STRUCTURAL AND CYCLICAL FACTORS OF GREECE’S CURRENT ACCOUNT BALANCES: A NOTE
Ioanna C. Bardakas
Bank of Greece
Abstract
This note examines the relative importance of cyclical and structural factors in determining Greece’s current account performance. I use a number of filters to remove the long-term component and isolate the cyclical factors. It is shown that for the last 15-years the structural component explains most of the variation in the current account. Cyclical factors show small increase in importance during the economic crisis. Thus, for any improvement in the current account to become permanent emphasis should be placed, among others, in the adjustment of structural factors such as development of import substitution and export promotion strategies and in finding ways to improve flows of trade-financing to exporting firms.
JEL- classification: C01, F14
Keywords: Cyclical factors, structural factors, current account performance, filtering methods
Acknowledgements: The author would like to thank George Zombanakis for providing the motivation for this work and useful insight. I would also like to thank Heather Gibson for her constructive comments and suggestions. The views expressed in this note do not necessarily represent those of the Bank of Greece.
Correspondence:
loanna C. Bardakas
Economic Analysis and Research Department
Bank of Greece,
21 El. Venizelos Av.,
10250 Athens, Greece
Email: impardaka@bankofgreece.gr
Tel.:0030-210-3202397