Essays on the economic performance of Greece: Common currency and immigration



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In the first chapter we examine Greece’s experience as part of the Eurozone. Specifically, we investigate the causal effect of adopting the euro on the per capita GDP of Greece by using the synthetic control method that constructs a credible counterfactual for comparison. Our results show that Greece benefited early from the introduction of the euro but these gains did not last. Although Greece was doing significantly better than its synthetic until 2010, during and after the European crisis Greece significantly underperformed its synthetic control. This large shortfall in GDP shows (as of 2017) no sign of shrinking and the size of the post-2010 underperformance swamps the size of the pre-2010 gains.

In the second chapter we study the causal effect of refugees in the Greek economy. The turmoil in the Middle East and particularly the civil war in Syria, that started in 2011, has sent waves of refugees through many regions in the world. Greece, which is a first port of entry for those who want to move further in Europe, has become something like a “holding pen” for people seeking asylum. This chapter focuses on the unexpected, rapid, and large influx of refugees in Greece as a result of forced out immigration from the Middle East region and examines the effect of these influxes on the GDP per capita. The difference-in-differences (DID) approach was used to estimate the effect of immigration on GDP. The main outcomes of the analysis were that the immigrant influx had a negative effect on the treated regions in the standard DID test as well as in all the different tests that included differing sets of covariates for robustness. Thus, the primary conclusion supports a hypothesis that the impacted regions served as a “break-water” for the immigrant waves, absorbing most of the negative economic effect.

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Common currency, European Monetary Union, Economic development, Synthetic control method, Greece, Refugee crisis, Regional migration, Economic crisis, Immigration