Authors: Kyriaki Kafka

Title: Towards Economic Stability: A Sectoral Analysis of Uncertainty in the Greek Economy

Abstract

Introduction

This research offers a comprehensive investigation into the influence of various forms of uncertainty on the sectoral Gross Value Added (GVA) within the Greek economy. Utilizing a rich dataset from 1998 to 2022, the study sheds light on how different sectors respond to multiple uncertainties—from economic and fiscal policy to currency and debt policy. Given the complex economic landscape of Greece, identifying sector-specific vulnerabilities and resilience is essential for effective policy formulation.

Objectives

The primary objectives of this study are twofold. First, to pinpoint sectors that are vulnerable or resilient to specific types of uncertainty, thereby aiding in targeted policy development. Second, to broaden our comprehension of the relationship between sectoral GVA and different forms of uncertainty, thus filling a knowledge gap in existing economic literature.

Methodology

The study relies on quarterly data spanning 24 years and employs nine established uncertainty indices. These indices encompass various policy domains: economic, fiscal, monetary, currency, banking, pension, tax, and debt. An in-depth analysis was carried out to assess the sensitivity of each sector to these forms of uncertainty over different time frames.

Key Findings

The analysis reveals nuanced impacts of uncertainty across various economic sectors. The "real estate" sector emerges as especially vulnerable to negative influences, suggesting a need for focused policy interventions. On the other hand, sectors like "professional, scientific, and technical activities," as well as "administrative and supportive activities," "construction," and "wholesale/retail trade" were found to be highly susceptible to shocks resulting from uncertainty. Importantly, Currency Policy and Debt Policy Uncertainty indexes were identified as having the most significant negative impacts on sectoral GVA.

Implications

These findings bear significant implications for policymakers and decision-makers in Greece. The study serves as a navigational aid for those striving to establish stability and promote economic growth. By identifying which sectors are most affected by different types of uncertainty, this research paves the way for more targeted and effective policy measures.

Conclusion

This study contributes substantively to the literature by offering a detailed examination of the impact of uncertainty on sectoral economic performance in Greece. In doing so, it provides valuable insights instrumental for academic discourse and practical policy formulation geared towards achieving economic resilience and growth in a volatile environment.