Ioannis N. Kallianiotis

Interest rate risk, labor supply and unemployment

Abstract When the rate of return on an individual’s savings is risky, the access to a labor market to work for a riskless wage provides a means of hedging this capital income risk by working more. In a non-expected utility maximizing framework using Selden’s OCE preference we investigate the effects of a change in the rate of return risk on such precautionary labor supply decision. It is shown that an increase in the rate of return risk leads to an increase (a decrease) in the optimal labor supply only when the elasticity of intertemporal substitution for consumption falls short of (exceeds) unity. An empirical analysis, using a GARCH model to estimate the interest rate risk, reveals that in the US, unemployment rate has responded positively to an increase in time-varying real interest rate risk.

Privatization and Financial Markets in European Union: A Social Welfare Perspective

Since 1980, with pressure from IMF and lately, from the EU and the Troika, privatization has become the key dimension of the world capital markets and European Union has been the international leader in selling state-owned productive assets (national wealth) to the private sector (mostly to foreign firms). This trend started because the states have historically taken a major direct role in the economy of all European countries [Kallianiotis (2007)], due to security, social policy, control of the enterprises, ownership of the national assets (wealth) by the nation, avoidance of private monopolies, and prevention of social inequality. During the Great Depression (early 1930s), many productive assets were shifted to state ownership, as failing enterprises were taken over by governments in the Western Europe.1 In the Eastern Europe, due to the socialist system, all enterprises ended up in the hands of the government. The last major expansion of state control in Western Europe was the nationalization of the banks in France at the outset of the Mitterrand administration in 1981. [Walter and Smith (2000, p. 165).But since that time the trend has changed and privatization is considered the only way of business, independently of the social cost to the country. On Sunday, September 7, 2008, the U.S. Treasury Secretary, Henry Paulson, announced plans to take control of troubled mortgage giants Fannie Mae and Freddie Mac, replaced the companies’ chief executives and provided up to

The Gini Coefficient: An Application to Greece

200 billion in capital to restore the firms to financial health. This nationalization movement had a positive effect, with stock markets rallying in the U.S. (DJIA gained 289.78 points or 2.6% to 11,510.74) and abroad, and mortgage rates fell. Also, Germany took a 25% stake in Commerzbank after injecting another

A Comparison of the Current Account and the Monetary Theories of Exchange Rate Determination

13.63 billion to shore up its finances. Further, Lloyds Banking could be pushed closer to nationalization, if the U.K. economy continues to sour. We see in many cases that governments must be in control of industries and firms for the benefits of the citizens. The uncontrolled private firms will cause serious problems in the future of our economic and social lives and due to globalization the (domino) effect will move to allover the world. Nationalization of some most deeply wounded financial institutions, during the 2008 financial crisis, might be the best policy to save the economies and bring back stability and

The Multitude of Econometric Tests: Forecasting the Dutsch Guilder

The Gini coefficient is a measure of income inequality. In this study we show that it needs to be adjusted to be a correct measure of income inequality. The result is that decomposition is possible even without the interaction effect. The requirement however, is that there are data on individual incomes. Secondly, the approach is applied to Greece. Third, there is the last section indicating extensions.

Privatization in Greece and Its Negative Effects on the Nation's Social Welfare (Expropriation of the National Wealth)

In this study, we develop a way to test for the two theories, the Monetary and the current account, in explaining exchange rate determination. The approach we develop has two components to it. The first is a test of the appropriate signs. That is, the two theories disagree on the signs of the determining variables. Thus, depending on the sign of the regressors, we can prove the one, or the other. The second sub test is one which has to do with the speed of adjustment. Specifically, importance should be depicted in a quicker speed of adjustment. On that issue, if real(monetary) variables adjust faster, then it supports the traditional (monetary) view.

The Optimal Interest Rates and the Current Interest Rate System

This paper studies a diversity of exchange rate models, applies both parametric and nonparametric techniques to them, and examines said models’ collective predictive performance. We shall choose the forecasting predictor with the smallest root mean square forecast error (RMSE); the empirical evidence for a better type of exchange rate model is in equation (34), although none of our evidence gives an optimal forecast. At the end, these models’ error correction versions will be fit so that plausible long-run elasticities can be imposed on each model’s fundamental variables.