Tag Archives: development

An Economic Model

Dr. John Psarouthakis
Executive Editor

This is the introduction of a paper of mine published in a related journal that I will post in the Business Thinker when that can be done. The title of this article is “An Economic Model of Government Expenditures and Economic Development” The journal is Economics and Finance Notes.

The economy is a complex system in which firms, households  and government interact to determine the process of wealth creation and,ultimately, the economic well-being of the nation. Economic theory has traditionally focused on the analysis of each subsystem (firms, households and government), however it has created a high controversy in the study of the complete system behavior, as well as the relevant role of the government in the macroeconomic context. Despite this controversy, firms and governments share certain objectives. Both are social organizations created to add value for stakeholders and voters through, at least, reducing transaction costs in the economy.

Poor performance of governments tend to generate negative externalities for the economy (or higher transaction costs) that are reflected in macroeconomic variables such as output, involuntary unemployment, slowdown of profitability and capital creation and/or utilization, and increase in inflation. In other words, the economic performance of the overall system depends significantly on the government involvement needed to reduce transaction costs given the characteristics of the economy.

Continue reading An Economic Model

Justice unfairly slow

Alexis Papachelas is a guest editorial writer to The Business Thinker. He is currently the Executive Editor of the long standing and highly respected daily Greek newspaper “Kathimerini”.

Despite the intense debate about Greece’s numerous structural problems, any focus on the judicial system has been pretty limited. Yet, one of the main reasons behind the crisis in our political system has to do with the fact that the country’s judiciary has not lived up to its full potential in probing major scandals and reinforcing the overall feeling of justice.

Some critics like to point a finger at the judges and their closed, near-autistic microcosm. However, the problem does not lie so much with the judges but with the means that they have at their disposal and with the country’s general culture when it comes to legal issues.

One fundamental issue concerns the outrageous foot-dragging in the administration of justice. When a case has been deferred for years, the citizen who is in the right inevitably grows frustrated, while the wrongdoer interprets the delay as a sign of impunity. While a number of practical steps would rectify the situation, it all boils down to political will and consultation with the judiciary. Continue reading Justice unfairly slow

The Making of The Greek Fiscal Crisis

Dr. Periklis Gogas is an invited contributor to The Business Thinker magazine. He is a faculty member at Democritus University of Thrace, Greece, teaching Macroeconomics, Banking and Finance

The public debate over Greek debt is in the headlines for months now ever since the first issues with regard to Greece’s fiscal problems were raised. Political and ideological confrontations on the subject are inevitable. Accusations over culpability are an everyday occurrence between members of the two major political parties PASOK and ND that ruled Greece by turns since democracy was restored in 1974. Academic economists in Greece follow these developments closely and they are often at the epicenter of heated discussions in the media with journalists and tax payers indirectly or directly accusing them for the current situation. People are wondering why all the economists that now stress the shortcomings of Greece’s fiscal policy remained silent or at least they did not criticize that strong the same policies in the past. The truth of course is that no politician ever asked them and no one ever listened to their warnings. Politicians were busy accusing each other for creating the debt. Thankfully, numbers can tell the truth impartially without subjective political judgments and deception: a simple graph like the one in Figure 1 depicts the truth. Continue reading The Making of The Greek Fiscal Crisis