Table 3. The Results of the Granger Causality Tests [X=Price of Tradables]

|Lags|<br>MB|Ml<br>MB<br>MB|**CRG**<br>**US**|**D**<br>C|M<br>GR|D<br>[r|L|
|---|---|---|---|---|---|---|---|
||MStoP<br>P oMB|MltoP<br>PtpMl<br>M2toP<br>PtoM2<br>M3toP<br>PtoM3<br>|CRGtoP P toCRG USDtoP|PtoUSD<br>DMtoP|P toDM GRDtoP|PtoGRD<br>ITLtoP|PtolTL|
|I|0.60% 75.90%o|0.03%12.58% 24.02% 53.22% 26 96% 8585%|99.85% 75.97% 1438%|0.79% 31 88%|1.17% 15.37%|0.83% 15.31%|1.79%|
|2|2.62% 17.01%|0.10% 52.22% 43.84% 6220% 19.40% 57.89%|91.41% 86.83% 1089%|0.09% 3812%|2.88% 1626%|1.39% 1600%|1.52h.|
|3|8.45% 15.60%|0.37% 5472% 50.84% 5512% 25 19% 70.14%|97.73% 96.79% 1659%|0.3 0% 1789%|632% 23.92%|3.7r!. 3216%|3.14%|
|4|12.09% 10.30%|0.87% 73.77% 69.52% 47.94% 6.87% 65.91%|95.21% 99.02% 27.59%|<br>0.43% 3006%|10.38% 41.00%|4.51% 5799%|4.07%|
|_5_|17.72%_11.82%_|_1.85%_85.60% 8203% 60.34% 1422% 22.01%|95.90% 99.36% 27.03%|<br>0.31% 40.31%|1233%5889%|3.78% 75.65%|4.32%|
|6|21.10% 19.68%|0.30% 8356% 65.17% 35.54% 25.97% 28.00%|6957% 24.77% 29.06%|<br>0.26% 29.27%|33.40% 62.79%|4.05% 88.97%|12.56%|
|7|912% 2955%|0.29% 25.72% 56.84% 39.44% 16.56% 28.81%|63.85% 3746% 39.58%|0.40% 3129%|8.98% 47.86%|0.36% 87.96%|11.24%|
|8|16.94% 24.65%|0.90% 22 28% 68.81% 36.96% 20.36% 24 07%|59.14% 5005% 44.17%|<br>0,41% 869%|3.06%9.94%|0.05%B190%|26.03%|
|9|6.62% 23.10°%|1.15% 28.05% 75.10%64.00% 3251% 71.33%|57.72%50.77% 5548%|0.77% 1003%|6.33% 8.48%|_0.52%/_14.47%|29.84%/o|
|10|12.50% 76.36%|3.49% 33.34% 61.89% 43.94% 36.52% 81.45%|72.65% 62.74% 3657%|1.73% 27.70%|10.51% 25.53%|1.80% 37.68%|35.68%|
|11|5.54% 82.78%|9.12%58.49% 46.93% 53.43% 31.55% 8445%|81.37% 75.34%<br>5.05%|0.68% 19.48%|15.13% 40.21%|1.80% 24.20%|24.17%|
|12|9.46% 95.86%|7.06% 14.61% 65.30%64.66%35.50% 18.18%|92.87% 30.45%<br>594%|2.13% 22.60%|4085% 5861%|989Yo 28.37%|10.17%|
|Tab<br>La9g|le 4. The Re<br> <br>Ms|sults of the Granger Causality Tests [<br>Ml<br>M2<br>MB|X=Price of Non-tra<br>CRG<br>U|dables]<br>SD<br>C|M<br>GR|D<br>rr|L|
||<br>MBtoP<br>PtoMB|MltoP<br>PtoMl<br>M2toP<br>PtoM2<br>M3toP<br>PtoM3<br>|CRGtoP PtoCRG USDtoP|P toUSD DMtoP|P toDM GRDtoP|PtoGRD<br>ITLtoP|P toITL|
|1|77.14% 19.26%|86.54% 94.67%92.95% 83.24% 84.45% 66.27%|70.18%69.02%9837%|59.50% 94.18%|55.28% 97.53%|66.37% 66.59%|66.52%|
|2|91.80%22.48%|51.63% 92.74% 54.39% 96.75% 75.23% 88.23%|64.07%80.66% 9920%|64.50%83.33%|77.54% 57.03%|_84.99%_85.39%|76.05%|
|3|41.44% 46.12%|53.12% 95.39% 14.61%79.60%17.34% 92.74%|<br>0.00% 88.54% 9912%|64.55% 49.59%|73.70% 28.97%|6627% 91.47%|55.22%|
|4|37.18% 95.72%|69.99% 62.05% 25.18% 58.71% 30.37% 92.64%|0.00% 5370%86.88%|63.61% 35.19%|28.98% 25.03%|34.93% 87.05%|50.90%|
|5|66.63% 20.47%|70.14% 80.91% 38.11% 54.91% 41.58% 83.68%|0.00% 45.29% 92.00%|75.56% 41.45%|59.02% 35.93%|64.76%95.45%|4951%|
|6|56.21% 15.78%|73.07% 82.31% 10.42%79.74% 20.39% 93.41%|<br>0.00%56.21% 82.45%|75.37% 37.60%|27.87% 30.13%|37.39% 98.16%|15.24%|
|7|67.89% 21.72%|32.54% 85.22%<br>2.84%86.95%10.11% 88.64%|0.00% 16.52% 47.85%|73.40% 31.65%|50.73% 28.23%|21.34% 98.93%|15.63%|
|8|49.52% 23.94%|48.39% 92.81%<br>3.33% 93.55% 23.58%94.590/%|0.00% 24.39%58.37%|70.00% 23.39%|66.05% 12.77%|14.54% 43.48%|12.14%|
|9|38.02%<br>5.72%|18.16% 54.75%<br>0.15% 59.57% 26.42% 70.77%|0.00% 25.61%68.66%|75.77% 22.23%|56.65% 12.74%|10.62% 35.31%|10.33%|
|10|60.05%51.05%|23.15% 57.04%<br>0.49% 84.12% 31.21% 66.38%|0.00% 19.71% 76.94%|64.35% 25.53%|57.28% 1486%|23.26% 21.55%|20.09%|
|11|42.14% 11.88%|35.14% 75.14%<br>1.53% 92.57% 32.75% 71 15%|0.00% 23.45% 8370%|72.14% 52.78%|45.42% 43.48%|16.34% 44.60%|5.10%|
|12|44.83% 38.95%|43.70% 70.04%<br>0.67% 72.25% 28.07% 61.32%|0.00%<br>0.01% 9443%|21.67% 73.79%|41.52% 50.55%|39 07% 34.28%|13.99%|

The results reported in Table 3 indicate that there is a one-way causality running from high liquid money (Ml) to tradable goods. In addition, the findings show that causality runs from the price of tradables to the exchange rate, the USD and Greek Drachma in particular. This finding might be explained by the rapid flow of information on foreign prices obtained in the local market from the main trading partners. This, in turn, is reflected almost simultaneously in the exchange rate.

In the case of non-tradables, there is strong evidence that causality runs from credit to government to the price of non-tradables. This finding has an important policy implication: an increase in credit to government, as a result of the fiscal deficit, will lead to an increase in the price of non-tradables. This, in turn, will produce an appreciation in the real exchange rate, thereby reducing the country's export competitiveness. The empirical evidence also highlights that the M2 definition of money supply has predictive 19