In this paper I explore the effects of fiscal policy, in particular of both spending and taxes, on the Greek GDP, in the form of multipliers of GDP to a shock on the relevant fiscal instrument. A novel feature of this paper is that I try to estimate the effects of particular spending and tax components on GDP. I use Structural Vector Autoregression models and contemporaneous restrictions to identify fiscal shocks. A methodological difference with traditional SVARs is that I try to estimate the elasticities of the different taxes to GDP using the transitory components of the relevant time series. The results indicate that the macroeconomic effects of different fiscal instruments vary a lot, but spending on average has a higher multiplier than taxes, while personal income tax and fuel tax have the worst impact on the economy.
{"title":"Tax Elasticities and the Macroeconomic Effects of Fiscal Policy in Greece","authors":"Andreas Zervas","doi":"10.3790/aeq.64.1.59","DOIUrl":"https://doi.org/10.3790/aeq.64.1.59","url":null,"abstract":"In this paper I explore the effects of fiscal policy, in particular of both spending and taxes, on the Greek GDP, in the form of multipliers of GDP to a shock on the relevant fiscal instrument. A novel feature of this paper is that I try to estimate the effects of particular spending and tax components on GDP. I use Structural Vector Autoregression models and contemporaneous restrictions to identify fiscal shocks. A methodological difference with traditional SVARs is that I try to estimate the elasticities of the different taxes to GDP using the transitory components of the relevant time series. The results indicate that the macroeconomic effects of different fiscal instruments vary a lot, but spending on average has a higher multiplier than taxes, while personal income tax and fuel tax have the worst impact on the economy.","PeriodicalId":36978,"journal":{"name":"Applied Economics Quarterly","volume":"64 1","pages":"59-98"},"PeriodicalIF":0.0,"publicationDate":"2018-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70168872","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper assesses the effect of foreign economic activity on Greek exports based on both static and dynamic analysis. We employ data from 1995:I to 2016:IV and quantify the long-run foreign income elasticity of Greek exports. We establish a cointegration relationship and find, based on Dynamic OLS estimations, that the aggregate foreign income elasticity of Greek exports is above one and the price elasticity is positive. We reveal that economic growth in Turkey and in emerging markets such as the Balkans, North Africa and the Middle East have the greatest impact on Greek exports. The impact of the traditional European trading partners of Greece (Germany and Italy) are found to be positive but insignicant. Finally, the dynamic analysis shows a positive interaction between real income growth in Turkey and Greek export growth in the short-run horizon. A real depreciation of the Greek economy will lead to an increase in exports.
{"title":"The Relationship Between Greek Exports and Foreign Income","authors":"Konstantinos Chisiridis, Theodore Panagiotidis","doi":"10.3790/AEQ.64.1.99","DOIUrl":"https://doi.org/10.3790/AEQ.64.1.99","url":null,"abstract":"This paper assesses the effect of foreign economic activity on Greek exports based on both static and dynamic analysis. We employ data from 1995:I to 2016:IV and quantify the long-run foreign income elasticity of Greek exports. We establish a cointegration relationship and find, based on Dynamic OLS estimations, that the aggregate foreign income elasticity of Greek exports is above one and the price elasticity is positive. We reveal that economic growth in Turkey and in emerging markets such as the Balkans, North Africa and the Middle East have the greatest impact on Greek exports. The impact of the traditional European trading partners of Greece (Germany and Italy) are found to be positive but insignicant. Finally, the dynamic analysis shows a positive interaction between real income growth in Turkey and Greek export growth in the short-run horizon. A real depreciation of the Greek economy will lead to an increase in exports.","PeriodicalId":36978,"journal":{"name":"Applied Economics Quarterly","volume":"64 1","pages":"99-114"},"PeriodicalIF":0.0,"publicationDate":"2018-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70168456","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
D. Anastasiou, Konstantinos Drakos, Stylianos Giannoulakis
The purpose of this study is to investigate the link between bank credit standards (CS hereafter) and business cycle fluctuations. This is the first empirical study which attempts to examine whether business cycle affects bank CS. We use quarterly survey-data on CS taken from the Bank Lending Survey from 2003Q1 to 2016Q1, for 14 Euro-area countries. We find that business cycle and GDP growth trend exert a negative influence on CS, and thus business cycle and trend are two major drivers of the tightening or easing of the CS. We also find that the two components (cyclical and trend) of the real GDP decomposition affect in a symmetric way CS. Moreover, symmetry of impacts was found between the CS and the business cycle and trend for large vs. small firms. Our findings could be helpful for both the European bank regulatory authorities and for the banks’ loan officers when they are designing macroprudential policies.
{"title":"Are Bank Credit Standards Affected by the Business Cycle? Evidence from the Euro Area","authors":"D. Anastasiou, Konstantinos Drakos, Stylianos Giannoulakis","doi":"10.3790/AEQ.64.1.5","DOIUrl":"https://doi.org/10.3790/AEQ.64.1.5","url":null,"abstract":"The purpose of this study is to investigate the link between bank credit standards (CS hereafter) and business cycle fluctuations. This is the first empirical study which attempts to examine whether business cycle affects bank CS. We use quarterly survey-data on CS taken from the Bank Lending Survey from 2003Q1 to 2016Q1, for 14 Euro-area countries. We find that business cycle and GDP growth trend exert a negative influence on CS, and thus business cycle and trend are two major drivers of the tightening or easing of the CS. We also find that the two components (cyclical and trend) of the real GDP decomposition affect in a symmetric way CS. Moreover, symmetry of impacts was found between the CS and the business cycle and trend for large vs. small firms. Our findings could be helpful for both the European bank regulatory authorities and for the banks’ loan officers when they are designing macroprudential policies.","PeriodicalId":36978,"journal":{"name":"Applied Economics Quarterly","volume":"64 1","pages":"5-16"},"PeriodicalIF":0.0,"publicationDate":"2018-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70168855","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We use a large survey on health conditions conducted in Israel to explore whether absolute and/or relative income has a moderating effect on depression and/or chronic anxiety. In contributing to the literature, we use diagnosis-based depression and/or anxiety instead of non-diagnosis terms, such as happiness or well-being. Under this framework, we found that all of the moderating effect of income should be attributed to relative income and especially to socioeconomic relative income. Thus, stressing social comparison, as opposed to inner comparison or habituation. These moderating effects, which are mostly found in middle-aged adults (ages 30 to 65), are robust to alternative specifications of different sampling of health conditions, numerous control variables and several subsamples divided by gender, age and religion. The results have important health policy implications regarding possible treatments.
{"title":"Absolute versus Relative Income and Their Effect on Depression and Chronic Anxiety","authors":"Orly Zelekha, Yaron Zelekha","doi":"10.3790/AEQ.63.4.429","DOIUrl":"https://doi.org/10.3790/AEQ.63.4.429","url":null,"abstract":"We use a large survey on health conditions conducted in Israel to explore whether absolute and/or relative income has a moderating effect on depression and/or chronic anxiety. In contributing to the literature, we use diagnosis-based depression and/or anxiety instead of non-diagnosis terms, such as happiness or well-being. Under this framework, we found that all of the moderating effect of income should be attributed to relative income and especially to socioeconomic relative income. Thus, stressing social comparison, as opposed to inner comparison or habituation. These moderating effects, which are mostly found in middle-aged adults (ages 30 to 65), are robust to alternative specifications of different sampling of health conditions, numerous control variables and several subsamples divided by gender, age and religion. The results have important health policy implications regarding possible treatments.","PeriodicalId":36978,"journal":{"name":"Applied Economics Quarterly","volume":"63 1","pages":"429-454"},"PeriodicalIF":0.0,"publicationDate":"2017-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44771676","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Kuznets’ inverted-U hypothesis asserts that at the early stages of economic growth income inequality gets worse. It only improves after a threshold growth level is reached. Like previous research, when we considered time series data from each of the 41 countries in our sample and a linear ARDL approach, we only found support for the hypothesis in four countries. However, when we shifted to nonlinear ARDL approach which separates economic booms from recessions, we were able to find support for the hypothesis in 15 countries. In many countries we found economic activity to have asymmetric effects on income inequality which is not considered by previous research.
{"title":"Impact of Economic Growth on Income Distribution: Are the Effects Asymmetric?","authors":"Mohsen Bahmani‐Oskooee, Amid Motavallizadeh-Ardakani","doi":"10.3790/AEQ.63.4.391","DOIUrl":"https://doi.org/10.3790/AEQ.63.4.391","url":null,"abstract":"Kuznets’ inverted-U hypothesis asserts that at the early stages of economic growth income inequality gets worse. It only improves after a threshold growth level is reached. Like previous research, when we considered time series data from each of the 41 countries in our sample and a linear ARDL approach, we only found support for the hypothesis in four countries. However, when we shifted to nonlinear ARDL approach which separates economic booms from recessions, we were able to find support for the hypothesis in 15 countries. In many countries we found economic activity to have asymmetric effects on income inequality which is not considered by previous research.","PeriodicalId":36978,"journal":{"name":"Applied Economics Quarterly","volume":"63 1","pages":"391-427"},"PeriodicalIF":0.0,"publicationDate":"2017-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48091976","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The objective of this study is to analyze Pakistan’s bilateral export and import determinants and potential with major trading partners as well as border sharing countries. The study uses augmented gravity model and utilizes the panel data of thirty eight major trading partners of Pakistan from 2000 to 2013 at annual frequency. General to specific approach is used to determine the determinants with random effect model, while the final models are used to compute the trade potentials. Bilateral export determents of Pakistan are GDP of partner country, per capita GDP differential, distance, import openness of partner country, inflation rate in importing country, exchange rate, and common language. Pakistan has highest export potential with Switzerland and Hungary, while exhausted its potential with Sri Lanka, Bangladesh and UAE. Bilateral import determinants of Pakistan are GDP of home country and partner country, distance, export openness of the partner country, trade openness of Pakistan, and inflation rate in Pakistan. Pakistan has highest import potential with Norway followed by Philippines, Portugal and Greece, while Pakistan has exhausted its import potential with Malaysia, Indonesia and Kuwait. In case of border sharing countries, Pakistan has exhausted both export and import potential with China, while with India import potential is exhausted but export potential exists, and large export and import potential exists with Iran. Government must tailor policies to utilize the untapped export and import potential of Pakistan with trading partners as well as border sharing countries.
{"title":"Bilateral Export and Import Determinants and Potential of Pakistan: A Gravity Model Approach","authors":"K. Munir, M. Sultan","doi":"10.3790/AEQ.63.4.369","DOIUrl":"https://doi.org/10.3790/AEQ.63.4.369","url":null,"abstract":"The objective of this study is to analyze Pakistan’s bilateral export and import determinants and potential with major trading partners as well as border sharing countries. The study uses augmented gravity model and utilizes the panel data of thirty eight major trading partners of Pakistan from 2000 to 2013 at annual frequency. General to specific approach is used to determine the determinants with random effect model, while the final models are used to compute the trade potentials. Bilateral export determents of Pakistan are GDP of partner country, per capita GDP differential, distance, import openness of partner country, inflation rate in importing country, exchange rate, and common language. Pakistan has highest export potential with Switzerland and Hungary, while exhausted its potential with Sri Lanka, Bangladesh and UAE. Bilateral import determinants of Pakistan are GDP of home country and partner country, distance, export openness of the partner country, trade openness of Pakistan, and inflation rate in Pakistan. Pakistan has highest import potential with Norway followed by Philippines, Portugal and Greece, while Pakistan has exhausted its import potential with Malaysia, Indonesia and Kuwait. In case of border sharing countries, Pakistan has exhausted both export and import potential with China, while with India import potential is exhausted but export potential exists, and large export and import potential exists with Iran. Government must tailor policies to utilize the untapped export and import potential of Pakistan with trading partners as well as border sharing countries.","PeriodicalId":36978,"journal":{"name":"Applied Economics Quarterly","volume":"63 1","pages":"369-389"},"PeriodicalIF":0.0,"publicationDate":"2017-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43903798","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper presents our research on the effect of trade liberalization with leading trade partners on Bosnia and Herzegovina’s (B&H) trade balance. The theoretical framework includes a gravity model and GMM dynamic panel analysis as the econometric technique. The research results show that the export of products from B&H increased thanks to the growth of macroeconomic indicators of trading partners, dummy variables and the export of certain products according to the sector structure. On the other hand, imports of products to B&H decreased due to the decline of B&H’s macroeconomic indicators, dummy variables and reduced imports of certain products according to the sector structure. From these findings, we can conclude that through the process of trade liberalization with developed countries, B&H recorded an increase in exports and reduction of the leading imports sector, which led to a reduction in the trade deficit.
{"title":"The Effect of Trade Liberalization of Bosnia and Herzegovina with the Leading Trade Partners","authors":"Safet Kurtović, B. Halili, N. Maxhuni","doi":"10.3790/AEQ.63.4.341","DOIUrl":"https://doi.org/10.3790/AEQ.63.4.341","url":null,"abstract":"This paper presents our research on the effect of trade liberalization with leading trade partners on Bosnia and Herzegovina’s (B&H) trade balance. The theoretical framework includes a gravity model and GMM dynamic panel analysis as the econometric technique. The research results show that the export of products from B&H increased thanks to the growth of macroeconomic indicators of trading partners, dummy variables and the export of certain products according to the sector structure. On the other hand, imports of products to B&H decreased due to the decline of B&H’s macroeconomic indicators, dummy variables and reduced imports of certain products according to the sector structure. From these findings, we can conclude that through the process of trade liberalization with developed countries, B&H recorded an increase in exports and reduction of the leading imports sector, which led to a reduction in the trade deficit.","PeriodicalId":36978,"journal":{"name":"Applied Economics Quarterly","volume":"63 1","pages":"341-367"},"PeriodicalIF":0.0,"publicationDate":"2017-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42976168","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract The aim of this article is to explore the impact of the financial crisis in 2007–2008 on the banking sector in advanced economies of the European Union. The 2007–2008 financial crisis severely affected economies of the European Union, where the recession, the aftermath of the crisis, was more severe than in the US. Advanced economies were not often examined due to rare occurrences of financial crises in those countries, thus this research will contribute to the literature by providing detailed analysis of the crisis consequences on the economy and banking sector in advanced economies. Additionally, this research will provide an overview of the impact of the financial crisis on the banking sectors using the capital asset pricing model (CAPM) beta of the banking sector. The collapse of Lehman Brothers worsened the situation in the EU financial markets, where high volatility and a huge drop in the equity prices were observed. Furthermore, a high value of beta of banking sectors in 2007 and in 2008 i...
{"title":"The Impact of the 2007–2008 Financial Crisis on the Banking Systems in Advanced European Countries","authors":"K. Tomczak","doi":"10.3790/AEQ.63.2.161","DOIUrl":"https://doi.org/10.3790/AEQ.63.2.161","url":null,"abstract":"Abstract The aim of this article is to explore the impact of the financial crisis in 2007–2008 on the banking sector in advanced economies of the European Union. The 2007–2008 financial crisis severely affected economies of the European Union, where the recession, the aftermath of the crisis, was more severe than in the US. Advanced economies were not often examined due to rare occurrences of financial crises in those countries, thus this research will contribute to the literature by providing detailed analysis of the crisis consequences on the economy and banking sector in advanced economies. Additionally, this research will provide an overview of the impact of the financial crisis on the banking sectors using the capital asset pricing model (CAPM) beta of the banking sector. The collapse of Lehman Brothers worsened the situation in the EU financial markets, where high volatility and a huge drop in the equity prices were observed. Furthermore, a high value of beta of banking sectors in 2007 and in 2008 i...","PeriodicalId":36978,"journal":{"name":"Applied Economics Quarterly","volume":"63 1","pages":"161-176"},"PeriodicalIF":0.0,"publicationDate":"2017-11-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49479159","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Complicated tax systems may provide more opportunities for rent-seeking tax officials and politicians to grant favors and may attract the activity of fixers, both of which may lead to corruption. However, the possible channels between tax complexity and corruption have not been addressed in the literature. Using a large cross-section sample dataset, this study presents the empirical evidence suggesting that high degrees of tax complexity may serve as a breeding ground for corruption. Furthermore, in this framework, I examine the conditions under which the impact of tax complexity can change. Moreover, this study helps to resolve whether tax complexity effects are derived from tax levels, tax system structure or pure complexity. JEL Classification: H21, H26, K14, K34
{"title":"Tax Complexity and Corruption","authors":"Yaron Zelekha","doi":"10.3790/AEQ.63.2.177","DOIUrl":"https://doi.org/10.3790/AEQ.63.2.177","url":null,"abstract":"Abstract Complicated tax systems may provide more opportunities for rent-seeking tax officials and politicians to grant favors and may attract the activity of fixers, both of which may lead to corruption. However, the possible channels between tax complexity and corruption have not been addressed in the literature. Using a large cross-section sample dataset, this study presents the empirical evidence suggesting that high degrees of tax complexity may serve as a breeding ground for corruption. Furthermore, in this framework, I examine the conditions under which the impact of tax complexity can change. Moreover, this study helps to resolve whether tax complexity effects are derived from tax levels, tax system structure or pure complexity. JEL Classification: H21, H26, K14, K34","PeriodicalId":36978,"journal":{"name":"Applied Economics Quarterly","volume":"63 1","pages":"177-210"},"PeriodicalIF":0.0,"publicationDate":"2017-11-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46905368","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
An alarming legacy of the austerity programs in the euro area is the vast disinvestment that has taken place over the recent years, and especially so in the peripheral economies. Unless it is quickly reversed, disinvestment not only hinders long-term growth but also undermines the prospects of a gradual reduction of unemployment and risks further imbalances in, and threats to, the monetary union. Combining a neoclassical Diamond model with labour market imperfections, the paper shows that unemployment is a function of capital investment under either CES or Cobb-Douglas production functions. A cross-section estimate for the euro area economies confirms the theoretical findings.
{"title":"Underinvestment and unemployment: the double hazard in the euro area","authors":"N. Christodoulakis, Christos Axioglou","doi":"10.3790/AEQ.63.1.49","DOIUrl":"https://doi.org/10.3790/AEQ.63.1.49","url":null,"abstract":"An alarming legacy of the austerity programs in the euro area is the vast disinvestment that has taken place over the recent years, and especially so in the peripheral economies. Unless it is quickly reversed, disinvestment not only hinders long-term growth but also undermines the prospects of a gradual reduction of unemployment and risks further imbalances in, and threats to, the monetary union. Combining a neoclassical Diamond model with labour market imperfections, the paper shows that unemployment is a function of capital investment under either CES or Cobb-Douglas production functions. A cross-section estimate for the euro area economies confirms the theoretical findings.","PeriodicalId":36978,"journal":{"name":"Applied Economics Quarterly","volume":"63 1","pages":"49-80"},"PeriodicalIF":0.0,"publicationDate":"2017-10-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49434984","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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