Dimitris Hatzinikolaou

Inflation uncertainty and capital structure: Evidence from a pooled sample of the Dow-Jones industrial firms

Abstract The paper extends the literature on the determinants of capital structure by incorporating inflation uncertainty. By pooling data from the 30 Dow Jones industrial firms for 20 years and by using alternative model assumptions, namely, random effects vs. fixed effects and semilog vs. linear functional form, we find that inflation uncertainty exerts a strong negative effect on a firms debt-to-equity ratio.

Sensitivity of consumption to income and to government purchases: some specification and estimation issues

The paper derives a nonlinear error-correction model (ECM) for consumption and shows that existing models that are based on quadratic utility, combine permanent income and current-income consumption, and nest (or could nest) the hypothesis of substitutability between private consumption and government purchases are special cases of the ECM. The importance of some econometric issues that have not received proper attention in the literature is demonstrated by estimating the models using US aggregate quarterly data, 1953:1-1992:4. The evidence suggests that the ECM produces more reliable estimates than do the existing restrictive models.

Does government growth reduce precautionary saving

The paper extends the constant-relative-risk-aversion model by endogenizing the Arrow-Pratt coefficient of relative risk aversion. The empirical application treats this coefficient as a linear function of the rate of growth of real government expenditure per worker and estimates a Euler equation for consumption using Greek annual aggregate data for the period 1960-1993. The results support the view that government growth may cause a typical consumer to become less risk averse and save less.

Firing Restrictions, Government Growth, Immigration, and the NAIRU: Evidence from Fifteen OECD Countries

Using a Phillips-type equation and annual aggregate data from 15 Organization for Economic Cooperation and Development (OECD) countries, we estimate the effects of the following policies on the ‘non‐accelerating inflation rate of unemployment’ (NAIRU): restrictions on firing, growth in government ‘productive’ expenditure, growth in social security benefits, and lax immigration policy. We consider Greece separately, but treat the other 14 countries as a fixed‐effects panel. Two effects seem to be robust to changes in the sample: restrictions on firing and growth in social security benefits raise the NAIRU.

Government Spending and Consumer Attitudes toward Risk, Time Preference, and Intertemporal Substitution: An Econometric Analysis

We construct a model that considers the direct effects, if any, of government spending on the attitudes of a typical consumer toward risk, time preference, and intertemporal substitution. The null hypothesis is that a growing government sector does not affect the consumers behavior, and the alternative is that it causes him to become less risk averse, more impatient to consume now rather than in the future, and less responsive to changes in real interest rates. If the alternative hypothesis is correct, then government growth may lead to lower economic growth. Using Greek annual aggregate data, 1960-1990, we can reject the null hypothesis.

A PANEL DATA ANALYSIS OF THE NEXUS BETWEEN DEFENCE SPENDING AND GROWTH IN THE EUROPEAN UNION: A COMMENT

In a recent paper of this journal (Vol. 18(1), 2007, pp. 75–85)], Kollias, Mylonidis, and Paleologou (henceforth KMP) examined the relationship between the GDP growth rate (denoted as gdp) and military expenditure as a share of GDP (denoted as milex) using panel data from the 15 countries of the European Union (EU15), 1961–2000 (T=40 annual observations from each country). Given that a Common European Security and Defence Policy (CESDP) is under consideration in the EU15 group, this is an interesting paper. My comments relate to its econometrics and are organized according to the standard three stages of econometric analysis: specification, estimation, and diagnostic checking.

Modeling and Estimating the Effects of Institutional Variables on a Pay-as-you-go Social Security System and on Household Saving

Using a two-period overlapping generations model and three panel data sets of annual aggregate data from twenty-five countries, we estimate a fixed-effects Euler equation for household saving. We focus on the effects of several institutional and other variables, such as corruption and the debt to gross domestic product (GDP) ratio, on household saving and on the probability that a pay-as-you-go social security system will grant pensions. We find that social security contributions reduce saving in a less than one-for-one manner. Also, as corruption or the debt to GDP ratio increases, the probability that the system will grant pensions falls, and so does the effect of social security contributions on saving. Finally, the marginal effect of an improvement in the quality of institutions on the credibility of the social security system is greater in countries where the quality of institutions is low than in countries where it is high, a result that stresses the role of institutions in reducing uncertainty about pensions.