“Social vs. Military Spending”—A Rejoinder

The transition process in Russia and Eastern Europe was dominated in the literature and in policy making by the shock therapy process. However, shock therapy was short-lived. Governments that implemented shock therapy were not able to sustain the reform program since they lost power after the first term as a result of unfavourable electoral results. The new governments implemented gradualism. While after the first term shock therapy governments were substituted by gradualists, a government in favour of shock therapy never substitute any gradualist governments. The aim of the paper is to demonstrate that shock therapy was inconsistent with a democratic process of decision-making. Actually shock therapy was only consistent with a pluralistic political structure in the tradition of Hayek, Buchanan and Friedman. Foreign aid was inadequate to ensure the continuation of the shock therapy reforms within a democratic environment.     

The dynamics of Greek public debt – evidence from simultaneous and structural VAR models

The goal of the present article was to investigate not only the dynamics of the Greek public debt, but also the appropriate measures required for achieving fiscal consolidation. The empirical estimation is carried out using a macroeconomic data set spanning the period 1980–2008 and both the three-stage least squares (3SLS) methodological approach on a theoretical model and the structural VAR methodology to perform forecast tests and to calibrate the future paths of the public debt variable up to 2020. The results suggest that only a restrictive fiscal policy that simultaneously increases government revenues and reduces government expenditure could permit the country to achieve debt sustainability. The results also suggest that debt sustainability can be achieved faster when tax revenue policies are intensified. The results are expected to have important implications to policymakers for designing effective macroeconomic policy in terms of achieving sustainable levels of public debt.     

When is the Greek Nation? The Role of Enemies and Minorities

This paper questions the importance and usefulness of identifying, through theoretical analysis and empirical study, an historical moment when a nation comes into being. In the first part of our study, we discuss briefly the theoretical background of the question 'when is the nation?'. The second part addresses this question with reference to the Greek case. We first look at the process of consolidation of Greek national identity during the first two decades of the twentieth century. The role of Turks, Bulgarians and other neighbouring countries in the development and crystallisation of Greek nationhood is highlighted. We show that although the Greek nation-state was established in 1829, the Greek nation has been in the process of becoming through the nineteenth century until the 1920s, when its ethnic and territorial components were brought together and irredentism was abandoned. However, as we show in the section that follows, the Greek nation has been further reshaped through its interaction with the Muslim minority of western Thrace, its fundamental 'Other within' during the twentieth century. In the concluding section, we look at more recent developments, such as the Greece-FYROM controversy, that have further influenced the definition of the Greek nation. By analysing the dynamic and constantly evolving nature of nation formation as a socio-political process, we show that fixing an historical moment when a nation comes into being is an analytic exercise for which there is little empirical grounding. Rather, we argue, scholarly research should concentrate on 'how' is the nation.     

The domestic Balassa–Samuelson effect of inflation for the Greek economy

The goal of this study is to assess whether and to what extent inflation differentials between the tradable and nontradable sectors in the Greek economy are due to the domestic version of the Balassa–Samuelson (BS) effect and, therefore, the ‘expensiveness’ of the country and its huge deficit of international competitiveness. Using data over the period 1989 to 2009 from the Greek economy, the empirical results indicate that the domestic BS effect is present for the case of Greece and seems to explain about 33% of the overall inflation rate.     

A Political Economy Application of the “Tragedy of the Anticommons”: The Greek Government Debt Crisis

The tragedy of the anticommons unfolds when separate social agents—be they private owners of a property who intend to use the property for their own economic benefit or political actors who pursue their political objectives—do not hold effective rights to use their economic or political power for their own purposes without consent of the other players of the economic or political game. I shall discuss the Greek government debt crisis and the Eurozone countries’ policies toward Greece within the analytical framework of the tragedy of the anticommons in this paper. I do not intend to dig deep into the structure and long-term trends of public and private finances in Greece. I shall only show that the successive bail-out programs of the Eurozone countries were doomed to fail because of these countries’ competitive and non-cooperative approach to the Greek financial problems. I shall also show that a coordinating agency, say the IMF, can foster the coordinated outcome only under strict informational conditions.     

Turkish trade unionists and Turkey’s membership of the European Union

In all the discussions regarding Turkey’s accession to the EU, little attention has been paid to the views of workers. This paper provides a statistical analysis of the views of over 6000 Turkish trade union members on Turkey’s EU membership. Parameters are estimated using multilevel probit models where the nested structures of workers into trade unions and federations were taken into account since they shared some joint characteristics because of belonging to these organisations. It confirms the extensive disillusion with the EU found elsewhere in Turkish society but more interestingly it disconfirms an idea that those inside the EU may too easily assume to be the case: that it is those with what might be considered modernist characteristics among the Turkish population who are most likely to be in favour of EU entry. The idea seems to chime well with assumptions that the EU is a progressive, modern force. But whatever the validity of such a view, EU entry is not in fact found to be the favoured goal of the young and the best educated: it is older workers who are the most likely to support entry and those who are educated to the highest level the most likely to oppose it. Amongst the main three trade union federations there is also a greater propensity of members of trade unions affiliated to Hak Is (the Islamic federation) to support entry than those in Turk Is (centre right) or DISK (historically the most militant).     

Cyclical behavior of price–cost margins in the Turkish banking industry

Using a dynamic panel data framework, the cyclical behavior of the banks' price–cost margins in Turkey over the period 2002Q1–2008Q2 is analyzed. The findings provide evidence towards countercyclical behavior of the margins. This is important for the Turkish economy since the countercyclicality of banks' margins may deepen the contraction by constraining the credit opportunities over economic downturn periods. Furthermore, the control variables, monetary policy, market structure and financial deepening of the economy indicate significant effect on the price–cost margins of the banks. The findings also serve as evidence towards the “financial accelerator” mechanism in Turkish economy over the sample period.     

How Much Does the State of the Economy Influence the Popularity of Austrian Parties? An Empirical Investigation

We estimate popularity functions for the Austrian parties Austrian People’s Party (ÖVP), Social Democrats (SPÖ) and Austrian Freedom party (FPÖ) between 1987 and 2010 (using annual data) as well as vote functions for the same Austrian parties in the 86 election districts in the national elections in 1999, 2002, 2006 and 2008. In most cases we find a statistically significant and theoretically predicted influence of three economic variables, namely the unemployment rate, inflation rate and growth rate of income, on both popularity and voting behavior. However, this influence is not robust and shows a tendency to decline over time.     

On the Relation between the Demand Environment and the Innovation

The demand environment has a great influence on innovations and the formation of the motive force of the innovation. The demand causes the desire： the desire forms the motive force; the motive force inspires the innovative thinking. the innovative thinking becomes the innovative practice; and the innovative practice.finally, meets people＇s demand.     

Funding self-employment – the role of consumer credit

This article investigates whether self-employed households use consumer loans – in particular, instalment loans and overdrafts – to finance business activities. Controlling for financial and nonfinancial household variables, we show that self-employed households particularly use personal overdrafts significantly more often than employee households. When analysing the correlation between consumer loan take-ups and consumption of self-employed in comparison to employee households, we find first evidence that overdrafts are used by self-employed to finance their business as well. This indicates that intermingling constitutes a financing strategy when regular business loans might not be accessible.     

Models of mortality rates – analysing the residuals

The area of mortality modelling has received significant attention over the last 25 years owing to the need to quantify and forecast improving mortality rates. This need is driven primarily by the concern of governments, insurance and actuarial professionals and individuals to be able to fund their old age. In particular, to quantify the costs of increasing longevity we need suitable model of mortality rates that capture the dynamics of the data and forecast them with sufficient accuracy to make them useful. In this article, we test several of the leading time series models by considering the fitting quality and in particular, testing the residuals of those models for normality properties. In a wide ranging study considering 30 countries we find that almost exclusively the residuals do not demonstrate normality. Further, in Hurst tests of the residuals we find evidence that structure remains that is not captured by the models.     

An Empirical Investigation of the Ratchet Effect in the OECD, 1985–2009

This paper employs a reduced form structuralist model of inflation in the OECD over the period 1985–2009 to find out whether domestic prices respond symmetrically to rising and falling import prices. We find that the response is asymmetrical: domestic prices rise when import prices rise but they do not fall when import prices fall. Our finding thus confirms the presence of a ratchet effect in the sample countries during the sample period, and implies that factors – such as exchange rate fluctuations and movements in tariff rates – that influence import prices tend to be inflationary.     

Are We Spending Too Many Years in School? Causal Evidence of the Impact of Shortening Secondary School Duration

During the last decade, most of the German states have abolished the final year of higher secondary schooling while keeping academic content almost unaltered. We evaluate the effects of the reform in Saxony‐Anhalt for the double cohort of graduates in 2007. In 2003, the 13th year of schooling was eliminated for students in grade 9, while tenth grade students were unaffected. This provides a natural experiment for analyzing the impact on schooling achievements and educational choice. We find negative effects on grades in mathematics, but no effects in German literature. Moreover, a significant share of females were found to delay university enrollment.     

1979–2001: A Greek great depression through the lens of neoclassical growth theory

This paper focuses on the performance of the Greek economy during the period 1979–2001. Following the work of Cole and Ohanian (1999) and Kehoe and Prescott (2002, 2007) this twenty year episode can be characterized as a great depression. We use this methodology and ask whether, given the observed exogenous path of total factor productivity (TFP), the neoclassical growth model can generate an equilibrium behavior that has growth accounting characteristics similar to those in the data. The answer is affirmative: Changes in TFP are crucial in accounting for the Greek great depression. Our model economy predicts a big decline of economic activity during the 80s and until the mid-90s and a strong recovery for the period 1995–2001. This is exactly what happened in Greece. Moreover, the model successfully mimics the actual data with respect to the timing of peaks and troughs and the time paths of most key macroeconomic variables. However, puzzles between theory's predictions and the observed data are not missing. For instance, things are (not surprisingly for the neoclassical growth model) less successful when it comes to the labor factor.