The Social Accounting Matrix, the reduction of borrowing through the reduction of government consumption and its effect on the Greek economy
Keyword(s):
The aim of this paper is to calculate the impact of the reduction or elimination of net borrowing on the Greek economy. The assumption made for this calculation is that a reduction of net borrowing leads to a reduction of government consumption. The effects on the Greek economy of reducing borrowing are calculated by using the Social Accounting Matrix. The results show that a reduction of borrowing must be replaced by a significant increase in production and the resulting reductions relate primarily to sectors in which the state has sizeable participation, such as education, health, security, public administration and defence services.