Income distribution, structural competitiveness and financial fragility of the Greek economy
ABSTRACT The aim of this paper is to examine the growth prospects of the Greek economy, after the implementation of the Economic Adjustment Programs (EAPs) The main focus is on the impact of investment, and the structural competitiveness of the productive sector, on effective demand and the financial fragility of corporations. For this purpose, a Post Keynesian SVAR model is developed which connects functional income distribution and the regime of accumulation, with the structural competitiveness and the non performing loans of corporations. The findings indicate that the distribution of income and fiscal consolidation as established after the implementation of the EAPs have destabilized the economy both in macroeconomic and financial terms. The structural competitiveness of the Greek economy is particularly weak, the regime of accumulation is not profit led, while the non performing loans are in a negative relation with the capacity utilization ratio. In this respect, policies that aim to increase the capacity utilization ratio will determine the sustainability of the macro financial system of Greece.
International Review of Applied Economics