[1] Taxation and economic sophistication: Evidence from OECD countries
(PLoS ONE, 2019, 14(3): e0213498)
Taxation policies can explain the differences in countries' capacity to produce and export more sophisticated products. We develop a theoretical model considering elements from standard models of economic growth to highlight that a country's productive structure is implied by the appropriate fiscal policy that is necessary for the development of sophisticated products. We show that economies that rely less on capital relative to labor taxation tend to produce more complex products, while countries that rely more heavily on capital relative to labor taxation produce simple products. These relationships remain robust across alternative econometric specifications. Furthermore, we demonstrate the differential effect of a country's level of economic development on the nexus between the structure of taxation and economic sophistication. We show that the negative impact of capital taxes on economic sophistication becomes stronger for countries that are more developed.
[2] The effect of the Internet on economic sophistication: An empirical analysis
(Economics Letters, 2019, Volume 174, p. 35-38)
Backed by empirical results obtained from dynamic panel data analysis, this letter contends that the Internet has a positive effect on the sophistication of exported products after controlling for potential covariates.
[3] Environmental projects in the presence of corruption
(joint work with A. Litina and E.S. Sartzetakis)
(International Tax and Public Finance, 2018, https://doi.org/10.1007/s10797-018-9503-6)
This paper establishes that in the presence of corruption, the implementation of technologically advanced environmental policies may result in lower environmental quality. In corrupt countries, politicians may allocate a large fraction of public funds to environmental projects with the intention of increasing their ability to extract rents, rather than improving environmental quality. This has both a direct and an indirect negative effect on environmental quality. First, due to extensive rent-seeking, the effectiveness of environmental projects is disproportional to the amount of public funds allocated to them. Second, citizens who observe the poor outcomes of environmental projects are more prone to tax evasion, which results in reduced public funds. A vicious circle of extensive tax evasion and rent-seeking activities thus emerges, which has a detrimental effect on environmental quality. Anecdotal evidence from a number of corrupt countries shows little or no improvement in environmental quality, despite the implementation of technologically advanced environmental projects.
[4] Intelligence and economic sophistication
(joint work with A. Litina)
(Empirical Economics, 2018, https://doi.org/10.1007/s00181-018-1511-y)
Backed by strong empirical results, obtained from several different specification and sensitivity analyses, this paper contends that countries with high-intellectual quotient populations produce and export more sophisticated/complex products. This result is further reinforced by the quality of democracy.
[5] The role of consumer networks in firms' multicharacteristics competition and market share inequality
(joint work with A. Garas)
(Structural Change and Economic Dynamics, 2017, Volume 43, p. 76-86)
We develop a location analysis spatial model of firms' competition in multi-characteristics space, where consumers' opinions about the firms' products are distributed on multilayered networks. Firms do not compete on price but only on location upon the products' multi-characteristics space, and they aim to attract the maximum number of consumers. Boundedly rational consumers have distinct ideal points/tastes over the possible available firm locations but, crucially, they are affected by the opinions of their neighbors. Proposing a dynamic agent-based analysis on firms' location choice we characterize multi-dimensional product differentiation competition as adaptive learning by firms' managers and we argue that such a complex systems approach advances the analysis in alternative ways, beyond game-theoretic calculations.
[6] The relation between migration and FDI in the OECD from a complex network perspective
(joint work with A. Garas and Konstantinos Poulios)
(Advances in Complex Systems, 2016, Volume 19, Nos. 6&7, 1650009 DOI: 10.1142/S0219525916500090)
We explore the relationship between human migration and OECD's foreign direct investment (FDI) using a gravity equation enriched with variables that account for complex network effects. Based on a panel data analysis, we find a strong positive correlation between the migration network and the FDI network, which can be mostly explained by countries' economic/demographic sizes and geographical distance. We highlight the existence of a stronger positive FDI relationship in pairs of countries that are more central in the migration network. Both intensive and extensive forms of centrality are FDI enhancing. Illuminating this result, we show that bilateral FDI between any two countries is further affected positively by the complex web of 'third party' corridors/migration stocks of the international migration network (IMN). Our findings are consistent whether we consider bilateral FDI and bilateral migration figures, or we focus on the outward FDI and the respective inward migration of the OECD countries.
[7] Economic complexity and human development: a note
(Economics Bulletin, 2016, Volume 36, No. 3, p. A143)
Existing studies establish a positive effect of the mix of products that a country produces on that country's pattern of economic development and growth. But "there is more to life than income", hence, does this product mix also predict the people's "quality of life"? The theoretical arguments point out both positive and negative effects, but lack empirical support. In this note, we attempt to address these arguments by examining the impact of economic complexity on countries' social development. Utilizing a dynamic panel data econometric framework, we find no evidence of a causal effect of economic complexity on human development.
[8] Multinational versus national firms on capital adjustment costs: a structural approach
(Economics: The Open-Access, Open-Assessment E-Journal, Vol. 9, 2015-XX. http://dx.doi.org/10.5018/economics-ejournal.ja.2015-XX)
This paper provides an alternative perspective on the firm-level empirical analysis of the relation between foreign ownership and capital demand adjustment in host countries. The author estimates a dynamic structural model of investment on a sample of 4672 Belgian firms for the period 2003-2010, permitting him to distinguish the 'ownership status' of firms. He considers a dynamic discrete choice model of a general specification of adjustment costs including convex and non-convex components. The author uses the method of simulated moments in order to estimate the structural parameters. His results indicate that multinationals' affiliates face lower capital adjustment costs than national firms.
[9] Multinational versus national firms on labour adjustment costs: a structural approach
(Journal of Labor Research, 2015, Volume 36, No. 4, p. 427-441)
This paper provides a different perspective on the firm-level empirical analysis of the relation between foreign ownership and labour demand adjustment in host countries. We estimate a dynamic structural model of employment on a sample of 8215 Belgian firms observed between 2003 and 2010 that permits to distinguish the ‘ownership status’ of firms. 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 that multinational’s affiliates face lower convex and fixed adjustment costs but higher “disruption of production” adjustment costs than national firms.
[10] Income inequality and the tax structure: Evidence from developed and developing countries
(joint work with A. Adam and P. Kammas)
(Journal of Comparative Economics, 2015, Volume 43, Issue 1)
This paper seeks to examine the effect of income inequality on the structure of tax policies. We first use a simplified theoretical framework which allows us to formalize the testable implications of the relevant literature. Subsequently, our analysis indicates that more unequal economies rely heavier on capital relative to labor income taxation. This relationship remains robust across various alternative measures of income inequality and most importantly through alternative political regimes. In addition, our analysis investigates the role of the tax structure on the relationship between income inequality and economic growth. Our empirical findings provide evidence in favor of a political economy channel through which income inequality affects economic growth.
[11] Understanding Voting Behaviour in Complex Political Systems
(Mathematical Economics Letters , 2014, Volume 2, Issue 3-4)
We suggest in this paper that voting in political systems can be profitably analysed using complex system analysis. We discuss how we can capture the complexity of voting behaviour by applying graph theory in networks and we develop a simplified theoretical model of voting choice adopting the basic heuristics of the behavioural decision theory. We feel that such a complex systems approach provides a superior basis for understanding voting behaviour compared to standard political economy analysis.
[12] On the Interrelation of Capital and Labor Adjustment Costs at the Firm Level
(Studies in Nonlinear Dynamics and Econometrics, 2012, Volume 16, Issue 3)
In this paper we study capital and labor adjustment costs by allowing interrelation among adjustments when estimating a dynamic model of factor demand for Greek manufacturing firms. A balanced panel dataset of 1299 firms on 9093 observations for the period 1998-2004 has pointed strong evidence of (a) inaction (b) lumpiness and (c) interrelation of factor adjustment. On account of these empirical observations we set up and estimate models with alternative factor adjustment costs, using the Method of Simulated Moments. We show that a model incorporating convex, non convex and interrelation adjustment processes fits the data best. Moreover, the results indicate that (i) labor and capital adjustment should be analyzed together, (ii) capital and labor's slow adjustment is generated and can be explained by costs associated with changing input demand, and (iii) the firm has an incentive to adjust input factors at the same time period, since adjustment costs decrease when the firm decides to adjust the two factors, namely capital and labor, simultaneously.
[13] Labour Adjustment Costs Estimation of a Dynamic Discrete Choice Model using Panel Data for Greek Manufacturing Firms
(Labour Economics, 2009, Volume 16, Issue 5, pp. 521-533)
In this paper we estimate a dynamic structural model of employment at the firm level. Our dataset consists of a balanced panel of 1528 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 and stay inactive, (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 (2006) 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 goal is to investigate the nature of the labour adjustment process at the firm level for Greek data.
[14] Investment Decisions and Capital Adjustment Costs: Estimation of a Dynamic Discrete Choice Model using Panel Data for Greek Manufacturing Firms
(Journal of Computational Optimization in Economics and Finance, 2009, 1(2), pp. 107-130)
In this paper we estimate a dynamic structural model of capital investment at the firm level. Our dataset consists of a balanced panel of 1419 Greek firms. Two important features are present in our dataset. There are periods in which firms decide not to invest and periods of large investment episodes. This empirical evidence of infrequent and lumpy investment is in favour of irreversibilities and non-convex capital adjustment costs. Following Cooper and Haltiwanger (2006) we consider a dynamic discrete choice model of a general specification of adjustment costs including convex and non-convex components. We also assume total irreversibility of investment. We use an indirect inference procedure as in Gourieroux, Monfort and Renault (1993) and Smith (1993) to estimate the structural parameters. Our goal is to investigate the nature of the capital adjustment process at the firm level for Greek data.
