The Impacts of the Great Recession on Growth and Unemployment in Greece
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Authors
Garcia, Emmanuel
Faucette, Gage
Smith, Jason
Wookfolk, Clay
Issue Date
2020
Type
Presentation
Language
en_US
Keywords
Alternative Title
Abstract
This study uses Okun's Law, the statistical relationship between a country’s economic growth rate and its unemployment rate change, to answer two questions about Greece. First, was the long-run growth rate for Greece significantly different after the Great Recession ended? Second, did the statistical relationship between the real GDP growth rate and the change of the unemployment rate for Greece adjust during the Great Recession? This study uses quarterly real GDP growth rate and change of the unemployment rate data for Greece from Quarter 1 1998 through Quarter 3 2019 to answer these questions. The data was collected from the Federal Reserve Economic Data (FRED) at the Federal Reserve Bank of St. Louis. The results show that the long-run growth rate for Greece was 4% and was not significantly different after the Great Recession ended. The results also show that unlike the United States, there is not a significant statistical relationship between the real GDP growth rate and the change of the unemployment rate during the non-recession periods. This is likely because more than half the jobs in Greece are government jobs. The results reveal that there was a significant negative relationship between the real GDP growth rate and the unemployment rate change during the Great Recession for Greece. A 1% increase of the unemployment rate led to a 1.33% decrease of the Greece’s growth rate.