Opa! Did EU Entry Contribute to the Greek Crisis?

Copyright © 2013 Alexi Thompson, Koichi Yamaura. This is an open access article distributed under the Creative Commons Attri-bution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. This paper focuses on possible underlying causes of the current Greek debt. The Gregory and Hansen residual-based cointegration test is to test Greek deficit sustainability with annual data from 1988 to 2012. This cointegration test iden-tifies structural breaks when they are unknown a priori. Estimated results reveal a break in 1996. The break in 1996 coincides with the election of Simitis as prime minister, suggesting that the current debt problem may be due to in-creased government expenditure associated with the tenure of Simitis rather than due to EU entry