Investment Persistence and Payroll Financing during Fiscal Consolidation: Evidence from Greece

Investment Persistence and Payroll Financing during Fiscal Consolidation: Evidence from Greece | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Investment Persistence and Payroll Financing during Fiscal Consolidation: Evidence from Greece Boughabi Houssam This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-7699246/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract This paper analyzes the persistence of foreign direct investment (FDI) and household consumption in Greece during the austerity period using a stochastic Keynesian model with FIGARCH-based volatility. By linking consumption, payroll financing, and investment flows, the model shows how reductions in household demand propagate through investment expectations and affect labor market stability. Calibrated on monthly data, the framework replicates observed FDI dynamics, confirming that investment responded endogenously to consumption patterns. Results highlight the critical role of coordinated fiscal support and national savings in restoring investment equilibrium and mitigating the contractionary effects of austerity. JEL Classification. E62, H63, H68, C58, G32 Macroeconomics Investment Volatility Austerity Policies Economic Dynamics Fiscal Policy Analysis Full Text Additional Declarations The authors declare no competing interests. Supplementary Files Modelpythoncode.docx Model Python Code Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-7699246","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":519718098,"identity":"cd3234e6-5d70-4b27-ac9e-858d021e0641","order_by":0,"name":"Boughabi Houssam","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA9ElEQVRIiWNgGAWjYBACAwYeEHWAwYCZ+cABUrWwJZCqhYHHgDiHmTPwHnzM8+uOvDk7z8fDBX9s5BnYDz9gulGDW4tlA1+yMW/fM8OdzbwbDs9sSzNs4EkzYM45hsdhB3jMpHl7DjNuOAzUwttwmLGBIYeBOYeNsBb7DYd5Hhzm+fPfvoH/DVDLPwJaeH4cTgRqYTjMw3YgsUECaEtuGx4th/mSDec2HE7e2cxmcJi3LTm5TeKZweHcPjxajvcefPDmz2Hb7fyHH3/m+WNn28+f/PBxzjfcWhiYgZgR2Rkgjx/AowEK/hBWMgpGwSgYBSMYAABudFObf+hDdwAAAABJRU5ErkJggg==","orcid":"https://orcid.org/0009-0005-3492-1910","institution":"National Institute of Statistics and Applied Economics","correspondingAuthor":true,"prefix":"","firstName":"Boughabi","middleName":"","lastName":"Houssam","suffix":""}],"badges":[],"createdAt":"2025-09-24 04:28:29","currentVersionCode":1,"declarations":{"humanSubjects":false,"vertebrateSubjects":false,"conflictsOfInterestStatement":false,"humanSubjectEthicalGuidelines":false,"humanSubjectConsent":false,"humanSubjectClinicalTrial":false,"humanSubjectCaseReport":false,"vertebrateSubjectEthicalGuidelines":false},"doi":"10.21203/rs.3.rs-7699246/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-7699246/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":92260399,"identity":"9350c7c3-31bb-40ea-a7cb-20bb8da569d8","added_by":"auto","created_at":"2025-09-26 12:33:59","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":358139,"visible":true,"origin":"","legend":"","description":"","filename":"Article16.pdf","url":"https://assets-eu.researchsquare.com/files/rs-7699246/v1_covered_1d2ed38d-f4a1-4b10-bc32-1aa7736a24ec.pdf"},{"id":92260202,"identity":"97d7af2c-3afd-41ae-8b3c-438f1594fae0","added_by":"auto","created_at":"2025-09-26 12:25:58","extension":"docx","order_by":1,"title":"","display":"","copyAsset":false,"role":"supplement","size":21069,"visible":true,"origin":"","legend":"\u003cp\u003eModel Python Code\u003c/p\u003e","description":"","filename":"Modelpythoncode.docx","url":"https://assets-eu.researchsquare.com/files/rs-7699246/v1/224440471fd87f8de2f2b35d.docx"}],"financialInterests":"The authors declare no competing interests.","formattedTitle":"\u003cp\u003eInvestment Persistence and Payroll Financing during Fiscal Consolidation: Evidence from Greece\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"National Institute of Statistics and Applied Economics","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Investment Volatility, Austerity Policies, Economic Dynamics, Fiscal Policy Analysis","lastPublishedDoi":"10.21203/rs.3.rs-7699246/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-7699246/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThis paper analyzes the persistence of foreign direct investment (FDI) and household consumption in Greece during the austerity period using a stochastic Keynesian model with FIGARCH-based volatility. 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