Dr. Sotiris Karkalakos

Lecturer in Economics

Biography

Sotiris Karkalakos obtained his BA in Economics at the University of Piraeus (Greece), and then undertook a MSc in Financial Economics at Florida Atlantic University (USA). He holds a PhD in Applied Economics from the University of Illinois at Urbana-Champaign (USA) and joined the School in September 2007.

Research Group: Centre for Economic Research

Research Interests: Urban and Regional Economics, Longitudinal Data Analysis and Microeconometrics

JEL Codes: C21; C22; C23; C40; H10: H25; O41; R01.

Collaborators: Christos Agiakloglou (Piraeus), George Deltas (Illinois), Christos Kotsogiannis (Exeter), Miltiadis Makris (Leicester).

Selected publications

Current working papers

Current Research

Outline: Knowledge spillovers, tax competitition and industrial agglomeration are the main topics of my currect research. The first topic refers to research and development (R&D) productivity and examines the degree of similarity of research activities by the originator and recipient of the knowledge. The second topic is related to the tax inefficiencies arising from strategic behavior at the federal and provincial levels and focus on the relationship of taxes amongst horizontally-related provinces, and between the taxes of those provinces and the taxes of the federal government. The last topic is in the context of a new economic geography; when capital is heterogeneous – degree of environmental sensitivity – trade liberalization may lead to industrial agglomeration and inter-regional trade.

Currently completed work: Three papers are completed. The first paper tests whether horizontal and verical externalities give rise to provincial taxes that are too—from a social point of view—low or high. Using a model of interdependent tax choices, and accounting for equalization entitlements and general transfers, this paper estimates—making use of a spatial econometric framework—corporate income tax-setting functions for all Canadian provincial governments. The results show that there is a statistically significant positive fiscal interaction amongst a subset of provinces and between all provinces and the federal government. Provincial corporate income taxes are also found to be negatively related to equalization entitlements, general federal transfers and the federal corporate income tax (published in Canadian Journal of Economics). The second paper investigates at what rate spillover effects diminish as the distance between the originator and recipient observation increases. It finds, using regional patent and R&D expenditure data from the European Union, that similarity between R&D activities is not only statistically significant, but salient: regions with completely dissimilar R&D activities exhibit essentially no spillovers at all. Unlike much of the extant literature, the rate of spatial decay of spillovers is estimated jointly with the remaining parameters of the model rather than through specification searches over a set of alternative weight matrices. Finally, the third paper dicusses the concept of environmental consciousness as an instrument of industrial agglomeration. The country which ends up with the polluting industry may suffer not only from reduced productivity in environmentally sensitive sectors, but also from terms of trade deterioration that is brought on by its own environmental degradation. The latter degradation motivates the environmental consciousness of both consumers and firms. In turn, firms maximize their profits should they adopt environmentally friendly inputs.

The next two to five years: Two main research projects are planned: 1) The impact of euro at the european corporate tax competition, and 2) The degree of spatial heterogeneity accross alternative industrial sectors.