Be my guest: the effect of foreign policy visits to the USA on FDI

We examine whether a country leader’s diplomatic visit to the USA affects the Foreign Direct Investment inflow. The literature so far has found inconclusive results regarding diplomatic relations' effect on international flows. We use a dynamic Inverse Probability Weighting Regression Adjustment framework to examine this relationship and estimate the causal effect of foreign visits. Our results indicate that a visit to the US increases the country’s total FDI inflows by up to one percentage point per annum, with a cumulative effect reaching 2.5 percentage points six years after the visit. However, this is a short-run effect as it disappears in the subsequent years. Furthermore, our first-stage results shed light on the profile of the leaders that visit the US. Our findings are consistent with the view that foreign visits act as signals to investors regarding the country’s political risk

Do Democracies Have Higher Current Account Deficits?

In this paper we argue that democracies tend to run (larger)current account deficits than autocracies. Our argument is based on the different incentives faced by democratic and autocratic leaders. The main theoretical hypothesis are tested on a dataset that consists of 121 countries over the period 1980-2012, using five year averages and a fixed effects panel data model. The empirical findings suggest that autocracies run lower current account deficits than democracies. Special focus is given in the issue of endogeneity by estimating an IV Fixed Effects model, using as instruments of Democracy the share of Christian adherents in each country and also the level of democracy in neighboring countries. These results are found to be robust across alternative empirical specifications

The effect of international development assistance (IDA) on conflict. A fuzzy regression discontinuity approach

In this paper we try to explore the relationship between the World Bank’s international development assistance (IDA) and domestic conflict. As IDA is distributed only to countries that fall below an (ad hoc) income threshold, we employ a (fuzzy) regression discontinuity approach to estimate the causal effect of IDA on conflict. Our results suggest that IDA leads to a decrease in minor conflict events, such as anti-government demonstrations and riots and in an increase in major conflict events like assassinations of political leaders and revolutions. Moreover, IDA is associated with an increase in coup attempts and autocratic regime transitions. These results suggest that foreign aid may “win the hearts and minds of the population”, by increasing popular support for the government, and at the same time increase conflict over lootable aid rents

Serving two masters: The effect of state religion on fiscal capacity

In this paper, we examine the effect of having a state religion on fiscal capacity. Our analysis extends the legitimization argument, which postulates that state religion legitimizes the revenue-raising motives of the state. We estimate (i) a simple OLS model, and (ii) potential outcome models, to model the selection to observables, using both recent and historical data. Our empirical results suggest that countries with a state religion have lower levels of fiscal capacity. We then build a simple theoretical model, consistent with our empirical results, and show that countries with a state religion face lower incentives to invest in fiscal capacity as they are able to raise revenue through the legitimizing power of the church

Do Democracies Have Higher Current Account Deficits?

In this paper we argue that democracies tend to run (larger)current account deficits than autocracies. Our argument is based on the different incentives faced by democratic and autocratic leaders. The main theoretical hypothesis are tested on a dataset that consists of 121 countries over the period 1980-2012, using five year averages and a fixed effects panel data model. The empirical findings suggest that autocracies run lower current account deficits than democracies. Special focus is given in the issue of endogeneity by estimating an IV Fixed Effects model, using as instruments of Democracy the share of Christian adherents in each country and also the level of democracy in neighboring countries. These results are found to be robust across alternative empirical specifications

Θεσμοί, οικονομική πολιτική και κρατική ικανότητα

In the present PhD thesis, we examine the effect of institutions on economic outcomes as well as thedeterminants of institutions from a different perspective than the literature has so far examined. First,we empirically examine the relationship between the political regime type on the current accountbalance. Our findings suggest that countries with higher levels of democracy experience higher current account deficits. Then, we examine both theoretically and empirically the effect of an established state religion on the development of fiscal institutions. What we find is that the existence of an official state religion leads to a lower level of fiscal capacity. Last but not least, we examine the effect of foreign aid on domestic conflict events. Our empirical findings suggest that foreign aid leads to an increase in these events that aim to overthrow the political regime and to a decrease in these ones that aim to overthrow the government.Στην παρούσα διδακτορική διατριβή εξετάζεται η επίδραση των θεσμών στην οικονομία καθώς και οιπροσδιοριστικοί παράγοντες των θεσμών με μια διαφορετική σκοπιά από αυτήν που έχει παρουσιαστείμέχρι τώρα στη βιβλιογραφία. Αρχικά εξετάζεται εμπειρικά η σχέση μεταξύ πολιτικού καθεστώτος καιισοζυγίου τρεχουσών συναλλαγών. Φαίνεται ότι χώρες με υψηλότερο επίπεδο δημοκρατίαςαντιμετωπίζουν υψηλότερα ελλείμματα ισοζυγίου τρεχουσών συναλλαγών. Έπειτα, εξετάζεται τόσο σεθεωρητικό όσο και σε εμπειρικό επίπεδο η επίδραση της ύπαρξης επίσημα αναγνωρισμένης θρησκείαςστους δημοσιονομικούς θεσμούς. Αυτό που προκύπτει είναι ότι η ύπαρξη επίσημα αναγνωρισμένηςθρησκείας λειτουργεί σαν τροχοπέδη στην ανάπτυξη θεσμών. Τέλος, αναλύεται η επίδραση τηςεξωτερικής βοήθειας στις εγχώριες συγκρούσεις. Τα εμπειρικά αποτελέσματα δείχνουν ότι η εξωτερικήβοήθεια οδηγεί σε περισσότερες συγκρούσεις που αφορούν την κατάλυση του πολιτεύματος και σελιγότερες συγκρούσεις που στοχεύουν την κυβέρνηση