Δημόσιο έλλειμμα, δημόσιο χρέος και η φερεγγυότητα του ελληνικού δημόσιου τομέα

Abstract

This paper uses the Hamilton-Flavin test of public sector solvency and applies it in the
Greek economy. Under the maintained hypothesis that the government solvency constraint needs
to be imposed, this test develops from the idea of verifying whether the intertemporal budget
constraint of the public sector would be satisfied (a) if the fiscal policy in the sample had been
pursued indefinitely and (b) if the relevant macro and structural features of the economy were
stable over time. If solvency is not supported by the empirical evidence, a change either in the
implemented fiscal policy or in the relevant macro and structural variables (growth rate, inflation
rate, interest rate, etc.) must occur. The empirical work conducted in this paper provides
evidence that public sector solvency seems to be a problem in the Greek economy since the
end of the last decade, questioning the Sustainability of fiscal policies applied in the past.