Dr Anastasios Karantounias
Academic and research departments
School of Economics, Centre for International Macroeconomic Studies.About
Biography
Anastasios Karantounias is an Associate Professor in the School of Economics at the University of Surrey. His major field of study is macroeconomics with a particular emphasis on optimal fiscal and monetary policy, macro-finance, ambiguity, imperfect information and climate change economics.
Prior to joining the School, Dr. Karantounias worked as a research economist in the Research Department of the Federal Reserve Bank of Atlanta. Before that, he was a research and teaching assistant at New York University. He also worked as a research intern at the Research and Statistics Division of the Federal Reserve's Board of Governors and the Monetary Policy Strategy Division of the European Central Bank.
Dr. Karantounias has published in journals including the Review of Economic Studies, American Economic Journal: Macroeconomics, Journal of Economic Theory, Theoretical Economics and has continuously presented his research at several conferences, including the meetings of the Society for Economic Dynamics, the American Economic Association, the Econometric Society, and the European Economic Association. He has taught at Emory University and he has been a visiting professor at LUISS Guido Carli and a visiting scholar at Northwestern University and at the Einaudi Institute for Economics and Finance.
Dr. Karantounias organizes the Surrey Workshop on Macroeconomics, an academic workshop that brings together leading researchers across the world that conduct frontier work on the broader field of macroeconomics.
Dr. Karantounias received his doctorate in economics in 2008 from New York University and a master's degree in economics in 2004 from the same institution. He received his bachelor's degree in economics in 2001 from the Athens University of Economics and Business in Athens, Greece.
Areas of specialism
Teaching
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Publications
This paper studies the design of optimal fiscal policy when a government that fully trusts the probability model of government expenditures faces a fearful public that forms pessimistic expectations. We identify two forces that shape our results. On the one hand, the government has an incentive to concentrate tax distortions on events that it considers unlikely relative to the pessimistic public. On the other hand, the endogeneity of the public's expectations gives rise to a novel motive for expectation management that aims toward the manipulation of equilibrium prices of government debt in a favorable way. These motives typically act in opposite directions and induce persistence to the optimal allocation and the tax rate.
This paper analyzes optimal policy in setups where both the policymaker and the private sector have doubts about the probability model of uncertainty and form endogenous worst-case beliefs. There are two forces that shape optimal policy results: a) the manipulation of the endogenous beliefs of the private sector so that the forward-looking constraints that the policymaker is facing are relaxed, b) the discrepancy (if any) in pessimistic beliefs between a paternalistic policymaker and the private sector, which captures ultimately differences in welfare evaluation. I illustrate the methodology in an optimal fiscal policy problem and show that manipulation of beliefs materializes as an effort to make government debt cheaper through the endogenous beliefs of the household. This force may lead to either mitigation or amplification of the household's pessimism, depending on the problem's parameters. The policymaker's relative pessimism determines whether paternalism reinforces or opposes the price manipulation incentives.