Athanasios O. Tagkalakis

The unemployment effects of fiscal policy: recent evidence from Greece

This paper investigates the unemployment effects of fiscal policy in Greece based on the SVAR methodology. We find evidence that the unemployment and growth effects can be quite sizeable in case of cuts in government purchases and in particular government consumption and to a lesser extent government investment. Tax hikes reduce output and increase unemployment, in particular those leading to higher implicit direct and indirect tax rates. The impact effects of fiscal policy on output and unemployment are more sizeable when considering recent year developments. Both output and unemployment respond in a more persistent manner, compared to pre-crisis years.JEL CodesE6, H6, H3

Estimating the Elasticity of Corporate Income Tax to Output Gap in Greece: Implications for Tax Buoyancy

Using quarterly data over the period 1999 to 2013, we estimate the elasticity of corporate income tax (CIT) revenue to output gap in Greece. The elasticity is estimated to be about 1.40 to 1.55 when we use the profit share in its construction, while it increases to 1.83 to 2.05 when profit is used in its construction. The high values of the new estimated elasticity imply substantial CIT buoyancy effects in the years to come, provided that the current reform program of the Greek economy remains on track.

Bank Transaction Taxes: International Evidence and Potential Implications for Greece

This chapter studies a particular case of financial transaction tax, namely, the bank transaction tax—that is, a tax imposed on any payment, withdrawal, or transfer made via the banking system. We review the relevant academic literature on countries which have employed the tax. Moreover, we use Greece as a case study of what the bank transaction tax would imply for a peripheral euro-area economy during the crisis, both in the context of a meta-analysis of existing literature as well as using a micro-founded dynamic stochastic general equilibrium (DSGE) model with a detailed financial sector and an appropriate shock. We conclude that, while the bank transaction tax has some advantages, its imposition also has a number of negative implications.