Greece withdraws from Euro and runs on Bitcoin; April Fools Prank or Serious Possibility?

Bouoiyour, Jamal and Selmi, Refk (2015): Greece withdraws from Euro and runs on Bitcoin; April Fools Prank or Serious Possibility?

Abstract

This paper assesses whether the way in which the Greek crisis was communicated by media and social networking increase the debt deal uncertainty and the possibility of abandoning the euro in favor of Bitcoin. Through an improved frequency approach, we attempt to disentangle short-, medium- and long-run causality between Google Trends (search queries) and Twitter (social media) data related to the Greek crisis and Bitcoin unconditionally and conditioning upon relevant control variables. Our results unambiguously show a short-run unidirectional causality running from search queries and the number of tweets to the use of Bitcoin. These findings remain meaningful when a number of control variables are accounted for, while the cycle length becomes shorter. These results change substantially by the arrival of the left-wing Syriza party in power, on January 25th, 2015, with its radical approach to debt negotiations. The cycle becomes longer (short- and medium-run). Not surprisingly, doubts have increased as to whether Athens can appropriately settle its debt repayment obligations. This study indicates that Greece’s withdrawal from euro and running on Bitcoin is likely to be an April fool’s joke rather than serious possibility. It also proves a sharp distinguishability among Googlers and Twitters.

• Item Type: MPRA Paper
• Language: English
• Keywords: Greek crisis; Social media; Google Trends; Bitcoin; frequency domain causality.
• Subjects: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E30 - General; F - International Economics > F3 - International Finance > F34 - International Lending and Debt Problems; G - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets

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