Can Migrants save Greece from Ageing? A Computable General Equilibrium Approach using G-AMOS.

The population of Greece is projected to age in the course of the next three decades. This paper combines demographic projections with a multi-period economic Computable General Equilibrium (CGE) modelling framework to assess the macroeconomic impact of these future demographic trends. The simulation strategy adopted in Lisenkova et. al. (2008) is also employed here. The size and age composition of the population in the future depends on current and future values of demographic parameters such as the fertility, mortality rates and the level of annual net migration. We use FIV-FIV software in order to project population changes for 30 years. Total population and working age population changes are introduced to the GAMOS modelling framework calibrated for the Greek economy for the year 2004. Positive net migration is able to cancel the negative impacts of an ageing population that would otherwise occur as a result of the shrinking of the labour force. The policy implication is that a viable, long-lasting migration policy should be implemented, while the importance of policies that could increase fertility should also be considered.

The EMU sovereign-debt crisis: Fundamentals, expectations and contagion

We offer a detailed empirical investigation of the European sovereign debt crisis based on the theoretical model by Arghyrou and Tsoukalas (2010). We find evidence of a marked shift in market pricing behaviour from a ‘convergence-trade’ model before August 2007 to one driven by macro-fundamentals and international risk thereafter. The majority of EMU countries have experienced contagion from Greece. There is no evidence of significant speculation effects originating from CDS markets. Finally, the escalation of the Greek debt crisis since November 2009 is confirmed as the result of an unfavourable shift in countryspecific market expectations. Our findings highlight the necessity of structural, competitiveness-inducing reforms in periphery EMU countries and institutional reforms at the EMU level enhancing intra-EMU economic monitoring and policy co-ordination.