The Growth and Crisis of the Greek Economy in a Kaldorian Framework

Abstract The present paper surveys the role of two economic sectors, namely tourism and agriculture in the economic growth of Greece, a country that goes through a severe economic crisis during the last decade. The findings, confirm that tourism has a major contribution to the GDP growth. Therefore, the Kaldorian theory on an “engine of growth” appears to apply in Greece for tourism (rather than manufacturing in Kaldor's original findings). In fact, a bidirectional causality linear intertemporal relationship is found between GDP and tourist GDP (in the long as well as in the short term) whiles the relationship between GDP and agricultural GDP seems to apply only for the long term period. Furthermore, non-linearities in the GDP – agricultural GDP relationship, led the authors to the implementation of threshold co-integration. The findings underline the shift of the economy from the primary (agriculture) to the tertiary sector. Keywords: Economic Growth, Kaldorian Theory, Greek Economy, Tourism, Agriculture, Threshold Co-integration