All posts by Periklis Gogas

Dr. Periklis Gogasis a frequent contributor to The Business Thinker magazine. He is an Assistant Professor of Economic Analysis and international Economics, Department of International Economics and Development, Democritus University of Thrace, Greece

Belief in Excellence leads to stability and optimism

By Professor Periklis Gogas

Dr. Periklis Gogasis a frequent contributor to The Business Thinker magazine. He is a Professor of Economic Analysis and international Economics, Department of International Economics and Development, Democritus University of Thrace, Greece

The economic crisis of recent years has led many of the Greeks to come closer to economics looking mainly for the causes that led to the prolonged crisis and the structural problems of the Greek economy. Many times, this criticism leads us to exaggerations or even wrong judgments, as it is based on an impression of the potential and dynamics of the Greek economy, which has been cultivated for decades within the Greek society, mainly by the politicians and journalists but it does not correspond to reality.

Is Greece a small and poor country, with an oversized public sector, whose economy is based exclusively on the agricultural and tourism sector? Are the Greeks lazy people that produce nothing? Are wage cuts the only way to make our country more competitive?

These are just some of the questions that concern us (Greeks) and which Dr. Periklis Gogas professor at the Democritus University of Thrace, addressed with his books “Economics for Beginners” and “Modern Greek Myths”. With these books he provided the opportunity to all of us to come closer to economics and seek answers to a series of critical questions that concern us both for the past and for the future of the Greek economy and consequently of our country in general.

Dr. Periklis Gogas is Professor of Economic Analysis and International Economics at the Democritus University of Thrace. Most recently he was a Visiting Professor at the Ross School of Business at the University of Michigan. He also teaches Finance, Banking and Forecasting at postgraduate level at the Aristotle University of Thessaloniki, the International Hellenic University, the Hellenic Open University and at Neapolis University Pafos (Cyprus) .

He received his PhD from the University of Calgary, his Master’s degree from the University of Saskatchewan and his Bachelor’s degree from the University of Macedonia. He has presented research seminars at the European Central Bank, at the Ross School of Business at the University of Michigan , Temple University , at the Mobile Media Association of New York. He is also an evaluator of research and academic programs in Greece, Italy, Cyprus, Croatia, Poland, Kazakhstan, etc.

His research interests include Macroeconomics, Finance, Banking, Machine Learning, Artificial Intelligence, Econometrics and Complex Networks and he is an Associate Editor for the “Journal Economic Asymmetries” (Elsevier ), the Journal of Banking and Financial Technology ( Springer ) and other editorial board. scientific journals.

His research work is published regularly in scientific journals such , the Journal of Money Credit and Banking, Journal of Banking and Finance, International Journal of Forecasting, International Review of Economics and Finance, International Finance, Journal of Forecasting, Physica A, Computational Economics, Economic Modeling, Open Economies Review.

Mr. Gogas, in your book “Modern Greek Myths” you describe twenty myths about our country, which, however, the vast majority of Greek society considers as reality. Why were these myths cultivated? What have they served over time?

I think it is the result of a social and national introversion that came to create a feeling of inferiority for Greece and the Greeks. Of course, some of them are also international, but the vast majority are endogenous. We believe and take it for granted without even considering it any further that we are, for example, a small, underdeveloped country that produces nothing and generally a small “detail” on the world map and economic world.

Perhaps it was an easily accepted excuse that was cleverly spread to cover up the failures of our politicians. If we all believe that we are small, insignificant, underdeveloped, we do not produce anything and we are lazy, it is a very good excuse not to ask for something better and it justifies every failure of our politicians and all of us personally.

The truth is very different. Greece was before the crisis in the 19 most prosperous countries in the world and after the crisis we fell to 29 in a total of 200 countries. Even if we do not take into account the population, in absolute numbers the Greek economy is among the 45 strongest in the world.

I confess that by reading your books, the reader reconsiders a lot. What is the truth, after all? Do you think that the answer to this question may coincide with the causes that led us to the memoranda and all that it has followed since?

That is the main goal of that book. To revisit the idea we have for ourselves because without believing in our strengths we will not be able to do well and achieve the best for ourselves. Our difference with the USA, for example, is that they believe that they are the best in everything. In the economy, wealth, democracy, justice, institutions, etc. Of course, in some of these they are good, but in others they are far behind. But belief in superiority leads to stability and optimism for their future. It leads to a conscious effort to stay on top -real or not- and that serves them good in the long-run.

The big issue is that if you do not identify what the real problem is, how can you find a solution? When you feel that everything is bad, you do not have the courage to fix anything. You are in despair. You do not know where to start and you usually give up. That’s why we have to find exactly where we are lagging behind. What are the structural problems and real impediments in increasing our prosperity. No, everything is not bad, no all is not broken. We have one of the best democracies on the planet. A beautiful country, many dynamic companies that are world leaders and a highly educated human capital.

Recently, the current Government has been heavily criticized for the development model it has been following since the beginning of its term and, in particular, for the way it manages the crisis caused by the effects of the coronavirus. What do you think about how this situation is managed so far by the government? And, at the same time, how do you rate its performance, financially and developmentally?

These are two different issues.

On the subject of the pandemic, I think the government handled it well until last September. Then many mistakes were made unjustifiably, such as the opening of schools, which aggravated the problem, while almost everyone was accustomed to distance education. Many mistakes were made for a narrow political – and I mean micropolitical – interest of specific ministers of the government. They tried to look good and relax the measures in the sphere of their influence in order to gain some electoral benefit. Nonetheless, this was done to the detriment of public health and the economy by extension. We saw many regressions in the measures that as a final result had in the eyes of the public the loss of credibility to all measures.

With respect to the economic policy now, I saw that since 2019 with the election of the new government it was completely anachronistic and “inspired” by the decade of 1950. It may have been good for that era but clearly not anymore.

· Zero VAT was imposed on construction, as if that was our problem. The infrastructure of the country is of high quality with so many billions invested by the EU.

· But VAT and other taxes on universities, which are by definition the center of development and prosperity of any developed nation, have remained constant.

· Why not make all research funds for the universities tax-free? so that our “best minds” do not go to study and research abroad?

· Why Ph.D. students have still to pay taxes on their minimal incomes?

· Of the €100 that we will bring to the country from a European research program, more than half go to fees and various taxes. Money that can finance our research through laboratories and payments to doctoral students.

· No provision for innovation spin-offs from universities or other high-tech companies.

· Why not provide a 5-10 years zero-tax period to every high-tech company that will come to invest in Greece?

· At the same time, provide to any new incoming large investment with a guaranteed stable tax system for the same period. You know, from my business experience as a Financial Director at

a multinational corporation, I can tell you that the main motivation and driver to invest in another country for such a company is not the tax rate, but the stability of the tax environment. That is why countries with much higher corporate taxes have no problem attracting investment from many large companies. We focused on reducing rates that for someone who makes a long-term investment is not an incentive as these tax rates can change overnight.

We still believe that tourism is the most important component of our GDP and it is not. It constitutes only 6% -7% of our GDP. We also believe that we are an agricultural economy which is also not true as the primary sector accounts for only 3% of our GDP. The truth is that similarly to any developed industrial country, 80% of our GDP comes from the services sector and relate to activities such as: banking, insurance, transportation, telecommunications, internet, software , health, education, entertainment, etc.

My example is GrandTheftAuto (GTA). For those of you who do not know, it is a very successful computer game. What you probably do not know is that the total sales of this game reach $6 billion. Yes, 4% of Greek GDP from just one game. This game is, of course, a product of the services sector.

I would like to dwell a little more on the Health sector, as there are many who argue that the pandemic has come to reveal the enormous problems of health systems worldwide. After all, are health systems the biggest “victim” of the coronavirus? Is the way in which our country responded satisfactory?

Many people will be surprised -again- but out health system is according to the World Health Organization (WHO), the 7th best in the world. It responded very well to the pandemic, despite the problems and shortcomings that were created after an almost decade-long cuts because of the debt crisis. That is why we must support it in order for it to remain good and of course to become better. People take for granted some things they have but it is good to recognize them and be appreciate them. Not all countries have free health care. In the US if you call an ambulance you may have to pay from $1,000 to $5,000 for your transfer to the private hospital to which it belongs and there if it is not covered by your insurance (if you are insured) you will have to pay thousands of dollars for simple things like a broken leg.

Therefore, it is very natural for something unprecedented like a pandemic we have never seen before to create many problems to a health system. These are not normal time and needs that we try to meet. But our top and highly skilled doctors and nurses do their best.

Are you optimistic about the future, especially in a period that coincides with the gradual opening of activities? What is considered the most appropriate mix, based on the current data of the Greek economy, in order for the country to achieve a stable development course?

I am optimistic yes. I estimate that this crisis will be followed by a growth of 6% -8% in the next 6 months. This is the case, for example, in the United States,

which is ahead of vaccinations and has returned faster to opening the economy. The big difference in relation to the debt crisis is that we did not have any destruction of the productive potential of the country, both human and natural capital. We just pressed “pause” for about a year. It is like a car that, while travelling, finds an obstacle in its path, like a heard of sheep that we may encounter on a small Greek country road. In that case we will reduce spped and even stall. But once the herd is gone, we can very easily return to the speed we had before. The situation, though, was not the same in the recent debt crisis. In that case the car was severely damaged and lost speed. Thus, it was very difficult to get to where it was before. In short, we have a strong economy, which now, in contrast to the debt crisis, can borrow at very low interest rates, even negative in some cases. Thus, the return to growth rates will be easy

Artificial Intelligence in Banking

Dr. Periklis Gogas

Professor, Dr. Periklis Gogas 



Anna Agrapetidou, Ph.D. Candidate


Professor, Dr. Theophilos Papadimitriou,


                                 Department of Economics  



 The problem

The health and stability of the banking sector is crucial in modern economies. Failures of systemically important financial institutions and generalized distress in even less significant banks can propagate to the whole sector very fast. These issues of distress, if not addressed swiftly and directly by the regulators (usually the central banks to associated specialized entities) may lead to wide-spread full economic crises and even international financial crises.

The U.S. banking sector

From 2000 to 2018 the total number of banking institutions in the U.S. decreased from 9,904 to 5,406 (more than 40%). This significant decline was the result of: a) an increased number of bank failures (more than 500 banks went bankrupt), b) a lack of new financial institutions entering the U.S. banking sector and c) a consolidation process through mergers and acquisitions. The financial crisis of 2007 highlighted the systemic effects of a banking crisis propagated in national (to other sectors of the U.S. economy) and international level (to other national economies around the world). Moreover, it raised serious concerns on the appropriate regulatory policies in effect and led to significant supervisory and regulatory reforms in an international scale (the Dodd-Frank Act and Basel III). Banking institutions are supervised, and their performance is monitored and evaluated by regulatory authorities through i) periodic stress testing, ii) the imposition of minimum capital requirements (Basel III), and iii) the implementation of prompt mandatory corrective actions when their financial position deteriorates significantly.

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The Visible Hand of the Government

Dr. Periklis Gogas,Professor of Economic Analysis and International Economics



Emmanouil Sofianos, Ph.D. candidate



Department of Economics, Democritus University of Thrace, Greece

Following the financial crisis and the great recession of 2008, income inequality has become a key concern for economists, governments and policy makers in most developed countries. Many believe that taxation may be unfair and ineffective. One of the main issues is that the taxation system and the redistribution of income through allowances, benefits and various transfers, instead of mitigating income inequality it is actually making the poor poorest and rich richer. Several recent estimates show what Oxfam (a development charity organization) stated earlier this year: in 2018, the world’s 26 richest billionaires own the same value of assets as the poorest 50% of the world population, i.e. 3.5 billion people. This number was 43 in 2017 and 61 in 2016, providing evidence of a growing gap between the rich and poor.

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What is the real cost of the Greek crisis?

Dr. Periklis Gogas
Associate Professor



Nancy Dimitriadou


Department of Economics, Democritus University of Thrace

The Greek debt crisis led to an unprecedented reduction in the country’s real GDP by 26.5%. This recession is one of the largest crises that the world economy has ever seen. For comparison, the Great Depression in the US in the later 1920’s resulted in a GDP reduction between 25% to 30%. Moreover, the Great Depression lasted for four years, while the Greek crisis reaches almost 8.

Simply stating that Greeks lost 26.5% of their income paints a gruesome picture. The true impact of the crisis is even worse. We compare current Greek real GDP to the one in 2009 just before the crisis. By doing so we are not taking into account a very significant stylized fact of every economy: growth. All economies show a strong positive trend in their GDP time series. This is the result of a steady growth in the factors of production, i.e. human and physical capital. The available human-working-hours increase due to population growth and the amount of physical capital stock also increases over time as a result of investment in fixed capital. Last but certainly not least, an additional very important factor for continuous growth is the improvement in technology. Technology significantly increases the productivity of both human and physical capital.

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Greek NPL’s: Is there light at the end of the tunnel?

Dr. Periklis Gogas Associate Professor


Dimitrios Karagiozis

Ph.D. Candidate

Department of Economics Democritus University of Thrace, Greece


The year 2018 is a milestone for Greece, as it moves towards to the completion of the third economic adjustment program. That means that after the official end of the program in August 2018, Greece must take fate into its own hands, and try to borrow from the markets to meet its future debt obligations. As the country leaves behind the 8-year long memorandum era, the two main concerns for the Greek government and the banking sector are: a) a decision on the debt relief measures that should follow and b) a solution to the Non-Performing Loans (NPL’s) problem.

The International Monetary Fund openly declares what anyone with basic training in economics can see: Greece requires substantial debt relief from its European partners to restore debt sustainability. The main issue here is that the resolution of this problem mainly depends on political decisions from Greece’s EU partners that are hard to sell to their voters-tax payers. This is of outmost importance for the medium to long term stability of the Greek economy. On the other hand, the NPL’s problem is urgent and imperative.

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Greek Banks in the Balkans: the big crunch

Ms. Athanasia Dimitriadou, M.B.A. Student – Specialization in Finance

Dr. Periklis Gogas, Associate Professor

Department of Economics


Democritus University of Thrace

Mergers and acquisitions are often used as a means of bank expansion both nationally and even more so internationally. Greece joined the EMU in 1999 and was in the first group of EU countries that abandoned their national currencies and adopted the euro in its physical form in 2002. From that point on the Greek banking sector became an integral part of the European monetary and economic union. There were multiple benefits from this integration. On the top of the list was the stability that was guaranteed by the European Central Bank (ECB) and its supervision mechanisms. This stability and the related risk minimization was reflected in the low financing costs of the European banks in general and Greek banks specifically. This fact significantly widened the spread between lending and deposit rates for Greek financial institutions so that profit margins increased. These margins were sufficiently large that Greek banks did not need to invest (at least not greatly) in financial instruments such as Asset Backed Securities (ABS) or other derivative financial instruments that appeared to have high yields. After the crash in the markets were these assets were traded they became widely known as “toxic bonds”.

Greek banks did not have a high exposure to these bonds as they found an alternative source of high revenues: the expansion to neighboring countries in the Balkans. These emerging economies started their financial liberalization process and opened their financial sector to international investors. In Table 1 below we report the most important investments of Greek banks in the Balkans before the Greek Debt Crisis. The five major Greek banks were very active in investing in the Balkans. These were more specifically: the National Bank of Greece, Eurobank, Piraeus Bank, ATE Bank and Alpha Bank. In the first column of Table 1, we present the Greek bank that invested in the Balkans, in the second column we report the acquired foreign bank, in the third column we report the country of the acquired bank and in the final column the percentage stake of participation. In all, fifteen banks were acquired in total or in a major stake by the five systemic Greek banks.

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Greece: Labor Market reforms and their impact on economic development.



Dr. Periklis Gogas, Associate Professor and



Mr. Panagiotis Mitrakoulis,


Senior Economics Student, Department of Economics
Democritus University of Thrace, Greece

Greece’s debt crisis, that started in 2010, is the longest and most severe in the country’s modern economic history. Since 2010, when Georgios Papandreou as the prime minister signed the first memorandum of understanding (MoU), Greece implements important fiscal adjustment measures combined with structural reforms.

Fiscal adjustment clauses aim to achieve balanced government budgets or primary surpluses that will help reduce the debt to GDP ratio. The complimentary, in the MoU, structural reforms are designed to increase productivity and international competitiveness. It will be very interesting to justify how labor market reforms, which are among the most painful and spark more public debates in Greece, bring the economy back to the road of development.

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Surprising Facts in Greek Export Analysis Dynamics


Dr. Periklis Gogas
, Associate Professor and



Mr. Orestis Piskioulis
Senior Economics Student


Department of Economics, Democritus University of Thrace

The significance of the analysis of the Greek exports’ evolution derives from the fact that exports play an indisputably important role in every small open economy like the one of Greece. It is apparent that exports of goods and services represent the value of all goods and other market services provided for the rest of the world. In effect, exports can have a major influence on the level and speed of economic growth, employment rates and consequently on the balance of payments.

During the course of the previous year, there was a decline in Greek exports by 5.1% to a total of €25.5 billion in comparison to the €26.9 billion a year earlier. However, after excluding the contribution of mineral oils, we have an increase of 7.8 % or to €17.9 billion as compared to the €16.6 billion in 2014.

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FDI: A potential driver of growth for the Greek economy

gogasDr. Periklis Gogas, Associate Professor,
Economic Analysis and International Economics

Mr. Stavros Hatzitheodoridis,

Senior Economics Student

Department of Economics, Democritus University of Thrace

Greece in a serious recession for the last 7 years. This is a world record for a developed economy. With the decline in wages, pensions and most significantly government spending the tools to overcome the recession are limited. In this situation, it is imperative to create a positive business environment and put forward the appropriate policies in order for Greece to attract foreign investors. Foreign Direct Investment (FDI) can be used as a shortcut to Greece’s recovery. FDI is essentially a new stream of influx that includes the transfer of capital. This capital inflows may be in various forms: physical capital, business and scientific expertise, new production methodologies, technology, etc. These assets play a significant role and greatly contribute to the economic development. They can enhance the a country’s production base bycreating economies of scale.

In their simplest and more direct form, FDIs create jobs which, in turn, create demand that subsequently leads to profits and new investments, new jobs etc. In the macroeconomics terminology these are called multiplier effects of the FDI on the economy. In a crisis striken country like Greece, domestic capital is limited. Moreover, for Greece, capital controls and the problematic banking sector resulted in a steep decline in domestic savings. These facts limit the ability of the country to start a virtuous cycle of investment, production, demand, consumption and increased income and employment. This is the main reason why FDI is vital, especially in a country like Greece.

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Greece vs EU: the Labor Cost Index


Dr. Periklis Gogas, Associate Professor

Ms. Sofia Christakidou
, Senior Economics Student

Department of Economics,  Democritus University of Thrace

What is the LCI?

In any economy, capital, labor and technology are the most crucial production factors in the supply process of all goods and services. ”The quarterly measured Labor Cost Index (LCI) is a Euro Indicator that measures the cost pressure arising from the production factor “labor”. The data covered in the LCI collection relate to total average hourly labor costs and to the labor cost categories labeled as “wages and salaries” and “employers’ social security contributions plus taxes paid minus subsidies received by the employer”. Data, also broken down by economic activity, are available for the EU as a total and EU Member States” (from the Eurostat website). All sectors of the economy are included with the exception of agriculture, forestry, fisheries, education, health, community and social/personal service activities. The LCI is a Laspeyre index. In other words it calculates the total cost of labor as a rate of change between a base year and the year we examine. For Greece this base year is 2012. The numbers in the Figure below are calculated as the arithmetic mean of the quarterly values. The vertical line shows the rate of change in costs of labor and the horizontal one the time that this change has occurred. The grey line represents the LCI for the Euro area countries and the orange one for Greece. The LCI, except from assisting enterprises in the decision making process, also helps European Central Bank and the European Commission to sense the stability of prices. The U.S. use a similar index, the ECI (Employment Cost Index) that is calculated by the Bureau of Labor Statistics.

What can we conclude from Greece’s LCI?

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