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Output Loss from the Banking Crisis in Cyprus

Author

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  • Panos Pashardes

    (Department of Economics and Economics Research Centre, University of Cyprus)

  • Nicoletta Pashourtidou

    (Economics Research Centre, University of Cyprus)

Abstract

This article provides estimates of output losses of the banking crisis in Cyprus for the period 2012-2020. Unlike most studies, where the effects of banking crises are computed ex post using actual data, the crisis in Cyprus is still evolving and thus the output losses and the period over which the economy will be below its potential output are not known. The analysis is, therefore, conducted on the basis of the output gap approach, where projected replaces actual output in the comparison with potential output. Furthermore, we provide alternative output loss estimates to account for the uncertainty about the magnitude and the duration of the recession. Our results show that the crisis can be very costly in terms of lost output/income and growth.

Suggested Citation

  • Panos Pashardes & Nicoletta Pashourtidou, 2013. "Output Loss from the Banking Crisis in Cyprus," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 7(2), pages 3-24, December.
    • Handle: RePEc:erc:cypepr:v:7:y:2013:i:2:p:3-24
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    File URL: https://www.ucy.ac.cy/erc/documents/Pashardes_Pashourtidou_3-24.pdf
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    References listed on IDEAS

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    4. Furceri, Davide & Zdzienicka, Aleksandra, 2012. "How costly are debt crises?," Journal of International Money and Finance, Elsevier, vol. 31(4), pages 726-742.
    5. International Monetary Fund, 2013. "Cyprus: Second Review Under the Extended Arrangement Under the Extended Fund Facility and Request for Modification of Performance Criteria," IMF Staff Country Reports 2013/374, International Monetary Fund.
    6. Michael Bordo & Barry Eichengreen & Daniela Klingebiel & Maria Soledad Martinez-Peria, 2001. "Is the crisis problem growing more severe?," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 16(32), pages 52-82.
    7. International Monetary Fund, 2013. "Cyprus: Request for an Arrangement Under the Extended Fund Facility," IMF Staff Country Reports 2013/125, International Monetary Fund.
    8. van der Mensbrugghe, Dominique & Osorio Rodarte, Israel & Burns, Andrew & Baffes, John, 2009. "How to feed the world in 2050: Macroeconomic environment, commodity markets - A longer temr outlook," MPRA Paper 19019, University Library of Munich, Germany.
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    Cited by:

    1. Koutsampelas, Christos, 2014. "The introduction of a GMI scheme in Cyprus: family structure, equivalence scales and policy challenges," EUROMOD Working Papers EM10/14, EUROMOD at the Institute for Social and Economic Research.

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