Georgios Karras

Are Government Activities Productive? Evidence from a Panel of U.S. States

Using panel data for the forty-eight contiguous U.S. states in each year between 1970 and 1986, this paper investigates the extent to which government capital and current government services contribute to private production. The paper finds fairly strong evidence that current government educational services are productive but no evidence that the other government activities considered are productive. Indeed, government capital often has statistically significant negative productivity. The results are robust across the many specifications considered. Copyright 1994 by MIT Press.

Government Spending and Private Consumption: Some International Evidence

This paper investigates the relationship between private consumption and publicly provided goods and services for a number of countries. The empirical results show that, in the aggregate, private and government consumption are best described as complementary in the sense that an increase in one raises the marginal utility of the other. The strength of this relationship is shown to be negatively affected by the government size. These findings are robust across all specifications tried. Copyright 1994 by Ohio State University Press.

Is government capital productive? Evidence from a panel of seven countries

Abstract Using panel data for seven countries in each year between 1963 and 1988, this paper investigates the extent to which government capital contributes to production. No statistically significant evidence is found that government capital is productive.

Do Economies Converge? Evidence from a Panel of U.S. States

This paper investigates whether the forty-eight contiguous U.S. states converge and, if so, whether convergence is absolute. Economies are shown to converge if, and only if, technology is stationary around a common trend. If convergence does occur, it is unlikely to be absolute unless the economy fixed effects in technology, capitals share, and the rental rate vanish. Examining data on the level of technology, capitals share, and the rental rate provides strong evidence that the continuous U.S. states converge rapidly to levels that are far apart. The rapidity of convergence suggests that factors and technology are highly mobile across the contiguous U.S. states. Copyright 1996 by MIT Press.

Why are the effects of money-supply shocks asymmetric? Convex aggregate supply or “pushing on a string”?

Abstract This paper examines whether the asymmetric effect of money on output is an international phenomenon and investigates the reasons for this asymmetry. Annual data from the 1950–1990 period for a panel of 38 countries strongly support asymmetry internationally: negative money-supply shocks are shown to have a stronger effect on output than positive shocks (whose effect is often statistically insignificant). Next, the paper distinguishes between two types of theories that are consistent with the observed output effects: the convex aggregate supply and the “pushing on a string” views, that predict that money shocks have different asymmetric effects on prices. Somewhat surprisingly, however, the effects of money on prices are shown to be symmetric. This finding is consistent with both theories being operative.

Business-cycle synchronization in the EMU

This article asks whether the business cycles of the EU countries have become more or less synchronized after the introduction of the euro. Our findings show that all countries in our EU sample are better synchronized with the EMU-wide economy in the post-EMU period than they were before the euro. We also show that this increase in synchronization is present in all components of aggregate demand, as well as two supply-side variables, but it is more pronounced in the trade components (imports and, particularly, exports). It is also shown that the increase in trade within the EMU area is at least partly responsible for the increase in cyclical synchronization.

Sources of business-cycle volatility: An exploratory study on a sample of OECD countries

Abstract This paper investigates the sources of output volatility in twenty-four OECD economies using annual data from the 1960 to 1990 period. The paper finds that output volatility is positively related to the volatility of the money supply and the variance of the Solow residual, but negatively related to government size. The degree of openness of the economy and the exchange rate flexibility are also positively related to the size of business fluctuations, while price flexibility and industrial structure have no effect on output volatility. These results shed some light on the issue of the sources of business cycles.

Private and government consumption with liquidity constraints

Abstract Economic theory predicts that liquidity constraints and substitutability or complementarity between private and government consumption result in excess sensitivity of private consumption to income and government consumption, respectively. Using annual data, we estimate these excess sensitivity parameters for each of 54 countries and show that they not only have sensible values but are also correlated with several variables in ways consistent with economic theory. Our findings imply that the degree of substitutability between government services and private consumption depends negatively on the fraction of government spending that goes to national defense. We also find that liquidity constraints typically exist and they are affected positively by output variability and negatively by the saving rate.

The impact of immigrants on the macroeconomy

Abstract This paper analyzes immigrant impacts on long-run economic growth and development in the destination country. A four-factor production function permits explicit analysis of separate effects for the immigration of high-level (professional) manpower and other (production) workers, and for intra-occupational immigrant skill levels. recent history and current policy are reviewed to assess trends in the number and skill level of immigrants to the United States. The rising immigration rate leads to capital deepening (human and nonhuman) and higher consumption per native in the steady-state. Implications are explored for alternative immigration regimes and objective functions.

Sources of Output Fluctuations During the Interwar Period: Further Evidence on the Causes of the Great Depression

This paper decomposes output fluctuations during the 1913 to 1940 period into components resulting from aggregate supply and aggregate demand shocks. We estimates a number of different models, all of which yield qualitatively similar results. While identification is normally achieved by assuming that aggregate demand shocks have no long run real effects, we also estimate models that allow demand shocks to permanently affect output. Our findings support the following three conclusions: (i) there was a large negative aggregate demand shock in November 1929, immediately after the stock market crash; (ii) aggregate demand shocks are mainly responsible for the decline in output through mid to late 1931; (iii) beginning in mid 1931 there is an aggregate supply collapse that coincides with the onset on severe bank panics.