An Empirical Analysis of the Trade Impediments in Greece’s Global Trade Relationships: A CGE Approach

In this work, a multi-sector computable general equilibrium (CGE) model for the trading relationship between Greece and the rest of the world (RoW) countries is developed. It is examined how an import tariff and various quotas will affect the Greek economy. To measure the magnitude of these trade barriers and how Greece’s output changes as a result of lower RoW imports, the 2015 Input–Output (I-O) for the Greek economy has been used. As a scenario, quotas of 67% on energy imports and 35% on the remaining imports from RoW are implemented, combined with a 30% ad valorem import tariff. The results shed light on the fact that the output level and the domestic use level are considerably decreased since Greece is an energy-dependent country and is heavily reliant on RoW imports. When the effect of the quotas is combined with that of the import tariff, where prices increase and quantities decrease, the pollution/energy haven effect emerges, in which firms may reallocate to countries with less rigorous energy regulations and continue to produce as before.