The paper investigates the existence and nature of long-run relationships between
Greek national income and four categories of public expenditure. Our results suggest
that there exists a positive long-run relationship between GDP on the one hand; and
public expenditure and “productive” public consumption on the other, with causality
running both ways. There appears to be no long-run relationship between GDP and
public-sector personnel expenditure; and GDP and public-debt service expenditure.
From that point of view, it would appear that in terms of output growth, the fiscal
policy followed by Greece during the 1975-1990 period has rather been ineffective
