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The impact of the Recovery and Resilience Facility on the Greek economy

Author

Listed:
  • Dimitris Malliaropulos

    (Bank of Greece and University of Piraeus)

  • Dimitris Papageorgiou

    (Bank of Greece)

  • Melina Vasardani

    (Bank of Greece)

  • Evangelia Vourvachaki

    (Bank of Greece)

Abstract

This study assesses the potential 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 for 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 the 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.

Suggested Citation

  • Dimitris Malliaropulos & Dimitris Papageorgiou & Melina Vasardani & Evangelia Vourvachaki, 2021. "The impact of the Recovery and Resilience Facility on the Greek economy," Economic Bulletin, Bank of Greece, issue 53, pages 7-28, July.
    • Handle: RePEc:bog:econbl:y:2021:i:53:p:7-28
    DOI: 10.52903/econbull20215301
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    References listed on IDEAS

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    Cited by:

    1. Priscila Espinosa & Daniel Aparicio-Pérez & Emili Tortosa-Ausina, 2023. "On the Impact of Next Generation EU Funds: A Regional Synthetic Control Method Approach," Working Papers 2023/07, Economics Department, Universitat Jaume I, Castellón (Spain).
    2. Bańkowski, Krzysztof & Bouabdallah, Othman & Domingues Semeano, João & Dorrucci, Ettore & Freier, Maximilian & Jacquinot, Pascal & Modery, Wolfgang & Rodríguez-Vives, Marta & Valenta, Vilém & Zorell, , 2022. "The economic impact of Next Generation EU: a euro area perspective," Occasional Paper Series 291, European Central Bank.

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    More about this item

    Keywords

    Recovery and Resilience Facility; fiscal policy; structural reforms;
    All these keywords.

    JEL classification:

    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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