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on European Economics |
| By: | Libero Monteforte (Bank of Italy, Economic Research Department) |
| Abstract: | The euro area represents a case-study of great institutional relevance for the econometric problem of aggregation bias. The available data can be used to analyze the area either with aggregate or with country-specific models. The choice should be the result of a statistical comparison between the two options, with respect to the specific model. In this paper we suggest a representation of the aggregation error based on unobservable components and explicitly conceived for aggregations over a small number of economies. In the empirical application two alternative models are estimated: the first specifies the main euro countries while the other refers to the whole area. We then evaluate the aggregation error either from the viewpoint of a comparison of the two models with standard methods, or looking at the components of the representation suggested here. Both categories of results indicate non-negligible aggregation errors for the euro area. |
| Keywords: | aggregation bias, euro-area modeling |
| JEL: | C52 F47 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_534_04&r=eec |
| By: | Lorenzo Forni (Bank of Italy); Sandro Momigliano (Bank of Italy) |
| Abstract: | This paper examines the information-related problems associated with the analysis of fiscal policies, an issue recently analyzed in connection with monetary policies but largely ignored in the literature on budgetary actions. The results indicate that reliance on the information actually available to policy-makers in real-time is important for the assessment of past policies. We show that estimating fiscal policy rules based on ex post revised data tends to provide a misleading assessment of the sensitivity of discretionary policies to cyclical conditions. The results also suggest that part of the problems the Stability and Growth Pact encountered may have come from a misjudgment of cyclical conditions in some European countries in recent years. |
| Keywords: | Real-time information, OECD countries, stabilization policies, fiscal policy rules |
| JEL: | E61 E62 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_540_04&r=eec |
| By: | Levent, Tuzin Baycan (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics); Vreeker, Ron; Nijkamp, Peter |
| Abstract: | Urban green spaces play an important role in improving quality of life and sustainability in cities and require a careful empirical assessment. Several factors such as social, economic, ecological or planning aspects, and several functions such as utilization, production, employment, education, regulation and preservation of urban green spaces form the basis for the determination of the criteria and indicators relevant for the assessment of urban green spaces. This multi-faceted ramification of urban green spaces needs therefore, a multidimensional evaluation approach in an urban policy context. The aim of this paper is to investigate the complex and heterogeneous structure of urban green spaces from a multi-faceted assessment perspective. The paper examines urban green spaces from the viewpoint of quantity and availability of urban green spaces, changes in green spaces, planning of urban green spaces, financing of urban green spaces and level of performance, on the basis of a comparison of 24 European cities by deploying a multi-criteria analysis for mixed quantitative and qualitative information, coined Regime Analysis. It aims to highlight the present situation and priorities in decision-making and to compare the green performance of European cities in the process of urban green planning and management. A comparison of urban green spaces in European cities by means of multi-criteria analysis brings to light the critical elements in the present situation and sets out choice directions based on priorities in decision-making and policy evaluation. This evaluation of several experiences in different regions and countries provides a fascinating European picture in terms of urban green planning and management. |
| Keywords: | urban green spaces; cities; Europe |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:vuarem:2004-17&r=eec |
| By: | Andrea Bassanini (OECD and University of Evry); Alison Booth (Australian National University, University of Essex and IZA Bonn); Giorgio Brunello (University of Padova, CESifo and IZA Bonn); Maria De Paola (University of Calabria); Edwin Leuven (University of Amsterdam and CREST) |
| Abstract: | This paper reviews the existing evidence on workplace training in Europe in different data sources - the CVTS, OECD data and the European Community Household Panel. We outline the differences in training incidence and relate these differences to the private costs and benefits of training, and to institutional factors such as unions, employment protection and product market competition. We ask whether there is a case for under-provision of training in Europe and examine alternative policies aiming both at raising training incidence and at reducing inequalities in the provision of skills. |
| Keywords: | training, Europe, training policies |
| JEL: | J24 |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1640&r=eec |
| By: | Federico Ravenna (Economics Department, University of California) |
| Abstract: | We show that the credibility gain from permanently committing to a fixed exchange rate by joining the European Monetary Union can outweigh the loss from giving up independent monetary policy if the domestic monetary authority does not enjoy full credibility. Using a DSGE model, this paper shows that when the central bank enjoys only limited credibility a pegged exchange rate regime yields a lower loss compared to an inflation targeting policy, even if this policy ranking would be reversed in a full-credibility environment. There exists an initial stock of credibility that must be achieved for a policy-maker to adopt inflation targeting over a strict exchange rate targeting regime. Full credibility is not a precondition, but exposure to foreign and financial shocks and high steady state inflation make joining the EMU relatively more attractive for a given level of credibility. The theoretical results are consistent with empirical evidence we provide on the relationship between credibility and monetary regimes using a Bank of England survey of 81 central banks. |
| Keywords: | Inflation targeting, Credibilty, Open Economy, Exchange Rate Regimes, Monetary Policy |
| JEL: | E52 E31 F02 F41 |
| Date: | 2005–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:onb:oenbwp:98&r=eec |
| By: | Leonor Vasconcelos Ferreira (Faculdade de Economia, Universidade do Porto and CEMAPRE/ISEG-UTL); Adelaide Figueiredo (Faculdade de Economia, Universidade do Porto and LIACC/UP) |
| Abstract: | The basic aim of this paper is to assess existing welfare regimes in the countries of European Union before and after the enlargement of May 2004 (EU 15 and EU 25) building on a comprehensive approach that considers different dimensions of welfare through an extended set of variables. The paper starts with a brief presentation of current debates on welfare regimes and the new social policy agenda in the European Union. It proceeds with the selection of different dimensions of social welfare and social policy and related key variables that make up the database for the following multivariate statistical analysis, used in order to produce a clustering of welfare regimes. The paper concludes with a tentative interpretation of the underlying characteristics and patterns of current welfare mix and social policies in European Union. |
| Keywords: | Welfare Regimes; Social Policy; European Union; Enlargement; Cluster Analysis |
| JEL: | D63 I31 I38 P52 |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:176&r=eec |
| By: | Supreena Narayanan (Stockholm School Of Economics) |
| Abstract: | Europeanisation has emerged as a significant world order because of the magnitude of changes it has brought about in terms of the construction, diffusion of formal as well as informal rules and regulations pertaining to politics, economy, technology and international relations within the European Union. The benefits of Europeanisation as consolidated and enforced by the formation of the European Union are numerous inclusive of: • Unification of a vast majority of constituent European economies territorially, politically and economically. • Stronger, simplified and more effective political control of a vast majority of European countries • A more wholesome sense of Corporate and Social Responsibility for a larger area in terms of corporate governance, environmental protection measures and pollution control. • Creation of stable democratic countries on behalf of the individual European Countries, an essential pre-requisite for individual countries becoming part of the European. • An efficient and streamlined decision making for a fair and prosperous European Union. This paper analyses Europeanisation concerning its integration with EU politics and internal politics of EU countries, its relationship with firms as well as its interplay with Globalisation. European states - members and non-members of the EU - remain challenged by the important and still unsolved question about how future policies of the EU should be considered vis a vis globalisation. While Europeanisation will further strengthen globalisation pressures it also permits the EU exhibiting great potential to emerge as a well-networked and strong system of regional governance. |
| JEL: | P Q Z |
| Date: | 2005–06–20 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpot:0506010&r=eec |
| By: | Albert Ando; Sergio Nicoletti-Altimari (European Central Bank) |
| Abstract: | The relationship between the demographic structure and the saving rate of a society is the reflection of the aggregation of the behaviour of heterogeneous households, differing from one another in the type of living arrangements and in the characteristics of their members. In order to contribute to the understanding of this relationship, we construct a dynamic micro model capable of simulating the demographic development of a population, including the creation, destruction, dimension and various other important characteristics of households and their members. The demographic model is then combined with a specification of the processes generating income, social security wealth, retirement and consumption behaviour of households, and applied to a data set derived from survey data on the Italian household sector. Simulations of the model are used to study the evolution of aggregate income, saving and asset accumulation over the period 1994-2100. If fertility and mortality assumptions of recent official projections are adopted and marriage and divorce rates maintained at current levels, the dramatic ageing of the population and the marked decline in the share of population living in traditional households would lead, other things being equal, to a substantial decline in the aggregate saving rate. However, the reduction in the number of children per household and, above all, the decline in the ratio of social security wealth of households to disposable income as the effects of the recently introduced reforms begin to be felt act as offsetting factors. As a result, the aggregate saving rate increases over the initial 30 years of the simulation and moderately decreases thereafter, stabilizing slightly above the original level. Implications of changes in a number of key assumptions regarding the demographic evolution, productivity growth and individual behavioural responses are also analyzed. |
| Keywords: | demographic developments, family structure, consumption, saving, social security, micro simulation model |
| JEL: | D12 D31 D91 E21 H55 J10 J26 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_533_04&r=eec |
| By: | Franco Peracchi (Tor Vergata University); Eliana Viviano (Bank of Italy) |
| Abstract: | A large literature investigates the role of frictions in explaining labour market dynamics. Their presence is often summarized by an aggregate matching function relating the number of job matches to total unemployment and total vacancies. Most empirical specifications, however, are only reduced forms with no micro-foundation. Further, for many countries, empirical research on the matching function cannot be carried out because data on vacancies are simply not available. This paper looks at a job match as a transition from non-employment to employment. This transition is decomposed into two parts, one determined by the matching technology and one by individual search intensity. We show how the micro-founded model of Pissarides (1979) can be identified using only microdata on labour market transitions. This enables us to obtain a measure of market tightness even without information on the demand side of the market. The method is then applied to estimating the Italian and Spanish matching functions using data from the quarterly labour force surveys. |
| Keywords: | Matching function, market tightness, labour market transitions, search intensity |
| JEL: | J60 J63 J64 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_538_04&r=eec |
| By: | Charlotta Groth |
| Abstract: | This paper estimates UK capital adjustment costs, using a data set for 34 industries spanning the whole UK economy for the period 1970-2000. The results show that it is costly to install new capital, and that it has been more costly to adjust the level of non-ICT capital (plant, machinery, buildings and vehicles) compared to the level of ICT capital (computers, software and telecommunications). The results are applied to an analysis of total factor productivity (TFP) growth. That analysis is focused on the 1990s - a period when the growth rate of the standard measure of TFP fell in the United Kingdom, while rising sharply in the United States. The estimates suggest that capital adjustment costs accounted for around two thirds of the observed slowdown in UK TFP growth. However, the adjustment is not large enough to reverse the finding that UK TFP growth declines in the second half of the 1990s, unlike the US experience of rising TFP growth. |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:258&r=eec |
| By: | Nicholas Oulton; Sylaja Srinivasan |
| Abstract: | This paper uses a new industry-level dataset to quantify the roles of structural change and information and communication technology (ICT) in explaining productivity growth in the United Kingdom, 1970-2000. The dataset is for 34 industries covering the whole economy, of which 31 industries are in the market sector. Using growth accounting, we find that ICT capital accounted for 13% of productivity growth in the market sector in 1970-79 (ie 0.47 percentage points out of 3.62% per annum growth of GDP per hour), 26% in 1979-90, and 28% in 1990-2000. In 1995-2000 the proportion rises to 47%. ICT capital, despite only being a small fraction of the total capital stock, contributed as much to growth as non-ICT capital in 1990-2000 and getting on for twice as much in 1995-2000. Econometric evidence also supports an important role for ICT. Total factor productivity (TFP) growth slowed down in 1995-2000, but we find econometric evidence that a boom in 'complementary investment', ie expenditure on reorganisation that accompanies ICT investment but is not officially measured as investment, could have led to a decline in the conventional measure of TFP growth. |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:259&r=eec |
| By: | Ana Del-Ro; Garry Young |
| Abstract: | Household indebtedness has risen sharply in recent years, with large increases in both secured and unsecured borrowing. In this paper, waves 5 and 10 of the British Household Panel Survey (BHPS) for 1995 and 2000 are used to examine the determinants of participation in the unsecured debt market and the amount borrowed. Probit models for participation are estimated and age, income, positive financial prospects and housing tenure are found to be very significant and have the expected sign according to a life-cycle model for consumption. Regressions to explain the level of borrowing by individuals suggest that income is the main variable explaining crosssectional differences in unsecured debts. The increase in aggregate unsecured debt between 1995 and 2000 does not seem to be closely linked to changes in the determinants of debt market participation and has been mainly associated with the larger amounts borrowed by those with debts. Increases in income, better educational qualifications and improved prospects regarding the financial situation contributed to this result. The major part of the overall increase in unsecured debt is not explained by variables at the individual level, but is accounted for by common, unmodelled macroeconomic factors. |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:263&r=eec |
| By: | Fred Ramb; Alfons J. Weichenrieder |
| Abstract: | The paper analyses the financial structure of German inward FDI. From a tax perspective, intra-company loans granted by the parent should be all the more strongly preferred over equity the lower the tax rate of the parent and the higher the tax rate of the German affiliate. From our study of a panel of more than 8,000 non-financial affiliates in Germany, we find only small effects of the tax rate of the foreign parent. However, our empirical results show that subsidiaries that on average are profitable react more strongly to changes in the German corporate tax rate than this is the case for less profitable firms. This gives support to the frequent concern that high German taxes are partly responsible for the high levels of intra-company loans. Taxation, however, does not fully explain the high levels of intra-company borrowing. Roughly 60% of the cross-border intra-company loans turn out to be held by firms that are running losses. |
| Keywords: | foreign direct investment, financial structure, taxation |
| JEL: | F23 H25 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1252&r=eec |
| By: | Marius Brülhart; Pamina Koenig |
| Abstract: | We analyze the internal spatial wage and employment structures of the Czech Republic, Hungary, Poland, Slovenia and Slovakia, using regional data for 1996-2000. A new economic geography model predicts wage gradients and specialization patterns that are smoothly related to regions' relative market access. As an alternative, we formulate a "Comecon hypothesis", according to which wages and sectoral location are not systematically related to market access except for discrete concentrations in capital regions. Our estimations confirm the ongoing relevance of the Comecon hypothesis: compared to pre-2004 EU members, Central European countries' average wages and service employment were still discretely higher in capital regions. Our results point towards an increase in relative wages and employment shares of Central Europe's provincial regions, favoring particularly those that are proximate to the large markets of incumbent EU members. |
| Keywords: | regional wages; industry location; transition economies; Central Europe; new economic geography |
| JEL: | P25 R12 |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:lau:crdeep:05.01&r=eec |
| By: | Stefania P.S. Rossi (Economics at the Faculty of Economics, University of Cagliari); Markus Schwaiger (Oesterreichische Nationalbank, Financial Markets Analysis and Surveillance Division); Gerhard Winkler (Oesterreichische Nationalbank, Credit Division) |
| Abstract: | This paper analyzes cost and profit efficiency level and the managerial behavior of banks in nine Central and Eastern European countries (the Czech Republic, Estonia, Hungary, Latvia, Lithuania Poland, Romania, Slovakia and Slovenia), providing cross-country and time series evidence on the period 1995-2002. A stochastic frontier analysis based on a Fourier flexible form indicates a generally low level of cost efficiency and an even lower level of profit efficiency. However, we also find significant differences among countries and some evidence of an increasing tendency over time in profit efficiency and, to an even stronger extent, in cost efficiency. Cost and profit efficiency scores are negatively correlated both on a country wide as well as on a bank by bank basis. Furthermore, instead of just looking at the determinants of cost and profit efficiency (e.g. asset quality, problem loans and risk), we test several hypotheses of managerial behavior using the Granger causality approach based on the intertemporal relation between bank efficiency, capitalization and problem loans, as proposed by Berger and DeYoung (1997). Even though a static analysis shows a negative correlation between problem loan and efficiency, we find no evidence of bad management hypothesis. Results provide evidence for the bad luck hypothesis suggesting the exogeneity of bad loans triggering inefficiency. |
| Keywords: | Cost and profit efficiency; CEECs; Stochastic frontier analysis; Managerial behavior |
| JEL: | G21 G28 C14 D21 |
| Date: | 2005–03–04 |
| URL: | http://d.repec.org/n?u=RePEc:onb:oenbwp:96&r=eec |
| By: | Tobias Schmidt (ZEW Mannheim) |
| Abstract: | This paper analyzes the determinants of R&D co-operation among German manufacturing firms. Using firm level data from the Third Community Innovation Survey from Germany, we focus on the role of spillovers in explaining R&D cooperation. We also investigate firms’ decisions to cooperate with research institutions or with suppliers and customers. Implementing a two-step estimation procedure, we find a significant effect of knowledge flows on the probability of R&D co-operation in most model specifications. Additionally, we show that firms with high intramural R&D budgets are more likely to cooperate with universities and research institutions than with suppliers and customers. |
| Keywords: | Spillovers, R&D Co-operation, CIS 3 |
| JEL: | O P |
| Date: | 2005–06–22 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpdc:0506006&r=eec |