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The economic Impacts of COVID-19 Pandemic in Italy and Greece

Introduction

The outbreak of COVID-19 has driven governments at all levels (federal, state, and municipal) to operate in an environment of radical uncertainty. Governments across the world were faced with difficult trade-offs as a result of the economic, health, social, and fiscal challenges that came with the pandemic. For instance, many faced a tradeoff between leaving local businesses to operate to promote their economies and imposing strong containment measures such as lockdown of various parts of the economy and shutdown of businesses. In addition to the health consequences and deaths attributed to COVID-19, the pandemic has been recognized as one of the major triggers of economic downturn since the second world war. Italy and Greece are among the countries where the waves and shocks of the pandemic have been felt immensely, particularly on the economy. In Italy, the pandemic was devastating for the whole country, killing hundreds of thousands of people. Containment measures such as social distancing and lockdown, which were a new normal in most countries in response to the pandemic, closed down the country’s economy that had already been weakened by Lehman bankruptcy and 25 years of austerity. For instance, the country’s economy contracted by approximately 5.4% in the first quarter of 2020 followed by a further 12.4% decline in the second quarter (National Law Review, 2020). The second quarter of 2020 also saw Italy’s national industrial production index drop by close to 17.5% as a result of the pandemic (Petersen & Bluth, 2020).

Greece was no exception. While Greece was able to contain the COVID-19 due to its relatively small and disconnected economy, it undoubtedly felt the crisis’s sting on its economy (Clark, 2020). Notably, the country experienced a 9.5% contraction in the economy (Gross Value Added) by the second quarter of 2020 due to containment measures and impacts of the pandemic on the global economy (Iossiphides, 2020). This was compounded by the fact that the crisis hit Greece’s economy when the country had just recovered from many years of economic recession caused by a sovereign debt crisis.  To this end, the current paper investigates the economic impacts of COVID-19 pandemic on Italy and Greece with particular emphasis on the countries’ export trade, economic well-being (inflation rate), and unemployment rate as the key measures of economic performance. The paper begins with a review of existing literature, research studies, and other scholarly works regarding the outbreak of the COVID-19 pandemic and its impact on the economies of Italy and Greece. Of particular interest in the literature review is the impact of the crisis on the export trade, inflation rate, and rate of unemployment in both countries. This review is underpinned by the following research questions;

1. What is the impact of COVID-19 pandemic on export trade, inflation rate, and unemployment rate in Italy and Greece?
2. Which country between Italy and Greece was severely struck by the COVID-19 pandemic?
3. What factors and or measures enabled Greece to contain the COVID-19 crisis earlier than Italy?
4. Which of the two countries is more likely to recover faster?

The second section delves into an exploratory analysis of unemployment rate, export trade, and inflation rate in Italy and Greece both before and after the outbreak of the COVID-19 crisis (trend analysis) in order to understand the impact of the pandemic. In the penultimate section, the study’s focus shifts to the statistical analysis of the three economic performance dimensions in both countries. Three hypotheses addressed here include: 1) COVID-19 pandemic has led to an immense economic downturn in both Italy and Greece by causing a contraction of their export trade and level of employment; 2) Italy was severely hit by the crisis compared to Greece; and 3) Greece managed to contain the pandemic earlier than Italy due to its relatively small and disconnected economy and the strict containment measures it took (Clark, 2020). The paper ends with a conclusion discussing some of the limitations of the study and its statistical analysis as well as highlighting the areas for future research.   

Literature Review

This section collates existing literature (scholarly work, government reports, research articles, news and documentaries, and other sources) around the territorial impact of the COVID-19 crisis in the economic dimension. The first part looks at the pandemic’s impact on export trade, inflation rate, and rate of unemployment in Italy and Greece. In the second part, the identified literature is reviewed further to understand how the pandemic’s economic impacts compare between the two nations, whereas part three explores some of the factors that enabled Greece to contain the pandemic earlier than Italy.

The COVID-19 Pandemic

The outbreak of COVID-19 (coronavirus Sar-CoV-2) was first reported in Wuhan China on 30^th January, 2020. This prompted the World Health Organization (WHO) to declare the international state of emergency and asked all countries across the world to adopt measures aimed at mitigating the spread of the virus. According to OECD (2020), the pandemic forced governments at all levels (federal, state, and local) to operate “in a context of radical uncertainty”. It also presented governments across the world with difficult trade-offs considering the socio-economic and health challenges that it came with it. As Auriemma and Iannaccone (2020) note, among the first measures taken in response to the outbreak was “the suspension of flights to and from China with the implementation of airport controls, using thermo-scanners for measuring body temperature. The aim, as the authors add, was to monitor the health conditions of people travelling from China – the epicenter of the pandemic. Then followed other stringiest containment measures including mandatory quarantine for those suspected to have the virus, social distancing rules, shutdown of most businesses, introduction of remote working (work from home), and lockdown of many economies across the world among other measures. Enforcement of these measures disrupted normal economic activities and commonplace life, thrusting the economies of most countries into a sharp recession ever experienced since the second world war (Lossiphides, 2020). The Italian and Greek economies are among the economies that were immensely struck by the pandemic and it may take them until 2023 at the latest to recover to their normal output levels. 

The economic Impacts of the COVID-19 Pandemic in Italy and Greece

As aforementioned, the containment measures adopted in response to the COVID-19 pandemic paralyzed many economic activities, causing a significant contraction in the economies of both Italy and Greece. The most affected aspects of the economy, which are also measures of economic performance are the export trade, inflation rate, and unemployment rate.

Impacts on Inflation Rate

The outbreak of the COVID-19 pandemic prompted many European countries to lockdown most sections of their economies with a view to containing the spread of the virus. Combined with other containment measures that were taken in response to the outbreak, these lockdown measures had devastating impacts on the Italian economy. The country’s economy and social life were shutdown, causing the industrial production to plummet from 100 points it had maintained since 2015 to approximately 75 points in March 2020. As shown in figure 1 below, Italy experienced the biggest drop in industrial production of all the EU member states.

Figure 1: Massive Collapse in Italy’s Industrial Production following the COVID-19 Crisis outbreak.

 

Source: Petersen and Bluth (2020)

The slump in industrial production had negative impacts on the Italian economy that had already been weakened by the Lehman bankruptcy and more than 20 years of austerity (Petersen & Bluth, 2020). The decline in the country’s economic development throughout 2020 was exacerbated by a sharp drop in the demand for physical goods, such as consumer electronics and furniture since many consumers opted to postpone purchases of such goods until the end of the crisis. Combined with a slump in investment, this decline in domestic demand saw Italy’s overall economy contract by 5.4% in the first quarter of 2020 before felling further by 12.4% in the second quarter (National Law Review, 2020).

Moreover, measures adopted to contain the spread of the virus, including lockdown and social distaining to limit personal contact resulted in the suspension of business activities of close to 2.1 million enterprises in the country. These containment, together with reduced domestic demand saw the annual rate of inflation in Italy drop from 0.1% in March 2020 to -0.4 in July 2020 before reaching an all-time low of -0.6% in September 2020. Italy experienced the largest drop in the inflation rate than other European countries because the country relies heavily on food and non-alcoholic beverages, restaurants and hotels, and transports as the most important categories in its consumer price index. Other important sectors are recreation and culture (8%) and alcoholic beverages. The fact that these sectors were the most affected by containment measures that were imposed by the government, such as lockdown and social distancing, means that a slump in inflation rate was inevitable. For instance, international tourists and domestic travelers decreased by 58% and 31%, respectively, resulting in an economic loss of more than Euro 24.6 billion whereas the hotel and catering sector lost close to Euro 13 billion in the second quarter of 2020.

Lastly, the lockdown strategy adopted by the Italian government to contain the contain lead to temporary shutdown of small and medium enterprises (SMEs) across the country. Since SMEs account for approximately one third of the country’s economy, their temporary closure amid the COVID-19 contagion contributed significantly to the downturn of the Italian economy (Research and Markets, 2020).

In early 2021, the number of infections in Italy dropped significantly as a result of the measures that were put in place to contain the spread of the virus, and this saw the country’s annual inflation rate increase to 0.6% in February of 2021 from 0.4% in January. This marked the largest increase in consumer prices since the mid-2019.

Just like Italy, the Greek government and policy officials were caught by surprise by the pandemic, which exposed weaknesses inherent in the country’s emergency response systems. Most of the emergency measures that government officials put in place prioritized containment of the contagion before it could evolve further. As such, the measures, especially lockdowns and social distancing brought most aspects of economic activity across the country to a halt and quickly translated the pandemic into an economic crisis (Monastiriotis & Katsinas, 2020). The impact was worsened by prolonged financial and sovereign debt crisis in Greece, and its openness to tourism which made it an easy target for the contagion (Petersen & Bluth, 2020). Notably, the country incurred an estimated loss of 8.5% of gross domestic product and a 220% rise in public debt by the end of 2020. Overall, the country’s economy, as measured by Gross Value Added (GVA), experienced an output loss of approximately 9.5%. This implies that compared to Italy, the Greek economy is more vulnerable to supply shocks, even if they are a smaller magnitude. Apart from the sovereign and public debt crisis, Greece felt a more painful sting of the COVID-pandemic is mainly supported by tourism, which was severely hit economic sector across the world, considering the measures that were put in place to limit movement and socialization. Figure 2 below shows how the Greek economy slumped following the COVID-19 outbreak.

Figure 2: The Economic Impact of COVID-19 in Greece

 

Source: Monastiriotis and Katsinas (2020).

Reduced domestic demand due to movement restrictions and other containment measures caused consumer prices in Greece to fell throughout the pandemic (10 months in a row). Notably, the inflation rate remained below -1% from April 2020 to January 2021, with the deflation reaching a record high of 2.3% in December of 2020.

Impacts on the Unemployment Rate

Another economic development/performance indicator that was severely affected by the pandemic in each of the two countries is the unemployment rate. In Italy, the government was agile to institute measures such as short-tie work schemes and ban on retrenchment to boost employment amidst the pandemic. However, the rate of employment dropped sharply by 2.2% in April 2020 and further by 2.6% in May. Overall, the rate of unemployment in 2020 stood at 9.9%, and is expected to rise further to 11.6% through 2021 (Statista, 2020). According to Wijffelaars (2020), this contraction in monthly employment rate outpaces the rate that was experienced in the “worst month of the Eurozone debt crisis”. These findings resonate strongly with Auriemma and Innaccone (2020) who established that there was a marked decrease in employment (by 89 thousand units) for both permanent and self-employed men and women between December 2019 and the first quarter of 2020. There was also a significant decline in the number of people seeking employment and the inactive people rose by 51 thousand units. Similar findings are echoed in Wijffelaars (2020) where it is highlighted that employment for the self-employed people and those on temporary contract plummeted by 19% in the second quarter of 2020 compared to May 2020. Figure 3 illustrates how the rate of unemployment in 2020 compares with the rates reported in the past 10 years.

Figure 3: The Impact of COVID-19 on the rate of unemployment in Italy

 

Source: Wijffelaars (2020)

Figure 4: Vacancy rates slumped markedly in 2020 following the COVID-19 outbreak.

 

Source: Source: Wijffelaars (2020)

The sharp increase in the rate of unemployment in Italy in 2020 is attributable to measures that the government took to contain the COVID-19 pandemic. Notably, lockdown imposed by the national government forced SMEs to temporarily shut down their operations, which millions of people to lose their jobs given that almost a half of Italians are employed in the SMEs (Research and Markets, 2020). Furthermore, decreased demand for goods and services due to consumer’s uncertainty of the future of the pandemic meant that many companies were struggling to survive, and thus a rise in unemployment was inevitable. The move to adopt social distancing, which was a global norm to contain the contagion blockaded productive activities, rendering thousands of employees jobless. According to a research by ISTAT, for example, the social distancing requirement led to the suspension of activities in more than 49% of companies as of March 2020, which affected approximately 42.1% of employees across the country. 

In response to the pandemic outbreak, the Greek government joined the bandwagon of instituting restrictions aimed at containing its spread and mitigating its effects on both health, social, and economic dimensions. Among the notable restrictions were strict lockdown measures, cancellation of flights to and from the country, closure of learning institutions, ban of social gatherings, suspension of religious gatherings, and internal travel restrictions. These containment measures had remarkable impact on all aspects of commonplace life; and the effects were particularly reflected in mobility patterns and trends in employment and labor markets. For instance, Iossiphides (2020) estimates that losses in employment in the country stood at approximately 5.4% during the second quarter of 2020 (Iossiphides, 2020). As Monastiriotis & Katsinas (2020) observe, this decline in employment is because lockdown imposition did not only fuel job losses, but it also caused a slump in hiring. Furthermore, in the wake of the pandemic, Greece experienced a 1.6% contraction in GDP in the first quarter of 2020 (The Hellenic Statistical Authority, 2020) and a 9% decrease in economic activity in the third quarter (European Commission, 2020). Under such conditions, a deterioration in employment and labor market would be inevitable. 

Conclusion

The economic impacts of COVID-19 pandemic were more immense in Italy than in Greece. Economic activities including industrial production declined by close to 17.5% relative to Greece’s -9%. Italy also seems to be struck harder than Greece when it comes to the unemployment rate. However, Greece felt a bitter sting consumer prices since the rate of inflation remained below -1.1% for ten consecutive months during the pandemic (Trading Economics, 2021c). 

The immense impact of the COVID-19 pandemic on the Italian economy could be explained by the economic and financial crisis that the country was experiencing when experiencing when the pandemic struck. Additionally, Greece’s relatively small and disconnected economy (Clark, 2020), combined by nimbleness of the government in instituting both containment and impact mitigation measures such as lockdown and ban on layoffs, respectively allowed it to quickly handle the pandemic while mitigating its economic impacts.

Exploratory Analysis

The COVID-19 pandemic had devastating impacts on the economies of Italy and Greece, the same way it affected the global economy. Measures taken to contain the pandemic saw exports and inflation rates in the two countries drop sharply, and the rate of unemployment increase significantly. To confirm this hypothesis this section – exploratory analysis – examined data on three key variables: exports, inflation rate, and rate of unemployment in Italy and Greece. The analysis builds from a time series of annual and quarterly data between 2009 and 2020.

Exploratory Analysis of Export Trade

Figure 5: Trend in Italy Exports between 2012 and 2020

Figure 6: Figure 5: Trend in Greece Exports between 2012 and 2020

 

Figures 5 and 6 show the trend in Italy and Greece exports between 2012 and 2020. The exports of both countries were growing steadily since 2016 before the COVID-19 outbreak in early 2020. In Italy, export trade took a downward trend from 40,927.94 EUR Million in November to 38,832.52 EUR Million in December of 2020 (Trading Economics, 2021), following the pandemic outbreak. A similar fluctuation was experienced in Greece where exports dropped from approximately 2,900 EUR Million in December of 2019 to less than 2,100 EUR Million in the first quarter of 2020. Unlike in Italy, however, Greece exports grew to 2,979.80 EUR Million in December 2020 from 2,634.20 EUR Million in November the same year (Trading Economics, 2021b). The marked difference in the pace of recovery of export trade can be explained by differences in the exports of the two countries. In comparison to Greece whose exports are mostly petroleum products, medicament, aluminum, and agricultural produce, Italy’s main exports are machinery and equipment, transport, metal products, and textiles and apparel products (Trading Economics, 2021; Trading Economics, 2021b)

Further analysis reveal that Italy exports show more variation than Greece. Italy’s exports were experiencing a steady growth since 2009. However, the emergence of the epidemic caused the exports (cross-border trade) to plummet, particularly in April where revenue from exports dropped to 22,459.752 EUR million. This implies that Italy’s total exports decreased markedly during the epidemic, reaching the lowest level ever recorded since the 2011 slump. In contrast, Greece’s total exports dropped slightly to 2,065.60 million Euros in May 2020

Figure 7: Italy and Greece Total Exports for the Period 2009 to 2020

 Exploratory Analysis of Inflation Rate

Figure 9 shows the trends in Italy and Greece inflation rates for the period 2009 to 2020. Greece’s inflation rate exhibits higher fluctuations than Italy as shown by higher crests and deeper troughs. Compared to Italy, Greece seems to have higher deflation even before the pandemic, particularly between 2013 and 2016. During the pandemic, both countries experience consumer price deflation, but the deflation is more pronounced in Greece. To put this into perspective, Italy recorded -0.6% as the highest price deflation during the pandemic, whereas Greece’s inflation rate reached a record low of -2.3% (). The negative inflation rates were recorded in September and December of 2020, respectfully.

In addition to having greater consumer price deflation, Greece also seems to be recovering from the deflation at lower pace compared to Italy. Notably, whereas Italy’s inflation rate increased from 0.4% in January to 0.6% in February of 2021, Greece maintained a negative inflation rate of -2%, which was a slight increase from -2.3% recorded in last quarter of 2020 (Trading Economics, 2021d).

Figure 9: Trends in Italy and Greece inflation rates for the period 2009 to 2020.

 

 

Exploratory Analysis Unemployment Rate

Figure 9 displays unemployment rate data for Italy and Greece in the period 2009 to 2020. This figure shows that Italy unemployment rate is lower than Greece’s unemployment rate. Compare the Table 1 and 2, the average unemployment rate before the Covid-19 in Italy is 10.48% compared to 20.50% in Greece and during the coronavirus it is 9.22% and 16.54%. Figure 1 suggests that Greece unemployment rate is higher than Italy. Table 1 and 2 can better provide evidence of the two countries before and after the epidemic.

Figure 8: Italy and Greece all person unemployment rate. Data source: OECD Database

            During the epidemic, both countries unemployment rates have been affected, the unemployment rate that has grown to maximum of 9.9% in the Italy and 17.7% in Greece. It looks better than previous years, because the highest value for past ten years is 13.1% in Italy and 17.7% in Greece. However, unemployment rate trends increase after the outbreak, it may relate to government measures.

 

 

 

 

 

 

 

 

 

 

 

Table 1: Summary Statistics of Italy unemployment rate (%) by sex
before the Covid-19 (Jan 2009- Dec 2019)
Statistic	All person	Female	Male
Mean	10.48	11.61	9.66
Median	10.9	12.05	10.05
Standard Deviation	1.64	1.54	1.72
Minimum	7.2	8.7	6.1
Maximum	13.1	14.3	12.2
Summary Statistics of Italy unemployment rates (%) by sex groups, During the Covid-19 (Jan 2020 -Dec 2020)
Mean	9.22	10.35	8.39
Median	9.5	10.7	8.55
Standard Deviation	0.79	1.02	0.66
Minimum	7.4	7.7	7.2
Maximum	9.9	11.1	9

Table 2: Summary Statistics of Greece unemployment rate (%) by sex before the Covid-19 (Jan 2009- Dec 2014)
Statistic	All person	Female	Male
Mean	20.5	24.53	17.36
Median	21.3	25.7	18
Standard Deviation	5.57	5.67	5.46
Minimum	8.9	12.6	6.2
Maximum	27.9	32	24.8
Summary Statistics of Greece unemployment rates (%) by sex groups, During the Covid-19 (Jan 2020 -Dec 2020)
Mean	16.54	24.26	13.94
Median	16.45	25.6	13.8
Standard Deviation	0.82	1.08	0.67
Minimum	15.6	18.4	13.2
Maximum	17.7	21.5	14.8

Table 1: Summary statistic of unemployment rates in Italy

Table2: Summary statistic of unemployment rates in Greece

            From Figure 2 and Figure 3 reveal that both countries female unemployment rate higher than male unemployment rate. Compare the Table 1 and Table 2 Italy both sex unemployment rate is much lower than Greece. Figure 2 and Table 1 shows that the average of Italy before Covid-19 the female is 11.621% and male is 9.66% before Covid-19. During the epidemic, it 10.35% and 8.39%, respectively. In the Figure 2, it shows that April is lowest during the Covid-19 in Italy.  The Figure 3 and Table 2 shows that average of Greece before the coronavirus period for female is 24.53% and male is 17.36%, during the coronavirus period for female is 24.26% and male is 13.94%. Also, Figure 3 shows that May is peak in Greece during the coronavirus.

Figure 2: Italy unemployment rates by sex group. Data source: OECD database.

Figure 3: Greece unemployment rates by sex group. Data source: OECD database.

            The analysis of the unemployment rate trends, separated by sex group, both nations display the detail of COVID period change and past ten years unemployment rate. In addition, the future data coming can have more evidence to show the impact of epidemic.

Statistical Analysis

In this section, the focus shifts to statistical analysis of data on the economic impacts of the COVID-19 pandemic in Italy and Greece in 2020, particularly on unemployment rate and gross domestic product. The analysis primarily seeks to address the hypothesis that measures taken to contain the COVID-19 contagion in Italy and Greece spurred economic recession in the two countries by contributing negatively to GDP and employment rate. It also seeks to confirm that Italy was severely struck by the pandemic compared to Greece, and that Greece is most likely to recover and regain its previous economic growth trajectory faster than Italy.

ARIMA (0,0,0) is used to fit the models for all the independent variables since from the data, it revealed that all information was captured, though the correlogram of autocorrelation revealed significance at lags 30 and 31, hence the AF correlogram is not flat. However, based on the fact that parsimony is the fundamental watchword of the B-J methodology, the model is not re-estimated.

These ARIMA regression models, however, have negative log likelihood (goodness of fit). This indicates poor fit between the explanatory variables and the response variable (Unemployment rate). This expresses the unhappiness of the ARIMA models overall.

 

 

Table 1: ARIMA Model output for ALL UNEMPLOYMENT ATE in Italy. The model is overall significant.

Sample:  3451m7 – 3811m9, but with gaps		Number of obs     =	143
		Wald chi2(4)      =	55.47
Log likelihood = -244.8264		Prob > chi2       =	0

 

ITAUR	Coef.	Std. Err.	z	P>z	[95% Conf.	Interval]
ITAUR
ITEx	.0001002	.0000188	5.34	0.000	.0000634	.000137
ITIR	-.5401935	.1219262	-4.43	0.000	-.7791645	-.3012225
ITCCMM	.438882	.	.	.	.	.
ITCCMLD	-2.57227	1.703051	-1.51	0.131	-5.910189	.7656498
ITCc	-.0020054	.0190794	-0.11	0.916	-.0394003	.0353895
_cons	7.721415	.6359639	12.14	0.000	6.474948	8.967881
/sigma	1.340623	.1171288	11.45	0.000	1.111055	1.570191

In this case, it is seen that all the dependent variables are significant except the ‘COVID Cases’ and ‘Gathering Restrictions’ variables.

Table 2: ARIMA Model with Italy Female Unemployment Rate as the dependent variable.

ITFUR	Coef.	Std. Err.	z	P>z	[95% Conf.	Interval]
ITFUR
ITEx	.0000954	.0000183	5.20	0.000	.0000594	.0001314
ITIR	-.4995261	.1107969	-4.51	0.000	-.716684	-.2823682
ITCCMM	.1323882	.	.	.	.	.
ITCCMLD	-2.324821	1.272409	-1.83	0.068	-4.818697	.1690552
ITCc	-.0022627	.0170359	-0.13	0.894	-.0356525	.0311271
_cons	8.966353	.6240077	14.37	0.000	7.743321	10.18939
/sigma	1.260552	.1116486	11.29	0.000	1.041725	1.47938

 

This model was overall significant.

Again, the ‘COVID Cases’ and ‘Gathering Restrictions’ variables were the only independent variables that were not significant.

Table 3: Table of ARIMA regression Model with ITALY MALE UNEMPLOYMENT RATE as the dependent variable.

ITMUR	Coef.	Std. Err.	z	P>z	[95% Conf.	Interval]
ITMUR
ITEx	.0001002	.0000193	5.20	0.000	.0000624	.0001379
ITIR	-.5673892	.131704	-4.31	0.000	-.8255244	-.3092541
ITCCMM	.612722	.	.	.	.	.
ITCCMLD	-2.686573	1.781857	-1.51	0.132	-6.17895	.8058028
ITCc	-.0018598	.0410456	-0.05	0.964	-.0823076	.0785881
_cons	6.926899	.6553039	10.57	0.000	5.642527	8.211271
/sigma	1.414039	.12058	11.73	0.000	1.177707	1.650372

 

 

 

 

Table 4: Table of ARIMA regression Model with GREECE ALL UNEMPLOYMENT RATE as the dependent variable.

GRAUR	Coef.	Std. Err.	z	P>z	[95% Conf.	Interval]
GRAUR
GREx	.0026394	.000727	3.63	0.000	.0012145	.0040643
GRIR	-1.609635	.3208038	-5.02	0.000	-2.238399	-.9808715
GRCCMM	-3.748688	4.250843	-0.88	0.378	-12.08019	4.582811
GRCCMLD	-5.230742	5.021618	-1.04	0.298	-15.07293	4.611448
GRCc	.0004949	.5371917	0.00	0.999	-1.052382	1.053371
_cons	15.69844	1.792318	8.76	0.000	12.18556	19.21132
/sigma	4.00807	.3371928	11.89	0.000	3.347185	4.668956

In the case of Greece, the economic independent variables were found to be significant in the unemployment model while the COVID 19-related IVs were not found to be significant at 95% confidence level.

Table 5: Table of ARIMA regression Model with GREECE FEMALE UNEMPLOYMENT RATE as the dependent variable.

GRFUR	Coef.	Std. Err.	z	P>z	[95% Conf.	Interval]
GRFUR
GREx	.0031327	.000705	4.44	0.000	.001751	.0045144
GRIR	-1.636472	.3327873	-4.92	0.000	-2.288724	-.9842214
GRCCMM	-3.986957	3.180186	-1.25	0.210	-10.22001	2.246094
GRCCMLD	-5.818051	3.803201	-1.53	0.126	-13.27219	1.636087
GRCc	.0063438	.3347462	0.02	0.985	-.6497467	.6624343
_cons	18.63066	1.767354	10.54	0.000	15.16671	22.09461
/sigma	4.001018	.335139	11.94	0.000	3.344158	4.657878

 

Table 6: Table of ARIMA regression Model with GREECE MALE UNEMPLOYMENT RATE as the dependent variable.

GRMUR	Coef.	Std. Err.	z	P>z	[95% Conf.	Interval]
GRMUR
GREx	.0021461	.0007406	2.90	0.004	.0006945	.0035977
GRIR	-1.562843	.3087088	-5.06	0.000	-2.167902	-.9577852
GRCCMM	-3.447826	5.719908	-0.60	0.547	-14.65864	7.762988
GRCCMLD	-4.796861	6.561579	-0.73	0.465	-17.65732	8.063597
GRCc	-.0053395	.7896707	-0.01	0.995	-1.553066	1.542387
_cons	13.63142	1.79148	7.61	0.000	10.12018	17.14266
/sigma	4.02859	.3407173	11.82	0.000	3.360796	4.696384

In comparing the two slopes for ITAUR and GRAUR, Greece’s slope is larger than Italy’s, it was revealed that there is indeed a significant difference between the two slopes at 95% confidence level, t = 4.1945 (p-value = 0.00004). Further, it is notable that Greece has a larger slope that Italy – basically, this means that the rate of change for Greece’s unemployment rate is higher as caused by the independent variables in the model than Italy’s.

 

 

Conclusion.

It is notable that the COVID-19 restrictions and cases were not significant estimators of Unemployment Rates in both Greece and Italy at 95% confidence level.

Greece is more likely to recover from high unemployment rate, if constraining factors do not change, more than Italy.

Conclusion and Implications for Future Research