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on European Economics |
| By: | Roy Thurik; Isabel Grilo |
| Abstract: | This paper uses 2004 survey data from the 15 old EU member states and the US to explain country differences in latent and actual entrepreneurship. Other than demographic variables such as gender, age and education, the set of covariates includes the perception by respondents of administrative complexities, of availability of financial support and of risk tolerance as well as country-specific effects. A comparison is made with results using a similar survey in 2000. While a majority of the surveyed population identifies lack of financial support as an obstacle to starting a new business, the role of this variable in both latent and actual entrepreneurship appears to be even more counterintuitive in 2004 than in 2000: it has no impact on actual entrepreneurship and is positively related to latent entrepreneurship. Administrative complexities, also perceived as an obstacle by a large majority of the population, have the expected negative impact both for latent and actual entrepreneurship in both years. Country-specific effects are important both for latent and actual entrepreneurship and the comparison of 2000 and 2004 results suggests that, once all other factors are controlled for, an improvement in actual entrepreneurship in the EU relative to the US has taken place in the last four years. However, in terms of unweighted averages actual entrepreneurship remained about the same. Latent entrepreneurship dropped while this drop seems to have occurred evenly in the US and the EU member states. |
| Keywords: | entrepreneurship; latent entrepreneurship; nascent entrepreneurship; determinants; Europe |
| JEL: | M13 H10 J23 R12 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:esi:egpdis:2005-24&r=eec |
| By: | Jerome Creel (Observatoire Français des Conjonctures Économiques); Eloi Laurent (Observatoire Français des Conjonctures Économiques); Jacques Le Cacheux (Observatoire Français des Conjonctures Économiques) |
| Abstract: | In this paper, we develop an analysis of the reasons for the apparent failure of the “Lisbon strategy” (2000) so far. After having made the general case for a comprehensive “institutionalist perspective” on the European economy, we first try to formalise the objectives of “Lisbon” in order to present a mid-term review of the results attained. Since we find, like many others, that too little has been achieved, we then offer some possible explanations. Apart from an inconsistency problem between the different objectives set, we argue that the major reason for this failure appears to lie in the contradiction between the EU macroeconomic policy framework, based on the logic of delegation of power and control to independent authorities with conservative objectives, and the proactive policies required by the “Lisbon strategy”, which objectives the EU member states eventually find themselves accountable for (not) achieving individually. |
| Keywords: | European Union, “Lisbon strategy”, Institutions, Delegation, Inconsistency, Macroeconomic policy, Structural Reform |
| JEL: | N14 O11 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:0507&r=eec |
| By: | Filippo Altissimo; Pierpaolo Benigno; Diego Rodriguez Palenzuela |
| Abstract: | This paper analyzes the long-run determinants of inflation differentials in a monetary union. First, we aim at establishing some stylized facts relating the regional dispersion in headline inflation rates in the euro area as well as in the main components of the consumer price index. We find that a relatively large proportion of it occurs in the Service category of the EU's harmonized consumer price index (HICP). We then lay out a model of a monetary union with fully flexible prices, the long-run properties of which are analyzed. Our model departs in several respect from the Balassa-Samuelson hypotheses. Our results are in contrast with the result that movements in the real exchange rate are mainly driven by regionally asymmetric productivity shocks in the traded sectors. Our results point instead to relative variations in productivity in the non-traded sector as the primary cause of price and inflation differentials, with shocks to productivity in the traded sector being largely absorbed by movements in the terms of trade in the regional economies. These shocks are also found to largely drive the variability of real wages at the country level. |
| JEL: | E31 F41 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11473&r=eec |
| By: | Joreg Bibow (The Levy Economics Institute) |
| Abstract: | Challenging the conventional wisdom that structural problems are to blame for the euro area’s protracted domestic demand stagnation, this paper sets out to shed some fresh light on the role of the ECB in the ongoing EMU crisis. Contrary to the widely held interpretation of the ECB as an inflation targeter—and a rather soft one, too—it is argued that the key characteristic of the ECB is the pronounced asymmetry in its policy approach and mindset. Curiously, this asymmetry has not only given rise to an antigrowth bias, but to upward price pressures and distortions as well. There is a link between stagnation and inflation persistence that owes to the ECB’s failure to internalize the euro area’s fiscal regime. This raises the question as to whether inflation targeting would have led to better results, or could do so in future. |
| Keywords: | Monetary policy, European Central Bank, inflation targeting, inflation persistence, tax-push inflation, antigrowth bias. |
| JEL: | E31 E42 E58 E61 |
| Date: | 2005–07–15 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpma:0507017&r=eec |
| By: | Torben G. Andersen (Department of Finance, Northwestern University and NBER); Tim Bollerslev (Departments of Economics and Finance, Duke University and NBER); Francis X. Diebold (Departments of Economics, Finance and Statistics, University of Pennsylvania and NBER); Clara Vega (Department of Economics, University of Rochester) |
| Abstract: | We characterize the response of U.S., German and British stock, bond and foreign exchange markets to real-time U.S. macroeconomic news. Our analysis is based on a unique data set of high-frequency futures returns for each of the markets. We find that news surprises produce conditional mean jumps; hence high-frequency stock, bond and exchange rate dynamics are linked to fundamentals. The details of the linkages are particularly intriguing as regards equity markets. We show that equity markets react differently to the same news depending on the state of the economy, with bad news having a positive impact during expansions and the traditionally-expected negative impact during recessions. We rationalize this by temporal variation in the competing “cash flow” and “discount rate” effects for equity valuation. This finding helps explain the time-varying correlation between stock and bond returns, and the relatively small equity market news effect when averaged across expansions and recessions. Lastly, relying on the pronounced heteroskedasticity in the high-frequency data, we document important contemporaneous linkages across all markets and countries over-and-above the direct news announcement effects. |
| Keywords: | Asset Pricing; Macroeconomic News Announcements; Financial Market Linkages; Market Microstructure; High-Frequency Data; Survey Data; Asset Return Volatility; Forecasting. |
| JEL: | F3 F4 G1 C5 |
| Date: | 2004–01–19 |
| URL: | http://d.repec.org/n?u=RePEc:cfs:cfswop:wp200419&r=eec |
| By: | Lenno Uusküla (Bank of Estonia); Peeter Luikmel (Bank of Estonia); Jana Kask |
| Abstract: | High credit growth in Central and Eastern European countries (CEEC) over recent years has sparked interest among many market analysts. Although banking supervision has improved, the continuation of such growth may cause concern about the threat of financial crisis. This paper is written with the aim of analysing the importance of debt factors as a potential cause of financial crises. First, a comparison is conducted of various debt indicators from episodes of crisis in banking across European countries since the 1970s. Second, a probit analysis is used to measure the probability of a crisis. Based on this analysis, it can be claimed that any direct link between debt indicators and financial crises is weak. However, there is some evidence that once the crisis occurs, greater indebtedness lengthens the crisis and raises costs in terms of GDP. |
| Keywords: | financial crisis, indebtedness indicators |
| JEL: | C23 E44 F34 G20 |
| URL: | http://d.repec.org/n?u=RePEc:eea:boewps:wp2005-03&r=eec |
| By: | Janek Uiboupin |
| Abstract: | This paper analyses the short-term impact of foreign bank entry on bank performance in ten Central and Eastern European countries. A panel of 319 banks was analysed over the period 1995–2001. The Arellano-Bond dynamic panel estimation technique was used. The results indicate that foreign bank entry is associated with lower beforetax profits, non-interest income, interest income on interest earning assets and loan loss provisions. Foreign bank entry tends to increase the overhead costs of local banks in the short-run. The results generally indicate that foreign bank entry enhances competition on the market. The role the development of the banking sector plays in regard to the effects of foreign bank entry was analysed. Research results show that in more developed banking markets, foreign bank entry is associated less with decreasing incomes and loan loss provisions than in less developed banking markets. In more developed markets, the overhead costs of banks are less likely to increase. The results show that banks with a higher market share react less to foreign banks entering the market. |
| Keywords: | foreign bank entry, financial development, domestic banking |
| JEL: | E44 G21 |
| URL: | http://d.repec.org/n?u=RePEc:eea:boewps:wp2005-04&r=eec |
| By: | René Fahr (University of Cologne and IZA Bonn); Uwe Sunde (IZA Bonn) |
| Abstract: | This paper investigates the efficiency of the matching process between job seekers and vacancy posting firms in West-Germany, using variation across labor market regions and across time. The results of a stochastic frontier analysis shed new light on extent and regional differences of search frictions, on potential determinants of frictional inefficiencies and on the consequences of German reunification for the matching process. The paper also presents novel evidence on the complex interactions between spatial contingencies among regional labor markets: matching efficiency decreases with spatial autocorrelation in hiring, implying indirect evidence for crowding externalities. |
| Keywords: | regional unemployment, stochastic frontier, matching function, spatial autocorrelation |
| JEL: | J61 J64 J21 R12 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1660&r=eec |
| By: | John W. Budd (University of Minnesota); Karen Mumford (University of York and IZA Bonn) |
| Abstract: | Using linked data for British workplaces and employees we find a low base rate of workplacelevel availability for five family-friendly work practices - parental leave, paid leave, job sharing, subsidized child care, and working at home - and a substantially lower rate of individual-level perceived accessibility. Our results demonstrate that statistics on workplace availability drastically overstate the extent to which employees perceive that family-friendly are accessible to them personally. British workplaces appear to be responding slowly and perhaps disingenuously to pressures to enhance family-friendly work practices. |
| Keywords: | family friendly, perceived, access, availability |
| JEL: | J13 J32 J70 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1662&r=eec |
| By: | José António Cabral Vieira (University of the Azores and IZA Bonn); João Pedro Almeida Couto (University of the Azores); Maria Teresa Borges Tiago (University of the Azores) |
| Abstract: | This paper examines the size o inter-regional wage dispersion in Portugal. For this purpose, we estimate a Mincer-type human capital wage equation, including controls for a large number of regions, and calculate a weighted and adjusted standard deviation (WASD) of inter-regional wage differentials. The value is high and quite stable over time. The highest wages are found in the region of Lisbon. Moreover, the results are quite sensitive to inclusion of human capital and industry controls. A decomposition analysis reveals that differences average years of education and in the return to education across regions account for a significant fraction of observed wage differentials. |
| Keywords: | regions, wages, human capital, Portugal |
| JEL: | J31 R10 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1664&r=eec |
| By: | Jože P. Damijan; Andreja Jaklic; Matija Rojec |
| Abstract: | The paper analyses whether, and to what extent, firm’s ability to innovate is induced by firm’s own R&D activity and to what extent by factors external to firm. It first estimates the impact of firms' internal R&D capital and external R&D spillovers on firms' innovation activity within an integrated dynamic model. In the second step, we then estimate the impact of firms'innovations on firms’ productivity growth. Using the firm level data on innovation activity combined with firms' financial data for a large sample of Slovenian firms in the period 1996-2002, the paper produces three main findings. First, firm’s own R&D expenditures as well as external knowledge spillovers, such as national and international public R&D subsidies, foreign ownership and intra-sector innovation spillovers do enhance firm’s ability to innovate. Second, innovations as a result of firm’s R&D do contribute substantially to firm’s total factor productivity growth. And third, foreign ownership has a double impact on firm’s TFP growth - it first enhances firm’s ability to innovate and then it additionally contributes to firm’s TFP growth via superior organization techniques and other channels of knowledge diffusion. |
| Keywords: | innovation, external knowledge spillovers, FDI, Slovenia |
| JEL: | D24 F14 F21 |
| URL: | http://d.repec.org/n?u=RePEc:lic:licosd:15605&r=eec |
| By: | Etleva Germenji; Johan Swinnen |
| Abstract: | The most dramatic recent immigration in Europe is the influx of more than 700,000 Albanians, about a quarter of the total Albanian workforce, in the 1990s. The vast majority migrated illegally. This paper analyses the determinants of Albanian migration based on a unique representative survey of rural households. The study confirms that migrants are mostly young, male, and single. Regional variations in migration reflect a combination of cultural and economic factors, including migration costs. However, we find that migrants do not come from the poorest rural households. Moreover, education has a positive, albeit non-linear, effect on the likelihood of migration. Migration is negatively related with household access to alternative income sources and reduced financial constraints but positively related with the presence and household’s access to migration networks. Policy implications are that aid programs and government initiatives to invest in rural infrastructure and rural education may have mixed effects on migration. A key policy target to reduce migration should be the creation of non-farm rural employment and rural households’ access to finance. |
| Keywords: | Albania, migration, rural household |
| JEL: | F22 O52 P20 |
| URL: | http://d.repec.org/n?u=RePEc:lic:licosd:15705&r=eec |
| By: | Sergio Destefanis, Raquel Fonseca (CELPE – CSEF, Università di Salerno) |
| Abstract: | A matching theory approach is utilised to assess the impact on the Italian labour market of the 1997 legge Treu, which considerably eased the regulation of temporary work and favoured its growth in Italy. We re-parameterise the matching function as a Beveridge Curve and estimate it as a production frontier. We find huge differences in matching efficiency between the South and the rest of the country. The legge Treu appears to have reduced unemployment in the more developed regions of the country but did not greatly affect the matching efficiency of the regional labour markets. |
| Keywords: | temporary contracts, matching efficiency, regionaldisparities |
| JEL: | J64 J69 C24 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:sal:celpdp:93&r=eec |
| By: | Coucke, Kristien |
| Abstract: | In this paper we investigate the different effects of import competition on the exit behaviour of different types of firms. We find that import competition in Belgian manufacturing has a strong positive effect on the exit behaviour of firms that are not part of a multinational network. However, domestic firms with outsourcing activities (through a network of independent firms) experience a less important crowding out effect. Strong import competition especially increases the exit behaviour of larger domestic firms. But also multinational firms that do not specialise their production process through sourcing of less cost efficient activities abroad, have a higher probability to exit in industries characterised by strong import competition. The finding that import competition also increases the competitive pressure between multinational firms, reflects the increased importance of specialisation of production processes and vertical oriented FDI during the last decade. Note |
| Keywords: | exit, import, multinational presence |
| Date: | 2005–07–14 |
| URL: | http://d.repec.org/n?u=RePEc:vlg:vlgwps:2005-14&r=eec |
| By: | Jon Mikel Zabala Iturriagagoitia (Institute of Innovation & Knowledge Management, INGENIO CSIC-UPV) |
| Abstract: | The aim of this paper is the realization of a Benchmark analysis about the relative position of the Valencian Innovation System. This comparison has been threefold comparing the Spanish, Mediterranean and European regions. In order to undertake this analysis, on the one hand, for the Spanish regions, their evolution from 1992 to 2001 is analyzed according to the Instituto Nacional de Estadística (INE) data. On the other hand, when comparing the different Mediterranean and European Regions, the analysis done is related to the indicators offered by the European Innovation Scoreboard for 2002 and 2003. These analyses illustrate the Valencian Innovation System’s weaknesses. The Comunidad Valenciana shows relative strengths in those fields related to public funding, such as High Education, Lifelong learning and Public R&D Expenditure. In contrast, the weaknesses are strongly related to private activities, as Employment in High Technology sectors and Business R&D expenditure. The low employment rates remark the lacking industrial structure at the Comunidad Valenciana, what arises in great difficulties to absorb the new high educated people. This situation shows a great structural imbalance at the Valencian Innovation System, clearly compromising its future development. |
| Keywords: | Regional Systems of Innovation, Benchmarking, European Innovation Scoreboard |
| JEL: | O12 O18 O32 O52 R11 |
| Date: | 2005–07–15 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpur:0507005&r=eec |
| By: | Gertrudes Guerreiro (Department of Economics, University of Évora); Maria Filomena Mendes (Department of Sociology, University of Évora); António Caleiro (Department of Economics, University of Évora) |
| Abstract: | The decline in fertility that has been observed in Portugal is an apparent fact. From 1960 to 2002, the average number of children by woman has decreased from 3.1 to 1.5. Not ignoring this strong evidence of a sustainable decrease in fertility, the fact is that the numbers on the fertility rates by women’ ages show different realities. At the first sight, the decline in fertility of younger women has been the result of a postponement of births given that a general increase in fertility rates has been observed for older women. A question that then comes up is the following: are these observed trajectories sustainable in the sense of reflecting persistence in time or are just mere phases of a cycle in fertility? The paper intents to start giving an answer to that question by the use of statistical techniques, in a univariate approach, which are adequate to measure the degree of persistence over time. |
| Keywords: | Fertility, Persistence, Portugal |
| JEL: | C22 J11 J13 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:evo:wpecon:12_2005&r=eec |