Currency devaluation, external finance and economic growth: A note on the Greek case

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Published: Apr 13, 2016
DOI: https://doi.org/10.12681/scad.9089
Keywords:
Drachma Devaluation Greek Economy Dynamic Input-Output Price Models Thirlwall’s Model
Theodore Mariolis
Panteion University Athens
Abstract

This paper combines dynamic input-output
price models with Thirlwall’s extended model
of balance of payments constrained growth to
estimate the effect of a switch to drachma on
domestic income. The findings suggest that a
return to national currency would not necessarily
deepen the recession, although a rather
large nominal devaluation, i.e. in excess of
57%-60%, is necessary for the recovery

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