Causal Nexus between Economic Growth, Exports and Government Debt: The case of Greece

This paper examines the relationship between economic growth, exports and government debt of Greece over the period 1960-2011. We investigate this relationship using the vector error correction models (VECM) and we employ Granger causality technique in order to explore the presence of causality among these variables. The results show that both short and long run relationships exist among these variables. Specifically, the results show that there is a unidirectional Granger causality that runs from exports to economic growth as well as from economic growth to government debt, whereas there is no short run causal relationship between exports and government debt. In the long run, the results show that there is a unidirectional Granger causality that runs from economic growth to government debt.