Open AccessThe impact of the recovery and resilience facility on the Greek economy
Author(s) -
Dimitrios Malliaropulos,
Dimitris Papageorgiou,
Melina Vasardani,
Evangelia Vourvachaki
Publication year - 2021
Publication title -
economic bulletin - bank of greece/economic bulletin - bank of greece
Language(s) - English
Resource type - Journals
eISSN - 2654-1904
pISSN - 1105-9729
DOI - 10.52903/econbull20215301
Subject(s) - dynamic stochastic general equilibrium , economics , fiscal space , stimulus (psychology) , resilience (materials science) , psychological resilience , investment (military) , economic recovery , tax revenue , macroeconomics , revenue , fiscal policy , finance , monetary policy , psychology , physics , politics , political science , law , psychotherapist , thermodynamics
This paper assesses the macroeconomic impact of the stimulus and the structural reforms supported by the Recovery and Resilience Facility (RRF) on the Greek economy. The set-up is a Dynamic Stochastic General Equilibrium (DSGE) model that is augmented to account for the main features of Greece’s plan under the RRF framework. The results suggest that the full and timely implementation of the Recovery and Resilience Plan (RRP) implies significant benefits to the Greek economy. Real GDP, private investment and employment can potentially increase by 6.9%, 20% and 4%, respectively, by 2026. Tax revenues also increase, creating fiscal space that can be used to further boost economic activity. The implementation of structural reforms included in the RRP is necessary for maintaining important benefits also in the long run. The results indicate that the potential increase in long-run GDP from selected quantifiable reforms ranges between 6% and 9.9%, with gains extending to other macro variables.