References of "Koulovatianos, Christos 50002127"
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See detailThe long shadows of war in China: Battle shocks in early life and health/wealth accumulation
Li, Jian; Koulovatianos, Christos UL

in China Economic Review (2020)

This paper investigates the long-term effects of the 2nd Sino-Japanese war (1937–1945) and the later Chinese Civil War (1946–1950) on health and wealth outcomes of 45+ elder individuals in China. We find ... [more ▼]

This paper investigates the long-term effects of the 2nd Sino-Japanese war (1937–1945) and the later Chinese Civil War (1946–1950) on health and wealth outcomes of 45+ elder individuals in China. We find that exposure to the battle shock significantly reduces later adult health outcome such as lung function. Moreover, the later wealth accumulation is also affected negatively. According to our conservative estimates, exposure to battle shock(s) would reduce the lung capability by approximately 5% compared to the population mean and the wealth level by approximately 21% compared to the non-shocked groups. Exploiting the exogenous imposition of wealth equality during the 1950–1978 communism experiment in China, we argue it is the health accumulation channel which inherited the negative battle shocks rather than the wealth accumulation channel. We investigate quantitatively which health-model ingredients can replicate the lifecycle health/wealth dynamics of such early life shocks. [less ▲]

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See detailThe role of labor-income risk in household risk-taking
Hubar, Sylwia; Koulovatianos, Christos UL; Li, Jian

in European Economic Review (2020), 129(C),

In fifteen European countries, China, and the US, stocks and business equity as a share of total household assets are represented by an increasing and convex function of income/wealth. A parsimonious ... [more ▼]

In fifteen European countries, China, and the US, stocks and business equity as a share of total household assets are represented by an increasing and convex function of income/wealth. A parsimonious model fitted to the data shows why background labor-income risk can explain much of this risk-taking pattern. Uncontrollable labor-income risk stresses middle-income households more because labor income is a larger fraction of their total lifetime resources compared with the rich. In response, middle-income households reduce (controllable) financial risk. Richer households, having less pressure, can afford more risk-taking. The poor take low risk because they avoid jeopardizing their subsistence consumption. [less ▲]

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See detailDo demographics prevent consumption aggregates from reflecting micro-level preferences?
Koulovatianos, Christos UL; Schroeder, Carsten; Schmidt, Ulrich

in European Economic Review (2019), 111(C),

Most simulated micro-founded macro models use solely consumer-demand aggregates in order to estimate preference parameters of a representative consumer, for use in policy evaluation. Focusing on dynamic ... [more ▼]

Most simulated micro-founded macro models use solely consumer-demand aggregates in order to estimate preference parameters of a representative consumer, for use in policy evaluation. Focusing on dynamic models with time-separable preferences, we show that aggregation holds if, and only if, momentary utility functions fall in the Identical-Shape Harmonic Absolute-Risk Aversion (ISHARA) utility class, identifying which parameters of ISHARA utility functions are allowed to vary over time. Given this theoretical result, it should be easy to empirically reject the aggregation properties that the macroeconomic representative-consumer identification approach requires: it suffices to show that permanent incomes guaranteeing the same living standard across households of different size violate an affine relationship. In order to test the validity of this affine equation, we develop a vignette survey that produces appropriate data without demand-estimation restrictions imposed by models. Surprisingly, in six countries, this equation is not rejected, lending support to using consumer-demand aggregates. [less ▲]

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See detailDemographics and FDI: Lessons from China's one-child policy
Donaldson, John; Koulovatianos, Christos UL; Li, Jian et al

Article for general public (2018)

China’s one-child policy increased its capital-labour ratio and reduced FDI inflows relative to India, consistent with neoclassical fundamentals

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See detailDemographics and FDI: Lessons from China's One-Child Policy
Donaldson, John B.; Koulovatianos, Christos UL; Li, Jian et al

E-print/Working paper (2018)

Lucas (1990) argues that the neoclassical adjustment process fails to explain the relative paucity of FDI inflows from rich to poor countries. In this paper we consider a natural experiment: using China ... [more ▼]

Lucas (1990) argues that the neoclassical adjustment process fails to explain the relative paucity of FDI inflows from rich to poor countries. In this paper we consider a natural experiment: using China as the treated country and India as the control, we show that the dynamics of the relative FDI flows subsequent to the implementation of China's one-child policy, as seen in the data, are consistent with neoclassical fundamentals. In particular, following the introduction of the one-child policy in China, the capital-labor (K/L) ratio of China increased relative to that of India, and, simultaneously, relative FDI inflows into China vs. India declined. These observations are explained in the context of a simple neoclassical OLG paradigm. The adjustment mechanism works as follows: the reduction in the (urban) labor force due to the one-child policy increases the savings per capita. This increases the K/L ratio and reduces the marginal product of capital (MPK). The reduction in MPK (relative to India) reduces the relative attractiveness of investment in China and is thus associated with lower FDI/GDP ratios. Our paper contributes to the nascent literature exploring demographic transitions and their effects on FDI flows. [less ▲]

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See detailMarket fragility and the paradox of the recent stock-bond dissonance
Koulovatianos, Christos UL; Li, Jian; Weber, Fabienne UL

in Economics Letters (2018), 162

After the Lehman-Brothers collapse, the stock index has exceeded its pre-Lehman-Brothers peak by 36% in real terms. Seemingly, markets have been demanding more stocks instead of bonds. Yet, instead of ... [more ▼]

After the Lehman-Brothers collapse, the stock index has exceeded its pre-Lehman-Brothers peak by 36% in real terms. Seemingly, markets have been demanding more stocks instead of bonds. Yet, instead of observing higher bond rates, paradoxically, bond rates have been persistently negative after the Lehman-Brothers collapse. To explain this paradox, we suggest that, in the post-Lehman-Brothers period, investors changed their perceptions on disasters, thinking that disasters occur once every 30 years on average, instead of disasters occurring once every 60 years. In our asset-pricing calibration exercise, this rise in perceived market fragility alone can explain the drop in both bond rates and price–dividend ratios observed after the Lehman-Brothers collapse, which indicates that markets mostly demanded bonds instead of stocks. [less ▲]

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See detailIncreasing taxes after a financial crisis: Not a bad idea after all
Koulovatianos, Christos UL; Mavridis, Dimitrios

E-print/Working paper (2018)

Based on OECD evidence, equity/housing-price busts and credit crunches are followed by substantial increases in public consumption. These increases in unproductive public spending lead to increases in ... [more ▼]

Based on OECD evidence, equity/housing-price busts and credit crunches are followed by substantial increases in public consumption. These increases in unproductive public spending lead to increases in distortionary marginal taxes, a policy in sharp contrast with presumably optimal Keynesian fiscal stimulus after a crisis. Here we claim that this seemingly adverse policy selection is optimal under rational learning about the frequency of rare capital-value busts. Bayesian updating after a bust implies massive belief jumps toward pessimism, with investors and policymakers believing that busts will be arriving more frequently in the future. Lowering taxes would be as if trying to kick a sick horse in order to stand up and run, since pessimistic markets would be unwilling to invest enough under any temporarily generous tax regime. [less ▲]

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See detailDo Demographics Prevent Consumption Aggregates From Reflecting Micro-Level Preferences?
Koulovatianos, Christos UL; Carsten, Schroeder; Ulrich, Schmidt

E-print/Working paper (2018)

Most simulated micro-founded macro models use solely consumer-demand aggregates in order to estimate preference parameters of a representative consumer, for use in policy evaluation. Focusing on dynamic ... [more ▼]

Most simulated micro-founded macro models use solely consumer-demand aggregates in order to estimate preference parameters of a representative consumer, for use in policy evaluation. Focusing on dynamic models with time-separable preferences, we show that aggregation holds if, and only if, momentary utility functions fall in the Identical-Shape Harmonic Absolute-Risk Aversion (ISHARA) utility class, identifying which parameters of ISHARA utility functions are allowed to vary over time. Given this theoretical result, it should be easy to empirically reject the aggregation properties that the macroeconomic representative-consumer identification approach requires: it suffices to show that permanent incomes guaranteeing the same living standard across households of different size violate an affine relationship. In order to test the validity of this affine equation, we develop a vignette survey that produces appropriate data without demand-estimation restrictions imposed by models. Surprisingly, in six countries, this equation is not rejected, lending support to using consumer-demand aggregates. [less ▲]

Detailed reference viewed: 113 (5 UL)
See detailEvaluating How Child Allowances and Daycare Subsidies Affect Fertility
Goldstein, Joshua R.; Koulovatianos, Christos UL; Li, Jian UL et al

E-print/Working paper (2017)

We compare the cost effectiveness of two pronatalist policies: (a) child allowances; and (b) daycare subsidies. We pay special attention to estimating how intended fertility (fertility before children are ... [more ▼]

We compare the cost effectiveness of two pronatalist policies: (a) child allowances; and (b) daycare subsidies. We pay special attention to estimating how intended fertility (fertility before children are born) responds to these policies. We use two evaluation tools: (i) a dynamic model on fertility, labor supply, outsourced childcare time, parental time, asset accumulation and consumption; and (ii) randomized vignette-survey policy experiments. We implement both tools in the United States and Germany, finding consistent evidence that daycare subsidies are more cost effective. Nevertheless, the required public expenditure to increase fertility to the replacement level might be viewed as prohibitively high. [less ▲]

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See detailAsset Pricing under Rational Learning about Rare Disasters
Koulovatianos, Christos UL; Wieland, Volker

Scientific Conference (2017, January 07)

Why is investment in stocks so persistently weak after a rare disaster? Connecting disaster episodes with post-disaster expectations seems crucial for such post-disaster forecasting and also policymaking ... [more ▼]

Why is investment in stocks so persistently weak after a rare disaster? Connecting disaster episodes with post-disaster expectations seems crucial for such post-disaster forecasting and also policymaking, but rational-expectations models with variable disaster risk often fail to achieve this connection. To this end, while retaining full rationality, we introduce limited information and learning about rare-disaster risk and show that the resulting stock-investment behavior seems similar to persistent investor fear after a rare disaster. We study, (a) rational learning for state verification (RLS), with investors knowing the data-generating process of disaster riskiness but being unable to observe whether the economy is in a riskier state (regime) or not, and (b) rational learning about the data-generating process (RLP) of disaster risk, with investors also being unaware of the data-generating process of disaster riskiness. We analytically show that both RLS and RLP synchronize disaster events with post-disaster expectations and asset prices, and create persistence in price-dividend ratios even if data-generating processes of disaster risk have no persistence. Using De Finetti's theorem we show that RLP offers an explanation for global spells of pessimism and weak investment after a disaster. [less ▲]

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See detailPolitical Economics of Fiscal Consolidations and External Sovereign Accidents
Achury, Carolina; Koulovatianos, Christos UL; Tsoukalas, John

E-print/Working paper (2016)

As the recent chain of EU sovereign crises has demonstrated, after an unexpected massive rise to the debt GDP ratio, several EU countries manage to proceed with fiscal consolidation quickly and ... [more ▼]

As the recent chain of EU sovereign crises has demonstrated, after an unexpected massive rise to the debt GDP ratio, several EU countries manage to proceed with fiscal consolidation quickly and effectively, while other countries, notably Greece, proceed slowly, fueling Graccident and Grexit scenarios, even after generous rescue packages, involving debt haircuts and monitoring from official bodies. Here we recursively formulate a game among rent-seeking groups and propose that high debt-GDP ratios lead to predictable miscoordination among rent-seeking groups, unsustainable debt dynamics, and open the path to political accidents that foretell Graccident scenarios. Our analysis and application helps in under- standing the politico-economic sustainability of sovereign rescues, emphasizing the need for fiscal targets and possible debt haircuts. We provide a calibrated example that quantifies the threshold debt-GDP ratio at 137%, remarkably close to the target set for private sector involvement in the case of Greece. [less ▲]

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See detailStrategic Exploitation of a Common Property Resource under Rational Learning About its Reproduction
Koulovatianos, Christos UL

in Dynamic Games and Applications (2015), 5

We build a workable game of common-property resource extraction under rational Bayesian learning about the reproduction prospects of a resource. We focus on Markov-perfect strategies under truthful ... [more ▼]

We build a workable game of common-property resource extraction under rational Bayesian learning about the reproduction prospects of a resource. We focus on Markov-perfect strategies under truthful revelation of beliefs. For reasonable initial conditions, exogenously shifting the prior beliefs of one player toward more pessimism about the potential of natural resources to reproduce can create anti-conservation incentives. The single player whose beliefs have been shifted toward more pessimism exhibits higher exploitation rate than before. In response, all other players reduce their exploitation rates in order to conserve the resource. However, the overall conservation incentive is weak, making the aggregate exploitation rate higher than before the pessimistic shift in beliefs of that single player. Due to this weakness in strategic conservation responses, if the number of players is relatively small, then in cases with common priors, jointly shifting all players’ beliefs toward more pessimism exacerbates the commons problem. [less ▲]

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See detailCapital-value busts as a source of rational pessimistic policy swings
Koulovatianos, Christos UL; Mavridis, Dimitrios UL

Presentation (2014, November 14)

Detailed reference viewed: 224 (38 UL)
See detailFitting Parsimonious Household Portfolio models to Data
Hubar, Sylwia; Koulovatianos, Christos UL; Li, Jian UL

Presentation (2014, September 30)

Detailed reference viewed: 119 (14 UL)
See detailConfronting the Represetantive Consumer with Household-Size Heterogeneity
Koulovatianos, Christos UL; Schroeder, Carsten; Schmidt, Ulrich

Report (2014)

Detailed reference viewed: 53 (5 UL)
See detailFitting Parsimonious Household Portfolio models to Data (Keynote Speech)
Koulovatianos, Christos UL

Presentation (2014, June 20)

Detailed reference viewed: 45 (5 UL)