Structural and Cyclical Factors of Greece's Current Account Balances: A Note

Abstract

This note examines the relative importance of cyclical and structural factors in determining Greece’s current account performance. I use a number of filters to remove the long-term component and isolate the cyclical factors. It is shown that for the last 15-years the structural component explains most of the variation in the current account. Cyclical factors show a small increase in importance during the economic crisis. Thus, for any improvement in the current account to become permanent emphasis should be placed, among others, on the adjustment of structural factors such as the development of import substitution and export promotion strategies and in finding ways to improve flows of trade-financing to exporting firms.