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THE GREEK CURRENT ACCOUNT DEFICIT: IS IT SUSTAINABLE AFTER ALL?


George A. Zombanakis

Bank of Greece

Constantinos Stylianou

University of Cyprus


Andreas S. Andreou

University of Cyprus


ABSTRACT

The large Greek current account deficit figures reported during the past few years have become the source of increasing concern regarding its sustainability. Bearing in mind the variety of techniques employed and the views expressed as regards the analysis and the assessment of the size of the current account deficit, this paper resorts to using neural network architectures to demonstrate that, despite its size, the current account deficit of Greece can be considered sustainable. This conclusion, however, is not meant to neglect the structural weaknesses that lead to such a deficit. In fact, even in the absence of any financing requirements these high deficit figures point to serious competitiveness losses with everything that these may entail for the future performance of the Greek economy.   


Keywords
: Neural Networks, Current Account Deficit Sustainability
JEL classification codes: C45, F32.


Acknowledgements:
The views presented in this paper are personal and do not necessarily reflect the views of the Bank of Greece. We have benefited from comments by Isaac Sabethai and Heather Gibson. Thanks are also due to Stylianos Panagiotou and Zacharias Bragoudakis for their contribution on technical issues as well as to Eleni Gazopoulou for her assistance concerning data support and processing.


Correspondence:

George A. Zombanakis

Economic Research Department,

Bank of Greece, 21, E. Venizelos Ave.,

102 50 Athens, Greece

Tel. +30210-320 2415

gzombanakis@bankofgreece.gr.


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