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Greece withdraws from Euro and runs on Bitcoin; April Fools Prank or Serious Possibility?

Author

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  • Bouoiyour, Jamal
  • Selmi, Refk

Abstract

This paper assesses whether the way in which the Greek crisis was communicated by media and social networking increase the debt deal uncertainty and the possibility of abandoning the euro in favor of Bitcoin. Through an improved frequency approach, we attempt to disentangle short-, medium- and long-run causality between Google Trends (search queries) and Twitter (social media) data related to the Greek crisis and Bitcoin unconditionally and conditioning upon relevant control variables. Our results unambiguously show a short-run unidirectional causality running from search queries and the number of tweets to the use of Bitcoin. These findings remain meaningful when a number of control variables are accounted for, while the cycle length becomes shorter. These results change substantially by the arrival of the left-wing Syriza party in power, on January 25th, 2015, with its radical approach to debt negotiations. The cycle becomes longer (short- and medium-run). Not surprisingly, doubts have increased as to whether Athens can appropriately settle its debt repayment obligations. This study indicates that Greece’s withdrawal from euro and running on Bitcoin is likely to be an April fool’s joke rather than serious possibility. It also proves a sharp distinguishability among Googlers and Twitters.

Suggested Citation

  • Bouoiyour, Jamal & Selmi, Refk, 2015. "Greece withdraws from Euro and runs on Bitcoin; April Fools Prank or Serious Possibility?," MPRA Paper 65317, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:65317
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    References listed on IDEAS

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    1. Theologos Dergiades & Costas Milas & Theodore Panagiotidis, 2015. "Tweets, Google trends, and sovereign spreads in the GIIPS," Oxford Economic Papers, Oxford University Press, vol. 67(2), pages 406-432.
    2. Pavel Ciaian & Miroslava Rajcaniova & d’Artis Kancs, 2016. "The economics of BitCoin price formation," Applied Economics, Taylor & Francis Journals, vol. 48(19), pages 1799-1815, April.
    3. Bodart, Vincent & Candelon, Bertrand, 2009. "Evidence of interdependence and contagion using a frequency domain framework," Emerging Markets Review, Elsevier, vol. 10(2), pages 140-150, June.
    4. Bouoiyour, Jamal & Selmi, Refk & Tiwari, Aviral Kumar & Shahbaz, Muhammad, 2015. "The nexus between oil price and Russia's real exchange rate: Better paths via unconditional vs conditional analysis," Energy Economics, Elsevier, vol. 51(C), pages 54-66.
    5. Jamal Bouoiyour & Refk Selmi, 2015. "What Does Bitcoin Look Like?," Annals of Economics and Finance, Society for AEF, vol. 16(2), pages 449-492, November.
    6. David Yermack, 2013. "Is Bitcoin a Real Currency? An economic appraisal," NBER Working Papers 19747, National Bureau of Economic Research, Inc.
    7. Bouoiyour, Jamal & Selmi, Refk, 2014. "What Bitcoin Looks Like?," MPRA Paper 58091, University Library of Munich, Germany.
    8. Helmut Lütkepohl, 2006. "Structural Vector Autoregressive Analysis for Cointegrated Variables," Springer Books, in: Olaf Hübler & Jachim Frohn (ed.), Modern Econometric Analysis, chapter 6, pages 73-86, Springer.
    9. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    10. Breitung, Jorg & Candelon, Bertrand, 2006. "Testing for short- and long-run causality: A frequency-domain approach," Journal of Econometrics, Elsevier, vol. 132(2), pages 363-378, June.
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    Citations

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    Cited by:

    1. Bouoiyour, Jamal & Selmi, Refk, 2015. "Bitcoin Price: Is it really that New Round of Volatility can be on way?," MPRA Paper 65580, University Library of Munich, Germany.
    2. Zhou, Siwen, 2018. "Exploring the Driving Forces of the Bitcoin Exchange Rate Dynamics: An EGARCH Approach," MPRA Paper 89445, University Library of Munich, Germany.
    3. Bouoiyour, Jamal & Selmi, Refk, 2015. "Is the Internet Search Driving Oil Market? A Revisit through Time-Frequency approaches," MPRA Paper 66214, University Library of Munich, Germany.

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    More about this item

    Keywords

    Greek crisis; Social media; Google Trends; Bitcoin; frequency domain causality.;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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