Economic growth in Greece: the cost of a failed adjustment programme

摘要

This article aims to assess the cost of failure of Greece's 'First Economic Adjustment Programme', in terms of potential Gross Domestic Product (GDP) growth. In particular, real GDP trends are estimated through filtering techniques and compared with those had the first programme been successful. The trend growth rate of GDP is estimated at -3.84% (2012Q2), against -2.21% if the targets and forecasts of the first adjustment programme had been realized. The results indicate that the failure of the first programme has had a signifying adverse effect on the country's future growth prospects as current GDP dynamics are far worse than those forecasted in the first programme.