Discretionary fiscal policy and economic activity in Greece

This paper investigates the effects of discretionary fiscal policy changes on economic activity and its subcomponents in Greece in the period 2000–2011. Changes in government spending and net taxes have Keynesian effects. An increase in government consumption has the most pronounced positive effects on output growth, private consumption and non-residential investment, while it reduces residential investment. Cuts in the public investment programme crowd in private investment, but are associated negatively with the net exports ratio. Both indirect and direct tax hikes lower private consumption, private investment and output growth. However, higher direct taxes by lowering disposable income they reduce import demand, thus, improving the trade balance.     

Nonlinear Exchange Rate Adjustment in the Enlarged Eurozone: Evidence and Implications for Candidate Countries

This paper sheds light on the importance of the validity of PPP hypothesis for the accessing process of the candidate countries towards EMU. The evidence of nonlinear adjustment in real exchange rates suggests the estimation of a nonlinear SETAR model. While linear half‐life estimates are biased upward (five years on average), SETAR half‐life estimates imply a faster reverting process (1.5 years on average). Moreover, we found that TPI‐based real exchange rates are more appropriate than CPI‐based real exchange rates in testing for PPP hypothesis. For the cluster of EMU countries and for the pre‐EMU period, our nonlinear model confirms stationarity for the majority of the TPI‐based real exchange rates with half‐life estimates less than a year.     

Regularity conditions and scope estimates: The case of large-sized U.S. banks

We consider economies and diseconomies of scope for large U.S. banks by employing ordinary and hybrid translog cost functions. We examine the regularity conditions in output space where scope estimates are calculated and reject all models for which these conditions fail. The translog model always possesses violations. For the hybrid translog, violations occur in every case except one. In this one case, we find economies of scope.     

Labour adjustment costs: Estimation of a dynamic discrete choice model using panel data for Greek manufacturing firms

In this paper we estimate a dynamic structural model of employment at firm level. Our dataset consists of a balanced panel of 2790 Greek manufacturing firms. The empirical evidence of this dataset stresses three important stylized facts: (a) there are periods in which firms decide not to change their labour input, (b) there are periods of large employment changes (lumpy nature of labour adjustment) and (c) the commonality is employment spikes to be followed by smooth and low employment growth periods. Following Cooper and Haltiwanger [Cooper, R.W. and Haltiwanger, J. “On the Nature of Capital Adjustment Costs”, Review of Economic Studies, 2006; 73(3); 611–633], we consider a dynamic discrete choice model of a general specification of adjustment costs including convex, non-convex and “disruption of production” components. We use a method of simulated moments procedure to estimate the structural parameters. Our results indicate considerable fixed costs in the Greek employment adjustment.     

Regional Integration and Economic Growth

The rapid economic growth of developing countries that openedtheir markets to free international trade during the past twodecades has stimulated a large empirical and theoretical literatureon the impact of trade on growth. This literature concludesthat free trade and growth were positively correlated duringthe 1970s and 1980s. However, most studies focus on nondiscriminatoryopenness. Does regional integration matter for economic growth?Do regional trade agreements have any impact on growth? This article presents empirical evidence that countries withopen, large, and more developed neighboring economies grow fasterthan those with closed, smaller, and less developed neighboringeconomies. The results are robust to different specificationsof the empirical model and different definitions of openness,suggesting that small economies should grow faster when theyform regional trade agreements with large and more developedeconomies. However, testing for the impact of five regionaltrade agreements during the 1970s and 1980s finds that noneled to faster growth. The main reason seems to be that mostof these agreements were among small, closed, and developingeconomies.     

Rational expectations models: An approach using forward–backward stochastic differential equations

We show that a general class of continuous time rational expectations models can be reformulated as forward–backward stochastic differential equations (FBSDEs). Using this connection we obtain results on the conditions under which paths leading to, or keeping close to equilibrium exist, as well as their qualitative properties. We also provide a method for the construction of such paths through the connection of FBSDEs with quasilinear partial differential equations (PDEs). The theory is applied to specific macroeconomic models.     

On the Allocation of Possible EU Total Allowable Catches (TAC) for the Mediterranean Swordfish: An Envy‐Free Criterion and Equitable Procedure

This paper examines the allocation of entitlement rights for the management of common property resources. In particular, the case of allocating a Total Allowable Catch quota for the Mediterranean swordfish is examined as a case study. The proposed approach comprises three steps. First, there is a bargaining procedure between the European Union (EU) and the rest of the International Commission for the Conservation of Atlantic Tunas (ICCAT) countries. As soon as an initial agreement is possible, the EU considers various equitable rationing methods to allocate its share to the European Member States. These rationing methods draw upon two different streams of the literature, bankruptcy and ‘burden sharing’. Finally, the European Member States reach a fair agreement through minimising an envy‐free index. The allocation rule which is defined as the weighted average of equal proportion and equal share rationales represents the best compromise solution.     

On the extension of binary relations in economic and game theories

Decisions in Economics and Finance - Szpilrajn’s extension theorem on binary relations and its strengthening by Dushnik and Miller are fundamental in economic and game theories....