, 259 supply-side reforms, 87–92, 257 surpluses, 107–8, 110, 256 See also current account balances sustainability, 8, 11, 100, 177, 184–5 adjustment programs failure and, 87 debt and, 106–8 decoupling and, 41 demographics and, 190, 193 division of labor and, 146 elections and, 84 energy and, 28 environmental, 150 extroversion and, 149 growth potential and, 83, 97 labor mobility and, 194–8 path-dependency and, 191 structural reforms and, 110–11 Swaziland, 89 Sweden, 22, 37, 178 Switzerland, 22 Syria, 28 Syriza party, 73, 80, 84, 96 T target, 5, 15, 45–6, 53 crisis cycle and, 253 default on, 131–3 pegged currencies and, 259 redenomination and, 118 sovereign debt crisis and, 134 tariff barriers, 142–3 taxes, 4, 6, 25, 275–8, 280–4 adjustment programs failure and, 87 CRAs and, 293 decoupling and, 40, 41, 46 employment and, 259 government and, 70 growth and, 256 innovation and, 183 liquidity and, 93 pegged currencies and, 259 redenomination and, 118 reform timing and, 164 T-bills (Greek), 126, 131, 134 Tcherneva, Pavlina, 255–6 technology, 104, 106, 142–5, 173, 178–82 crisis of 2008 and, 35 exports and, 308 extroversion and, 151 flexibility and, 235 regulation and, 141 secular stagnation and, 190 Terzi, Alessio, 9, 159, 161 Texas Pension Review Board, 206 third adjustment program, 3, 7, 70–1, 85, 88, 97 austerity and, 51 deficit-to-GDP ratio and, elections and, 84 ending of, 110 redenomination and, 115 Thomson Reuters Eikon, 123 time dimension, 161–2 Ting, Ngoo Yee, 226 INDEX Tobin’s Q variable, 301 “Tokyo” round, 143 total capital ration (tcr), 301–3 total factor productivity (TFP), 5–6, 7, 42–3, 76 GDP and, 75 globalization and, 106 social security and, 207 tourism, 10, 68, 173, 177, 180–1, 184 decoupling and, 40 globalization and, 103–4 new business models and, 100, 102 new growth models and, 65 productive base and, 87 tradable goods, 6, 74, 78, 308 See also exports tradable sector, 68–9 trade, 103–5, 266 See also exports trade deficits, 46, 311 Trade-Related Aspects of Intellectual Property Rights (TRIPS), 143, 151n2 Transatlantic Trade and Investment Partnership, 30 Trans Pacific Partnership, 30 transparency, 164, 168–9, 206 Transparency International, 89, 176 trickle-down policies, 257 See also supply-side reforms Troika, the (IMF, European Commission and ECB), 6, 37, 73 austerity and, 51 bubble economy and, 74 business cycle and, 270, 272 current account balances and, 14 debt and, 107 elections and, 84 growth and, 81, 256 innovation and, 10, 185 new business models and, 99 new growth models and, 62 pegged currencies and, 259 337 reform implementation and, 168 structural reforms and, 80 supply-side reforms and, 91 trust, 46, 48–9 Tsintzos, Panagiotis, 17 Tsionas, Efthymios, 15 Tsipras, Alexis, 73, 116 Turkey, 79 2001 crisis, 290 2008 crisis, 13, 34–6 See also financial crisis bubble economy and, 75 CRAs and, 294, 296 demographics and, 188 exports and, 310 fiscal multipliers and, 285 flexibility and, 241, 244 kun’s Law and, 227–9 new business models and, 100 political crisis and, 93 securitization and, 24 social security and, 210 2009 crisis, 88, 92, 100, 252 2010 crisis, 61–2, 115, 266 U Ukraine, 28 Ukraine-Russia crisis of 2014, 27 undeclared work, 247 unemployment, 235–9, 243–7 See also employment austerity and, 51, 52 business cycle and, 266 decoupling and, 4, 37, 39 employment and, 255 flexibility and, 240–3 GDP and, 13, 75, 225–9 globalization and, 104 government and, 70 growth and, 255 labor mobility and, 194–7 338 INDEX unemployment (cont.) Okun’s Law and, 13, 230–3 path-dependency and, 192–3 sources of, 38 structural reforms and, 80 youth and, 251 United Kingdom, 21, 207, 211, 220, 289, 291–2 capital and, 143 competitiveness and, 79 fiscal multipliers and, 277 flexibility and, 237 growth potential and, 96 innovation status quo and, 178 United States, 21, 205–8, 220, 256 capital and, 143 crisis cycle and, 253 crisis of 2008 and, 34–5 demographics and, 190 employment and, 252 fiscal multipliers and, 277–8 flexibility and, 237 globalization and, 30 growth and, 256 innovation status quo and, 179 job creation and, 258 labor mobility and, 196–7 new deal and, 260 path-dependency and, 192–3 pegged currencies and, 259 scientists and, 178 securitization and, 24 taxes and, 25 United States Congress, 30 unit labor costs (ULC), 6, 76 See also labor bubble economy and, 74 competitiveness and, 78 decoupling and, 4, 41, 44 euro membership and, exports and, 17, 307–12 flexibility and, 14 GDP and, 75 globalization and, 106 government and, 70 growth and, 53, 81 new growth models and, 63, 65 reform timing and, 164 supply-side reforms and, 90–1 unit root tests, 15 universities, 7, 95–7, 180 Uruguay, 90 “Uruguay” round, 142–3 Utah Retirement Services, 205 utility functions, 206, 212, 217, 219 V Valsamis, Dionysios, value-added production, 11, 87, 104, 177 Value Added Tax (VAT), 92 Varga, Janos, 67 variables, 15 Vector Auto Regressive models (VAR), 276–7, 279, 281 Velvet Divorce of Czechoslovakia, 116 venture capital, 210–11, 219–20, 222 Vivarelli, Marco, 178 vocational training, 152n5 W wages, 6–7, 78–81, 254, 259–60 bubble economy and, 74 decoupling and, 42 flexibility and, 238, 240, 242 GDP and, 76 growth potential and, 95 innovation and, 177, 184 job creation and, 257–8 Okun’s Law and, 226, 229–30, 233 INDEX path-dependency and, 193 reform implementation and, 160 social security and, 213 unemployment and, 13–14 war, 30 See also defense wealth, 93–4 See also inequality negative effects of, 276 welfare, 4, 25–6, 99 See also social security labor mobility and, 195–6 white noise tests, 15, 266–7, 269 white test, 267 Wolf, Holger, 307 women, 11, 198, 236 Wong, Poh Kam, 178 work hours, 255 working age population, 188–9, 191, 194, 197–8 Works Progress Administration (WPA), 258 World Bank, 88, 93, 142, 175, 183 See also ease of doing business 339 ease of doing business and, 61 structural reforms and, 109, 159 World Economic Forum, 38, 89 2014 report of, 308 World Economic Outlook of the IMF (October 2012), 46 World Trade Organization (WTO), 142 World War II, 86, 141–2 Wray, Randall, 14 Y youth employment, 4, 15, 244, 251–2, 259 Z Zandberg, Eelco, 210 Zarotiadis, Grigoris, Ziemann, Volker, 266 .. .A New Growth Model for the Greek Economy Panagiotis E Petrakis Editor A New Growth Model for the Greek Economy Requirements for Long-Term Sustainability Editor Panagiotis E Petrakis National... Economics of the National and Kapodistrian University of Athens (NKUA), Athens, Greece © The Editor(s) (if applicable) and The Author(s) 2016 P.E Petrakis (ed.), A New Growth Model for the Greek Economy,... refer to the Baltic countries as a single economy called the Baltics,” calculating all data presented as a weighted average of the three economies (Latvia, Estonia, and Lithuania) based on their