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on European Economics |
| By: | Robert-Paul Berben; Teunis Brosens |
| Abstract: | Using data for 17 OECD countries from 1983 to 2003, this paper establishes a non-linear relationship between private consumption and the level of government debt. In countries with a high level of government debt, a fiscal expansion is partly crowded out by a fall in private consumption. In contrast, in low debt countries, private consumption is insensitive to changes in government debt. This means that fiscal policy will be less effective in stabilising business cycle fluctuations at higher levels of government debt. |
| Keywords: | consumption; government debt; panel data |
| JEL: | E21 E62 C23 |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:045&r=eec |
| By: | Hisham Foad |
| Abstract: | Has the formation of the European Monetary Union reduced the impact of national borders on cross-border market convergence? This paper extends Engel and Rogers (1996) well known work on border effects to cities across Western Europe over the period 1995 . 2002 and finds two key results. First, cross-border relative prices tend to be more volatile than prices between locations not separated by a border. This result is robust to a variety of potential explanations for border effects, such as uneven sampling bias, idiosyncratic price shocks, and incomplete exchange rate-pass through. Turning our attention to cross-border price volatility before and after the formation of the EMU, the effects vary by country size. Within the EMU, cross-border price volatility has not changed between the "small" countries, but has fallen significantly between the large EMU countries. Between the EMU and the UK, cross-border volatility has increased between the UK and the small EMU countries, but there has been no significant change between the UK and the large EMU countries. These results are consistent with the fact that exchange rates are more likely to adjust to price differentials between small countries than between large countries. |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:emo:wp2003:0515&r=eec |
| By: | Cheti Nicoletti (Institute for Social and Economic Research) |
| Abstract: | The age at motherhood has increased in most European Countries in the past decades. The main aim of this paper is to assess the impact of women's education and work experience on the timing of first birth across the European Union (EU). According to the literature - based on income maximisation framework (Gustafsson 2001, Hotz et al. 1997) - women with a higher degree of education and a shorter work experience are more likely to delay motherhood or to remain childless. However, recent micro-level studies have shown contradictory empirical evidence. For instance, higher educated women or career women seem to enter motherhood earlier in the Northern European Countries (Kravdal 1994, Hoem 2000, Andersson 2001). Conceivably, these ambiguous findings might reflect substantial cross-country differences that we would like to point out. Therefore, we conduct an analysis to explain how the probability to enter into motherhood differs across 10 European Union countries by using the European Community Household Panel survey (ECHP). On one side, the gap between countries may reflect differences in the observed characteristics of the national women populations, such as differences in the female labour participation and in the human capital investment. On the other side, the gap may be instead due to different fertility behaviours across countries. In the empirical application we try to disentangle between these two reasons. |
| Keywords: | cross-national research methods, europe, fertility |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2005-04&r=eec |
| By: | Bode, Sven; Hübl, Lothar; Schaffner, Joey; Twelemann, Sven |
| Abstract: | The EU Directive 2003/87/EC for the introduction of a European emission trading system has left the task of allocating the emission allowances mainly to the member states. In Germany the details of the allocation method are laid down in the Allocation Act (ZuG 2007). One central element of the Allocation Act is the so called transfer-rule, which is intended to provide incentives for the replacement of emission intensive installations and thus to achieve environmental benefits. This paper takes a closer look at the transfer-rule's ecological impacts and competitive effects in the field of electricity generation. The analysis suggests that the investment incentives provided by the transfer-rule are limited and uncertain, while at the same time the overall amount of emissions from participants of the trading scheme will not be reduced. Instead the transfer-rule causes windfall profits for incumbent generators and leads to a significant distortion of competition. This cannot be justified by environmental benefits, as has been done by the German government and the European Commission. |
| Keywords: | Emission Trading, Competition, Electricity |
| JEL: | L49 L94 Q28 Q48 |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:han:dpaper:dp-316&r=eec |
| By: | Guido Tabellini |
| Abstract: | Does culture have a causal effect on economic development? The data on European regions suggest that it does. Culture is measured by indicators of individual values and beliefs, such as trust and respect for others, and confidence in individual selfdetermination. To isolate the exogenous variation in culture, I rely on two historical variables used as instruments: the literacy rate at the end of the XIXth century, and the political institutions in place over the past several centuries. The political and social history of Europe provides a rich source of variation in these two variables at a regional level. The exogenous component of culture due to history is strongly correlated with current regional economic development, after controlling for contemporaneous education, urbanization rates around 1850 and national effects. Moreover, the data do not reject the over-identifying assumption that the two historical variables used as instruments only influence regional development through culture. The indicators of culture used in this paper are also strongly correlated with economic development and with available measures of institutions in a cross-country setting. |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:292&r=eec |
| By: | G. SARENS; I. DE BEELDE |
| Abstract: | In addition to a number of quantitative studies in this area, this study wants firstly to elaborate in a complementary qualitative way how internal auditors perceive their current role in risk management within the Belgian context where internal auditing is a relatively young profession. Secondly, we want to investigate whether, under the influence of recent changes in corporate governance regulations, a greater financial emphasis in internal auditors’ work can be noticed. Thirdly, we are interested in differences between Belgian companies and Belgian subsidiaries of US companies with relation to internal auditors’ role in risk management. In order to get adequate data, we interviewed 10 Chief Audit Executives and collected relevant documents. The data reveal that the specific content of internal auditors’ role in risk management is very time and country specific. For the Belgian companies, internal auditors’ focus on acute shortcomings in the risk management system creates opportunities to demonstrate their value in the short run. Internal auditors are playing a pioneering role in the creation of a higher level of risk and control awareness and a more formalised, standardised, transparent and documented risk management system. In the Belgian subsidiaries of US companies, internal auditors’ objective evaluations and opinions are a valuable input for the new internal control review and disclosure requirements mentioned in the Sarbanes Oxley Act. Moreover, an enhanced attention for financial controls and the quality of financial reporting was noticed within these companies. |
| Keywords: | internal auditors, risk assessment, risk management, risk and internal control communication, Sarbanes Oxley Act, interviews |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:05/304&r=eec |
| By: | B. MERLEVEDE; K. SCHOORS |
| Abstract: | In a partial adjustment framework the observed FDI stock is the result of two driving forces. First, the stock converges towards its equilibrium level, even without policy changes. Second, the equilibrium level itself is driven by changes in its determinants. By means of a dynamic panel data analysis we examine the determinants of investment by ‘old’ EU-members in ten countries of Central and Eastern Europe. We find a rapid adjustment towards equilibrium. Traditional variables, such as market potential, trade integration, and relative unit labour costs, are fairly stable as determinants of equilibrium FDI stocks in transition economies. Institutional development in all its forms is a robust determinant of the optimal level of FDI. The relationship between FDI and the privatization process is complex. Non-direct privatization schemes negatively affect the speed of adjustment towards the equilibrium, whereas current direct privatization strategies positively affect the equilibrium level of FDI. Privatization history increases equilibrium FDI, independently of the method applied. |
| Keywords: | foreign direct investment, privatisation, partial adjustment |
| JEL: | F20 F23 P33 |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:05/309&r=eec |
| By: | José M. Labeaga; Xisco Oliver; Amedeo Spadaro |
| Abstract: | In this paper, we demonstrate the potential of behavioural microsimulation models as powerful tools for the ex ante evaluation of public policies. The subject of our analysis is the impact of recent Spanish Income Tax reforms on efficiency and household and social welfare. We also analyze the likely effects of some basic income - flat tax and vital minimum - flat tax schemes. The analysis is carried out using a microsimulation model in which labour supply is explicitly taken into account. Instead of following the traditional continuous approach (Hausman 1981, 1985a, and 1985b), we estimate the direct utility function using the methodology proposed by Van Soest (1995). Our data come from a sample of Spanish individuals in the 1995 wave of the EC Household Panel. We show that in the Spanish case, the redistribution policies considered have only little impact on the efficiency of the economy. On the contrary, they strongly affect social welfare. |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:pse:psecon:2005-13&r=eec |
| By: | Claudia Senik |
| Abstract: | This paper asks how income distribution affects individual well-being and tries to explore the idea that this relation depends on the degree of mobility and uncertainty in the economy. It mostly concentrates on the relation between satisfaction and reference income (defined as the income of one's professional peers), and hinges on the micro-econometric analysis of household survey data (mostly panel), including subjective attitudinal questions. Using over one million observations, it uncovers a divide, in the perception of income inequality, between "old" -low mobility- European countries on the one hand, and "new" European post-Transition countries and the United States, on the other hand. Whereas "jealousy" is dominant in the former, "ambition" is even stronger in the latter. |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:pse:psecon:2005-14&r=eec |