Year: 1983
Author: Panayotopoulos, Dimitris
Credit and Capital Markets – Kredit und Kapital, Vol. 16 (1983), Iss. 3 : pp. 394–404
Abstract
The “Vicious Circle” Hypothesis: The Greek Case
It is evident from the results of the empirical estimation that the exchange rates after 1973 do not passively reflect changes of the domestic price level. On the contrary, the exchange rate is an independent factor in feeding domestic price inflation, through the influence it exerts on the relative prices of importable and exportable goods and services. The statistical investigation has shown, as well, that changes in the money supply do affect the exchange rate. This fact reinforces the above findings, i.e. the exchange rate changes lead to domestic price inflation. After 1973 Greece has “got” to a vicious circle. The depreciation/price inflation spiral, which is in operation since then, has to be broken down. However, it has to be admitted that such a task is not an easy operation. Strong policies have to be implemented that, besides actions which are focusing on the adjustment of the economy itself, will attempt to establish confidence and to reverse the expectations of the public. The adjustment procees the country has to undertake, prolonged and problematic itself, is further complicated since the country is operating under the system of flexible exchange rates
Journal Article Details
Publisher Name: Global Science Press
Language: Multiple languages
DOI: https://doi.org/10.3790/ccm.16.3.394
Credit and Capital Markets – Kredit und Kapital, Vol. 16 (1983), Iss. 3 : pp. 394–404
Published online: 1983-03
AMS Subject Headings: Duncker & Humblot
Copyright: COPYRIGHT: © Global Science Press
Pages: 11
Author Details
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