International Advances in Economic Research

, Volume 5, Issue 1, pp 65–73 | Cite as

Budget deficits and economic activity

  • G. A. Vamvoukas
Articles
  • 69 Downloads

Abstract

Using annual data of the Greek economy, this paper explores the relationship between budget deficits and real output. The ultimate purpose is to empirically evaluate the validity of the Keynesian proposition and the Ricardian equivalence hypothesis. The econometric methodology is based on error-correction modeling, Granger bivariate and trivariate causality, and Hendry's general-to-specific technique. The ECM results are consistent with the Keynesian proposition, suggesting a significant and positive relationship between budget deficits and real GNP.

Keywords

Economic Growth Positive Relationship Economic Activity International Economic Annual Data 

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Copyright information

© International Atlantic Economic Society 1999

Authors and Affiliations

  • G. A. Vamvoukas
    • 1
  1. 1.Athens UniversityGreece

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