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Έρευνα

Does Output Predict Unemployment? A Look at Okun’s Law in Greece

01/12/2013
unemployment
by Costas Karfakis & Konstantinos Katrakilidis & Eftychia Tsanana

This paper examines the unemployment-output relationship in Greece, using a dynamic version of Okun’s Law. The Granger causality tests indicate that real output is important to understanding future movements in unemployment. The Okun’s ratio is 3-to-1, implying that one percent increase in unemployment has been associated to a three percent decrease in real output during the last thirteen years. In addition, the response of unemployment to real output is found to be stronger when there is a contraction rather than an expansion of real activity. This empirical fact is consistent with the developments of the Beveridge curve, which illustrate that a significant portion of actual unemployment is structural in nature. Therefore, a fall in unemployment will require not only a pick-up in aggregate demand but also structural reforms in the Greek labour market, which will make the economy competitive and reduce long-term unemployment.

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On the stationarity of per capita carbon dioxide emissions over a century

01/12/2013
Carbon-dioxide
by Maria Christisou & Theodore Panagiotidis & Abhijit Sharma

This paper examines the stationarity of carbon dioxide (CO2) emissions per capita for a set of 36 countries covering the period 1870-2006. We employ recently developed unit root and stationarity tests that allow for the mean reverting process to be nonlinear and take into account cross sectional dependence. By grouping countries according to their geographical proximity the importance of cross sectional dependence in panel unit root and stationarity tests is revealed. Using a recently developed nonlinear panel unit root test, we find strong evidence that the per capita carbon dioxide emissions over the last one hundred and fifty years are stationary. Our nonlinear specification captures the dynamics of the emissions time series data more effectively and we obtain evidence supporting stationarity for all country groups under study.

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A note on the extent of US regional income convergence

01/12/2013
regional-income-convergence
by Mark J. Holmes & Jesus Otero & Theodore Panagiotidis

Long-run income convergence is investigated in the US context. We employ a novel pair-wise econometric procedure based on a probabilistic definition of convergence. The time-series properties of all the possible regional income pairs are examined by means of unit root and non-cointegration tests where inference is based on the fraction of rejections. We distinguish between the cases of strong convergence, where the implied cointegrating vector is [1,-1], and weak convergence, where long-run homogeneity is relaxed. To address cross-sectional dependence, we employ a bootstrap methodology to derive the empirical distribution of the fraction of rejections. We find supporting evidence of US states sharing a common stochastic trend consistent with a definition of convergence based on long-run forecasts of state incomes being proportional rather than equal. We find that the strength of convergence between states decreases with distance and initial income disparity. Using Metropolitan Statistical Areas data, evidence for convergence is stronger.

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Using tradable water permits in irrigated agriculture

01/12/2013
tradable-water
by Dionisios Latinopoulos & Eftichios Sartzetakis

One of the most important challenges facing agricultural water policy is the design of mechanisms enabling the transition from the current myopic exploitation to an efficient and sustainable use of groundwater resources. Tradable water permits systems can be very effective and efficient instruments, especially under conditions of limited water availability. The present paper examines both theoretically and empirically the efficiency potential of implementing a tradable permit system in irrigated agriculture taking into account the heterogeneity of crop agro-economic profiles within a single aquifer. We first confirm that in the absence of any water management system individual farmers deplete the available water resources very fast and that both a tradable and a non tradeable water permit management system provide the basic mechanism for sustainable water use. Both systems impose significant costs on farmers which can be counterbalanced if water depletion is associated with lower productivity as a result of water quality changes (i.e. water salinization). However, when trade of water is allowed the benefits of implementing a permit management system are maximized. The more diverse, in technology and market prices, are the crops sharing the same aquifer and the stricter is the water constrain, the higher are the benefits from using a tradable water permit system.

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International Environmental Agreements: An Emission Choice Model with Abatement Technology

01/12/2013
International-Environmental-Agreements
by Eftichios Sartzetakis & Stefania Strantza

The present paper examines the size of stable IEAs concerning transboundary environmental problems. A coalition is considered stable when no signatories wish to withdraw while no more countries wish to participate. We assume that the coalition behaves as a leader maximizing its members’ aggregate welfare while the countries outside the coalition maximize their own welfare independently, taking the choice of the coalition as given. We further assume a benefit function that is concave in the country’s own emissions, an environmental damage function that is convex in aggregate net emissions and an abatement cost function that is convex in the country’s abatement effort. Each country chooses both its emission and abatement levels. Within this framework we find that the size of the stable coalition depends on the model’s parameters but it is always larger than in the case in which countries are allowed to choose either emission or abatement level. Our results complement Barrett’s (1994) suggestion that the size of the stable coalition depends on the model’s parameters, even though we are imposing the constraint that the net emission flow is positive.

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