The Economics Research Centre (CypERC) produces rigorous analyses on issues of the Cypriot economy using novel and state-of-the-art methodologies and building upon the in-depth institutional knowledge of the local economy the Centre has acquired over the years. The analyses produced at the Centre are communicated to a wide range of audiences, including the scientific and business community, governmental organisations, NGOs, trade unions and the media.  Research activities are divided into the following sectors:

Microeconomic and welfare analysis

The sector analyses topics regarding the economic welfare of households, the role of the state and productivity.  Topical issues which are currently on the research agenda of the sector include the impact of social policy, the public-private pay gap in Europe, the effects of the tax system on differences in labour supply outcomes across countries, competitiveness and the construction of productivity indicdes for the Cypriot economy.  The responsibilities of the sector also include the maintenance and updating of the tax-benefit microsimulation model for Cyprus which is part of the European model EUROMOD and the coordination of the field research conducted for the collection of data for individuals aged 50 and over as part of the European research project SHARE. The research outcomes of the sector address a wide audience including academics, researchers and policy makers and are published in the CypERC Economic Policy/Analysis Papers, in peer-reviewed academic journals or as policy reports.

Macroeconomic Forecasts and Analysis

The sector focuses on the development of models/tools for macroeconomic analysis of the Cypriot economy and the construction of forecasts for macroeconomic indicators, both at the aggregate and sectoral level. Details about the methodologies employed for macroeconomic analysis and forecasting are published in the Economic Analysis/Policy Papers series of the Centre.

GDP growth and inflation forecasts are published on a quarterly basis along with an analysis of recent developments and outlook for the Cypriot economy in the bulletin Economic Outlook.

Moreover, the sector coordinates the programme for the measurement of economic confidence in Cyprus via the conduct of surveys among business executives in different sectors of the economy, and among consumers. Business and Consumer Surveys in Cyprus are carried out within the framework of the Joint Harmonised EU Programme of Business and Consumer Surveys. The Surveys record business executives' and consumers' perceptions of current economic conditions as well as their expectations concerning the evolution of economic variables. The results of the Surveys are published on a monthly basis in the bulletin Business and Consumer Surveys.

Research in the above two sectors is partially sponsored by the Central Bank of Cyprus, the European Union and the Ministry of Finance.


This field of research at CypERC was pursued under the project "Employment in Europe" funded by the European Research Council (Advanced Grant) for the period 2013 - 2018 and coordinated by the Nobel Laureate Prof C. Pissarides. It focused on the study of employment and unemployment in Europe and examined issues such as: job creation by sector; wage inequality; public sector employment and wage subsidisation relative to the private sector; the compatibility of welfare state with EU targets for employment and the number of jobs vis-à-vis the hours worked for each job.

Project team members at CypERC: Vasiliki Bozani (PhD in Economics, University of Crete), Robert-Duval Hernandes (PhD in Economics, Cornell University, Neophyta Empora (PhD in Economics, University of Cyprus), Chrystall Kapetaniou (PhD in Management, University of Kent), Georgia Katsifaraki (Master in Business Administration, University of Cyprus), Paris Nearchou (PhD in Economics, University of Cyprus). 

Other Research Projects

Research Grant category «Research Hubs» of the research program RESTART 2016-2020 with title «Mixed Data Sampling (MIDAS) models: Theory and Applications» funded by the Research Promotion Foundation. Research Coordinator: Prof. Elena Andreou

The objective of the proposed project is twofold. The first objective is to develop novel econometric models that extend current state-of-the-art techniques for modelling the dynamic behaviour of economic time series which are useful in macroeconomic forecasting as well as economic policy making. The new models apply the Mixed Data Sampling (MIDAS) idea to develop further Factor type models with mixed frequencies which have broad applications in macroeconomics and financial economics. The second objective is to develop novel econometric techniques for evaluating and monitoring financial indicators and structural changes which are useful in periods of financial distress and economic crises, and which can be early warning indicators of instability in economies. These techniques will develop sequential change-point tests which test on-line, with the arrival of new data, the stability of economic indicators, capitalizing on the mixed frequencies and properties of financial variables in producing early warning indicators of financial distress in economies or financial institutions. Forecasting and monitoring key economic variables is one of the main activities of financial and government institutions, economic forecasting agencies, investment companies and is useful to economic policy makers.

Research Grant category "DIDAKTOR" of the research program RESTART 2016-2020 with title "Dynamic consumer behavior in car ownership" funded by the Research Promotion Foundation. Research Coordinator: Prof. Sofronis Clerides

Understanding consumer behavior is an important task of economics. An automobile is the largest item most individuals will ever purchase (besides a home), hence economists have dedicated much effort in analyzing the factors that determine automobile purchase decisions. One of the limitations of existing research is that it relies primarily on aggregate data as there is no information on consumers’ purchasing patterns over their lifetime. The proposed project aims to make a contribution to the literature by exploiting a unique dataset that records every vehicle registered in Cyprus since 1970. As of 1987, the dataset also records transfers of ownership and an identification number for the vehicle’s owner. Thus we can track every vehicle’s entire ownership history and each individuals' automobile holdings over time. A comprehensive descriptive analysis of this unique dataset will provide valuable insights into consumer behavior in durable good markets and will inform the development of tractable but also realistic dynamic models of consumer behavior.

Research Grant of the research program RESTART 2016-2020, International Collaborations Dual Targeting with title "Group Factor Models" funded by the Research Promotion Foundation.  Research Coordinator: Prof. Elena Andreou

This project will develop novel models, tests and tools for Group Factor models to analyze big data of different categories/classes and/or of different sampling in order to provide new results in econometric theory and macro/finance applications which are useful for economists and economic policy makers. The project aims at establishing a strong research team between universities and financial institution policy makers Cyprus and the USA. The research project is funded by the Research Promotion Foundation (RESTART 2016-2020, International Collaborations Dual Targeting). The Principal Investigator of the project is Professor Elena Andreou.

Research Programme "Composite Leading Indicator" funded by the Hellenic Bank, Research Coordinator: Prof. Elena Andreou

The Composite Leading Indicator (CLI) or Leading Economic Index (LEI) for each country is one of the key indices monitored internationally by economists, policy makers, financial organizations and the public, since it provides leading information about the state of the economy. The CLI/LEI is an index designed to provide early signals of turning points in business cycles showing fluctuation of the economic activity around its long term potential level. State-of-the-art econometric techniques will be applied in order to develop a CLI/LEI index for the Cyprus economy comparable with the corresponding indicators in other countries. The research project is funded by Hellenic Bank.

The Econometrics of Intergenerational Mobility, Marie Sklodowska-Curie fellowship MetricIMO

This project studies the intergenerational mobility of well-being, which is arguably the most important dimension of inequality with huge policy implications.  This type of inequality stems from how the socio-economic position of the children as they grow up to become adults relates to that of their parents. Put differently, it measures the degree of fluidity between the parental socio-economic status and offspring’s socio-economics status as adults.  Broadly defined, the overall objectives of the project focus on the development and application using real data of a novel class of intergenerational econometric models of poverty traps to consider how the joint evolution of income, capabilities, and social influences can generate poverty traps. The challenge of separately identifying the effects of family and social influences will be mediated by considering the effects of shocks such as family shocks. The objectives of this project revolve around three interrelated ideas. First, when one examines the intergenerational mobility of well being it is not sufficient to examine how income is transmitted from parents to offsprings, but also consider how the skills of parents are transmitted to the skills of the children, which in turn, these capabilities/skills joined with incentives and social environment determine child outcomes, which ultimately factor into income. Second, since the timing of parental investments and shocks matters for the long-run outcomes of the children, the analysis must examine how the trajectory of parent’s outcomes is transmitted to the trajectory of child’s outcomes. Third, linear models of the standard empirical approach are too restrictive because they ignore nonlinearities suggested by theoretical models of credit constraints or neighborhood effects that can generate poverty traps or persistent poverty under certain conditions. The main reason why we are interested in intergenerational mobility is that it provides insights into the equality opportunity among individuals, which means that outcome inequalities are not defensible when a person is not responsible for them and hence individuals should be compensated to “level the playing field”.  Understanding the role of social influences on poverty traps is also important because it provides a deeper understanding of the intergenerational transmission mechanism.

In addition to the five areas listed above, research at CypERC is further diversified through the study of specialised topics, such as long term energy planning in Cyprus, the evolution of car ownership in Cyprus, determinants of bank lending standards in Cyprus, technological progress, trade and conflict.