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Bank of Greece Economic Bulletin, Issue 55

29/07/2022 - Press Releases

Today, the Bank of Greece published the latest issue of its Economic Bulletin (No. 55 / July 2022).

The articles published in the Economic Bulletin reflect the views of the authors and not necessarily those of the Bank of Greece.  

Issue 55 features the following four articles:

Sofia Anyfantaki, Yannis Caloghirou, Konstantinos Dellis, Aikaterini Karadimitropoulou and Filippos Petroulakis: “Skills, management practices and technology adoption in Greek manufacturing firms”

The Greek economy has so far failed to shift its production structure towards more complex, high value-added activities incorporating knowledge-intensive practices. Greece lacks a systemic “activating knowledge” dimension. Given the country’s low performance in innovation and knowledge diffusion relative to EU peers, the article focuses on two specific problem areas of Greek industry: skills and management practices. Both areas are key requirements to achieve robust productivity growth, in which Greece has been shown to be chronically lagging behind its peers. First, the authors provide an in-depth look at skills indicators to identify the scope for action, particularly in addressing mismatch. A notable finding is that, by utilising mismatch indicators aggregated from microdata sourced from the recent OECD Survey of Adult Skills that was conducted as part of the Programme for the International Assessment of Adult Competencies (PIAAC), they show that Greece has the highest overskilling for professional occupations. The study also corroborates previous findings about the negative relationship between skills mismatch and firm productivity. Second, the authors use firm-level data from the World Management Survey (WMS) to give a review of management practices in Greek industry and explore the quality of these practices and their association with productivity. Finally, they use information from a novel survey on entrepreneurship, technological developments and regulatory change, and examine the structural characteristics of Greek firms that innovate and tend to adopt new technologies, with a focus on the role of size, ownership structure, global value chain participation and human resource practices. The empirical findings of the study provide valuable input into concrete policy proposals to increase productivity in Greek manufacturing.


Christos Catiforis: “Post-pandemic inflation: Phillips curve, trends, drivers and lessons”

After several years of very low inflation, the world economy in 2021 and 2022 has been confronted with an abrupt and persistent rise in inflation rates not seen for decades. This paper investigates the main factors behind the surge in consumer price inflation in advanced economies and possible differences across them. It assesses the relative role of excess demand arising from the reopening of economies after the COVID-19 restrictive measures, global value chain and supply-side disruptions, higher energy prices, the “base effect”, and labour market pressures. The author finds that prices were initially pushed up by the fast world demand recovery combined with global supply disruptions, but eventually, especially since the war in Ukraine, energy prices have become the main driver of increased inflation. Differences in the contribution of the core inflation component across advanced economies, especially between the United States and the rest, reflect differences in output gaps and labour market tightness, while unit labour cost pressures remained muted almost everywhere. Given that inflation is expected to remain elevated for longer than initially anticipated, monetary authorities are expected to become more “conservative” again, defending their credibility. Past experience suggests that, as the economic slowdown becomes inevitable, the short-term costs of a gradual and orderly monetary policy normalisation to activity and employment are probably lower than the potential longer-term costs of a more popular prolonged accommodative policy. The anchoring of inflation expectations is not “a free lunch”.


Nikos Ventouris and Georgios Palaiodimos: “Proposals for the reform of EU fiscal rules”

The aim of this paper is to contribute to the ongoing debate regarding the reform of the EU fiscal framework, with a special focus on fiscal sustainability for Greece. The key policy proposals for the EU fiscal rules draw on lessons from past experience, the conclusions of relevant studies and the fiscal sustainability risks faced by Greece and other high-debt countries in the euro area. To this end, the authors use the European Fiscal Board’s Compliance Tracker Dataset to assess compliance with the existing Stability and Growth Pact framework. Moreover, they employ the Bank of Greece’s Debt Sustainability Analysis (DSA) model to identify possible fiscal sustainability risks for Greece over the medium- to long-term horizon, taking into account alternative economic policy scenarios (including a debt rule scenario). The main findings of the paper indicate that the revised fiscal framework should focus on the need to enhance sustainability of public debt as a key priority, by setting a debt anchor as a medium-term fiscal objective, with a single operational expenditure rule that promotes countercyclicality of fiscal policy. The current benchmark levels could be maintained and complemented with the appropriate flexibility in the rate of debt reduction to address cross-country heterogeneity and avoid self-defeating effects of fiscal policy. In the case of Greece, despite the favourable characteristics of public debt, fiscal policy in the short and medium term should focus on accelerating debt reduction. The exposure of Greece’s public debt dynamics to market and interest rate risks is expected to gradually increase as official sector debt is replaced by market financing, thereby changing the structure of public debt and intensifying the need to create fiscal buffers in order to increase its resilience to future adverse macroeconomic shocks.


Sofia Anyfantaki, Petros Migiakis and Aikaterini Paisiou: “Green finance in Europe: actors and challenges”

Addressing climate change through mitigation and adaptation measures requires changes in policies, technologies and consumption behaviours towards a low-emissions model of growth. These structural and technological changes require appropriate financial solutions, in order to scale up financial flows that support sustainable growth. This paper focuses on the European dimension and considers the role of financial markets in the process of reducing greenhouse gas emissions and promoting climate change mitigation and adaptation. Global green bond markets have grown rapidly in recent years. Based on issue- and issuer-specific data, the authors find that the global market activity for financing projects within the scope of a green bond issuance has accelerated during the last years, with the aggregate amount of bonds issued in the period 2019-21 almost tripling compared with the period 2014-18. Moreover, they show that European markets and issuers lead this development, while private sector entities are increasingly making use of green bond markets as a source of funding. On the other hand, funding from green bond markets has been directed to few sectors of the economy, underlining the need for some policy-related initiatives. The increase in green bond issuance has come during a period of easy financial conditions, which further highlights the need for policy initiatives aimed at enhancing the provision of incentives to investors towards green financing in the present changing financial market landscape. The improvement of the credibility, comparability and transparency of ESG ratings and assessments of credit rating agencies is key to supporting sound investment decision-making and risk management, including those of central banks, which are increasingly incorporating climate change issues in their operations.  

Related information:

Issue 55 also includes the abstracts of Working Papers published by the Special Studies Section of the Bank’s Economic Analysis and Research Department between January and July 2022.  

Related link:

The full text of Issue 55 is available on the Bank of Greece website: Bank of Greece Economic Bulletin, Issue 55.

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