WORKING PAPERS by Sarantis
Kalyvitis
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Abstract: Conventional RBC models have been heavily
criticized for their inability to generate the estimated negative
correlations of hours and productivity in response to technology shocks
(`productivity-hours puzzle'). In this paper we show that by just
enhancing the standard framework with investment adjustment costs can
resolve the `productivity-hours puzzle'. |
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Abstract: This paper studies optimal fiscal policy, in
the form of taxation and the allocation of tax revenues between
infrastructure and environmental investment, in a general-equilibrium
growth model with endogenous subjective discounting. A green spending
reform, defined as a reallocation of government expenditures towards
the environment, can procure a double dividend by raising growth and
improving environmental conditions, although the environment does not
impact the production technology. Also, endogenous Ramsey and
growth-maximizing policies eliminate the possibility of an
`environmental and economic poverty trap'. Finally, we examine the
optimal response of the Ramsey government to greener preferences. |
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Abstract: This paper assesses the productivity effects
of infrastructure’s operations and maintenance (O&M) spending by
state and local governments in the 48 contiguous U.S. states over the
period 1978-2000. We explicitly account for transboundary spillovers
and follow a semiparametric methodology that allows us to estimate
state-specific output elasticities. We find strong evidence that in all
48 states the cross-state spillover effects of O&M outlays on
productivity exceed their within-state impacts and that they are
substantially higher than the spillover effects of capital
expenditures. These results are robust to a number of sensitivity
tests, including the potential endogeneity of public spending. |
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Real Business
Cycles with Capital Maintenance (with A. Albonico and E. Pappa). Abstract: We develop a stochastic general equilibrium
model in which maintenance endogenously affects the capital
depreciation rate. The model performs well in generating maintenance
series that match closely existing survey-based measures for Canada.
Maintenance is procyclical and comoves almost always with output.
Investment-specific shocks are the only disturbances that induce a
negative correlation between output and maintenance. This feature is
crucial for the identification of such shocks in the short run. We use
Bayesian estimation to obtain the time profile of equipment capital
depreciation in Canadian manufacturing. The depreciation rate has been
quite volatile and procyclical over the last 50 years. |
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Optimal Fiscal
Policy with Endogenous Time Preference (with E. Dioikitopoulos). Abstract: This paper studies the role of Ramsey
taxation under the assumption that the individual rate of time
preference is determined by the publicly-provided social level of
education. We show how intertemporal complementarities of aggregate
human capital can generate multiple equilibria and we examine the role
of endogenous fiscal policies in equilibrium selection. Our analysis
implies a lower optimal government size due to the effect of human
capital on time preference. |
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Political
Competition and the Growth Impact of Exchange Rate Regimes: An
Empirical Investigation (with I. Skotida). Abstract: Empirical
studies on the growth impact of exchange rate regimes have reported
mixed
results on the sign and significance of this effect. The present paper
introduces in this literature the claim by Acemoglu et al. (2005) that
economic
development is shaped by conflicts between social groups with
differential
political power. To this end, we examine whether the growth effect of
exchange
rate regimes depends on domestic political competition. We test this
prediction
using a panel dataset of 160 countries that covers the period
1975-2006, taking into account the endogeneity of the
exchange rate regime choice. We find that fixed exchange rate regimes
are
directly associated with higher growth, but floating exchange rate
regimes are
more beneficial to growth as political competition increases. |
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Misused Financial
Aid, Political Aid, and Regime Survival: Theory and Evidence from 70
Aid Recipients (with I. Vlachaki). Abstract: This
paper investigates the effects of foreign aid on the survival of
political
regimes by distinguishing between financial aid, which can be misused
by the
ruling political party in order to remain in power at the expense of
the
productive capacity of the country, and political aid, which enhances
the
probability of regime alteration. To this end, we construct a
simple model
for the behavior of the ruling party and we derive a number of testable
hypotheses. We investigate empirically
these effects using data from 70 aid-recipient countries covering the
period
1984-2002 and we find evidence that support the central predictions of
the
model. |
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Estimating C-CAPM and the Equity Premium
over the Frequency Domain (with K. Panopoulou). Abstract: In this paper we evaluate
the Consumption Capital Asset Pricing Model by employing as an
explanatory variable consumption risk over the frequency domain. We
find that at lower frequencies consumption risk explains up to 98% of
the cross-sectional variation of expected returns and the equity
premium puzzle is resolved. Our evidence is consistent with a
coefficient of risk aversion between 1 and 4 in the very long run. |
13 January 2012