Marios Zachariadis

Understanding European Real Exchange Rates

We study good-by-good deviations from the Law-of-One-Price (LOP) for over 1,800 retail goods and services between all European Union (EU) countries for the years 1975, 1980, 1985, and 1990. We find that for each of these years, after we control for differences in income and value-added tax (VAT) rates, there are roughly as many overpriced goods as there are underpriced goods between any two EU countries. We also find that good-by-good measures of cross-sectional price dispersion are negatively related to the tradeability of the good, and positively related to the share of non-traded inputs required to produce the good. We argue that these observations are consistent with a model in which retail goods are produced by combining a traded input with a non-traded input.

International Technology Diffusion and the Growth of TFP in the Manufacturing Sector of Developing Economies

This paper evaluates various channels through which foreign technology diffuses to the manufacturing sector of developing economies. These economies carry out virtually no own R&D so they rely on foreign technology to a much larger extent than developed economies. We investigate the direct effect of foreign R&D, as well as technology embodied in imports of intermediate and capital goods and foreign direct investment, on the growth of total factor productivity and value added in the manufacturing sector of thirty two economies during 1965-1992. We find that foreign R&D typically has the biggest positive impact on domestic productivity and value added growth. Imports of technology goods and foreign direct investment also play a similar role but their effect is of smaller magnitude and is not always significant.

International medical technology diffusion

Does medical technology originating in countries close to the technology frontier have a significant impact on health outcomes in countries distant from this frontier? This paper considers a framework where lagging countries may benefit from medical technology (a result of research and development by countries close to the frontier) that is embodied in medical imports or diffuses in the form of ideas. Using a novel dataset from a cross-section of 73 technology-importing countries, we show that medical technology dii¬€usion is an important contributor to improved health status, as measured by life expectancy and mortality rates

Global Versus Local Shocks in Micro Price Dynamics

A number of recent papers point to the importance of distinguishing between the price reaction to macro and micro shocks. We emphasize instead the importance of distinguishing between global and local shocks. We exploit a panel of 276 micro price levels collected on a semi-annual frequency over two decades in 59 countries around the world, that enables us to distinguish between different types (global and local) of macro and micro shocks. We find that global macro and micro shocks are always associated with a slower response of prices than the respective local shocks. Focusing on structural monetary macro shocks, we show that prices reach their long-run value much slower in response to a global macro shock, as compared to the time it takes for prices to reach their long-run value in response to a local macro shock.

The Importance Of Trade Costs In Deviations From The Law-Of-One-Price: Estimates Based On The Direction Of Trade

The full impact of trade costs in segmenting product markets cannot be captured by considering aggregate prices or in the absence of information on the direction of trade. We address this problem by utilizing product‐specific prices, cross‐sectional productivity indices, and bilateral trade flows, allowing us to identify the probable source of any one product. We show that trade costs in the form of transportation and distribution costs are important in determining international price differences and segmenting international markets. Physical distance relative to the origin has a precisely estimated positive impact on international deviations from the Law‐of‐One‐Price that is larger than estimates that do not account for the origin of each product. Based on our benchmark estimates, the price elasticity of distance was around 10% in 1990.

Education Externalities on Longevity

We argue that education exerts positive external effects on health, beyond the standard internal effects documented in the literature. We implement an innovative approach to control for endogeneity and omitted variables problems, and present evidence for the significant role played by higher education in explaining longevity across countries. Our findings provide empirical evidence in support of our hypothesis of educational externalities on health.

International Price Dispersion and the Direction of Trade

The importance of trade costs in segmenting product markets cannot be captured by considering aggregate prices or in the absence of information on the direction of trade. We address this problem by utilizing product-specific prices along with cross-sectional productivity measures and bilateral trade flows that allow us to identify the probable source of any one product. Our empirical approach is in line with the theoretical framework of Eaton and Kortum (2002) and the variation of this proposed in Anderson and van Wincoop (2004). The data are shown to be consistent with this framework. In particular, trade costs in the form of transportation and distribution costs are important in determining international price differences and segmenting international markets.

Inflation expectations and monetary policy in Europe

We use monthly data across fifteen euro-area economies for the period 1985:1-2015:3 to obtain different monetary policy shocks pertaining to more versus less informed individuals. We then investigate how these affect inflation expectations of different types of consumers before and after the incidence of the recent Crisis. Shocks obtained based on the assumption that individuals are well informed can have different impact on inflation expectations as compared to shocks obtained based on the assumption that they are not as informed. Moreover, monetary policy can have different effects on inflation expectations for different types of consumers. Finally, monetary policy has different effects on inflation expectations after as compared to before the incidence of the recent Crisis.

Productivity and Prices in Europe: Micro-Evidence for the Period 1975 to 1990

In the absense of frictionless trade, domestic productivity will be a major determinant of prices. Using repeated cross-sections of absolute prices of individual goods across European countries, I find that products of an industry tend to be cheaper in countries with higher productivity in that industry. Similarly, countries with higher productivity in manufacturing have lower prices for products of that sector, and will have a lower price level as long as the manufacturing sector is sufficiently large.