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on European Economics |
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Issue of 2005‒12‒01
fifty-one papers chosen by Giuseppe Marotta Universita di Modena e Reggio Emilia |
| By: | Anatoli Annenkov (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Christophe Madaschi (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | This paper analyses the differences in hourly labour productivity growth rates and levels between the Nordic EU countries (Denmark, Finland and Sweden) and four larger euro area countries (Germany, France, Italy and Spain). Additional information for the euro area as a whole, the UK and the US is also provided. Given that the economic and social models developed in the Nordic EU countries are in many ways closer to those of the larger euro area countries than that of the US, the experience of these countries is particularly interesting. Since the mid-1990s, the Nordic EU countries, particularly Sweden and Finland, have experienced stronger labour productivity growth than the larger euro countries. Like in the US, innovation and technological changes have played a major role in explaining the higher labour productivity growth in the Nordic EU countries compared with the larger euro area economies. Information and Communication Technology (ICT) diffusion is a key element to explain these differences. A number of institutional indicators, relating to market regulation, human capital, R&D investments and venture capital, show that the Nordic EU economies are better positioned than some of the larger euro area countries to exploit the opportunities provided by ICT in terms of productivity growth. However, remaining labour market rigidities may not allow the Nordic EU countries to fully enjoy the benefits of ICT diffusion in terms of increased employment. |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20050039&r=eec |
| By: | Ad van Riet (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Ekkehard Ernst; Christophe Madaschi (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Fabrice Orlandi (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Alvaro Santos Rivera (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Benoît Robert (Banque Nationale de Belgique, Boulevard de Berlaimont 14, 1000 Brussels, Belgium.); Jörg Döpke (Deutsche Bundesbank, Wilhelm-Epstein-Strasse 14, 10250 Frankfurt am Main, Germany.); Constantina Backinezos (Bank of Greece, 21, E. Venizelos Avenue, 60431 Athens, Greece.); Ioanna Bardakas (Bank of Greece, 21, E. Venizelos Avenue, 60431 Athens, Greece.); Esther Gordo Mora (Banco de España, Alcalá, 28014 Madrid, Spain.); Christian Barontini (Banque de France, 39, rue Croix-des Petits-Champs, 75049 Paris Cedex 01, France.); Mark Cassidy (Central Bank of Ireland, Dame Street, Dublin 2, Ireland.); Sandro Trento (Banca d’Italia, Via Nazionale 91, 00184 Rome, Italy.); Erik Walch (Banque centrale du Luxembourg, 2 boulevard Royal, 2983 Luxembourg.); Bouke Buitenkamp (De Nederlandsche Bank, Westeinde 1, 1017 Amsterdam, The Netherlands.); Karin Wagner (Oesterreichische Nationalbank, Otto-Wagner-Platz 3, 1011 Vienna, Austria.); Hugo Reis (Banco de Portugal, 148, Rua do Commercio, 1101 Lisbon Codex, Portugal.); Risto Herrala (Bank of Finland, P.O. Box 160, 00101 Helsinki, Finland.); Faisel Sethi (Danmarks Nationalbank, Havengade 5, 1093 Copenhagen K, Denmark.); Kurt Gustavsson (Sveriges Riksbank, Brunkebergstorg 11, 103 37 Stockholm, Sweden.); Vincent Labhard (Bank of England, Threadneedle Street, London EC2R 8AH, United Kingdom.) |
| Abstract: | This paper analyses trends in sectoral specialisation in the EU and concludes the following: 1) The European production structure appears more homogenous than that of the US. 2) While sectoral specialisation has shown a slight increase in some smaller euro area countries towards the end-1990s, it is too early to detect any potential impact of EMU. 3) Despite some changes in sectoral composition, the business cycles of euro area countries became more synchronised over the 1990s, which may be seen as reassuring from the point of view of the single monetary policy. 4) Sectoral re-allocation accounts for as much as 50% of the increase in labour productivity growth in business sector services in the euro area. 5) The slowdown of European labour productivity growth relative to the US since the mid-1990s is explained by a stronger performance in the US wholesale and retail trade, financial intermediation and high-tech manufacturing sectors. |
| Date: | 2004–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20040019&r=eec |
| By: | Micha? Brzoza-Brzezina (National Bank of Poland and Warsaw School of Economics, Warsaw, Poland.) |
| Abstract: | The paper analyses the potential for lending booms in the three biggest new EU Member States (the Czech Republic, Hungary and Poland) during the process of euro adoption. Experiences of some old members (Greece, Ireland and Portugal) and the econometric evidence speak in favour of strong loan increases in Hungary and Poland even though their magnitude may be smaller than in the case of those recently recorded in Ireland and Portugal. Due to estimation problems, the situation in the Czech Republic was more difficult to foresee, but given almost complete interest rate convergence with the euro area only modest increases in lending should be expected there. In conclusion, it may be stated that, given the currently available information, no substantial risk to the banking sectors of the new Member States should be expected. |
| Keywords: | lending booms, euro area, banking sector stability, new Member States. |
| JEL: | E51 E58 G21 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20050543&r=eec |
| By: | Louis Bê Duc (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Gabe de Bondt (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Alessandro Calza (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); David Marqués Ibáñez (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Adrian van Rixtel (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Silvia Scopel (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | For central banks, the monitoring of financing conditions plays a pivotal role in assessing the actual transmission of monetary policy impulses to borrowers. This paper presents in detail some of the indicators and data used by the ECB to assess financing conditions in the euro area. It also shows how these indicators have been used to provide a broad assessment of developments in financing conditions in the euro area in recent years. The ECB’s analysis of financing conditions is dynamic and seeks to reflect underlying changes in the euro area’s financial structure. |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20050037&r=eec |
| By: | Linda S. Goldberg; Michael W. Klein |
| Abstract: | The perceptions of a central bank's inflation aversion may reflect institutional structure or, more dynamically, the history of its policy decisions. In this paper, we present a novel empirical framework that uses high frequency data to test for persistent variation in market perceptions of central bank inflation aversion. The first years of the European Central Bank (ECB) provide a natural experiment for this model. Tests of the effect of news announcements on the slope of yield curves in the euro-area, and on the euro/dollar exchange rate, suggest that the market's perception of the policy stance of the ECB during its first six years of operation significantly evolved, with a belief in its inflation aversion increasing in the wake of its monetary tightening. In contrast, tests based on the response of the slope of the United States yield curve to news offer no comparable evidence of any change in market perceptions of the inflation aversion of the Federal Reserve. |
| JEL: | F3 E5 E6 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11792&r=eec |
| By: | Ignazio Angeloni (Italian Ministry of Economy and Finance, Rome, Italy.); Michael Flad (Johann Wolfgang Goethe University, 60054 Frankfurt am Main, Germany.); Francesco Paolo Mongelli (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | This paper examines diverse aspects of the monetary integration of the ten new Member States (NMS) which joined the EU on 1 May 2004 into the euro area. Most NMS have undergone a rapid and deep transformation in all areas with considerable progress in their processes of reform and convergence, and more is underway. While trade integration with the other 15 EU Member States (EU15) has progressed quickly, convergence in output specialisation to EU standards has been slow, especially if measured in real terms. This may influence negatively the pace of real convergence. Most NMS lag significantly behind in building up and deepening their financial systems. There is also evidence that exchange rate flexibility may still be serving as a useful shock absorber for some NMS, and so far the evidence indicates that real exchange rates have moved, broadly speaking, in line with long term fundamental equilibria. On the positive side, many NMS are quite advanced relative to the euro area in the process of labour market and institutional reform (their labour market structures are more flexible than those of the euro area countries). There is also some evidence that a few NMS have a significant degree of business-cycle synchronisation with the euro area: hence, they may become less likely to be affected by different economic shocks. This, however, is not true for all NMS. The monetary policy institutions of the NMS have also converged to some degree - goals and institutional settings of central banks are now much more similar than before. A case-by-case approach to adopting the euro, based on country-specific conditions, seems natural due to the differences between the countries. |
| Keywords: | Optimum Currency Area, Economic and Monetary Integration, EMU. |
| JEL: | E42 F13 F33 F42 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20050036&r=eec |
| By: | André Geis (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Arnaud Mehl (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Stefan Wredenborg (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | This paper analyses the main features of the market for euro-denominated bonds issued by non-euro area residents on the basis of a new database. It shows that large private corporations from mature economies have contributed significantly to the internationalisation of the euro since 1999, more than sovereigns in transition and emerging economies, whose part was initially expected to be stronger. It confirms that the euro’s international role is characterised by a strong regional focus, being most prominent in countries located in the immediate vicinity of the euro area. In particular, the paper provides ample evidence that the City of London plays a key role in the market for euro-denominated bonds issued by non-euro area residents, be it on the supply side, the demand side or as an intermediary. When it comes to demand, the paper shows that the euro’s reach in the rest of the world has been more limited thus far, notwithstanding some recent interest in Asia. Finally, the paper finds evidence that the international role of the euro has, to some extent, been driven by the euro area itself, with euro area investors being significant purchasers of euro-denominated bonds issued by non-euro area residents. |
| Date: | 2004–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20040018&r=eec |
| By: | Heiko Schmiedel (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Andreas Schönenberger (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | This paper investigates the state and process of integration of the European securities market infrastructure. The integration of financial infrastructures is one of the basic policy goals and key responsibilities of the Eurosystem. The paper finds that, despite the single currency, the euro area securities infrastructure remains highly fragmented and insufficiently integrated. There are still a high number of providers for trading, clearing and settlement, and they are not efficiently connected to one another. The paper also finds that the degree of consolidation varies among different integrated groups of market infrastructure. Economies of scale and scope and positive network externalities inherent in the securities services industry mean that substantial cost savings and increased efficiency can be expected from further integration. The most relevant factors underlying the less advanced areas of integration are likely to be not only persistent cross-border differences in tax regimes, procedures and laws, but also vested interests among users, owners and managers. Current work at the Eurosystem level can be expected to be helpful in promoting further integration. |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20050033&r=eec |
| By: | Lieven Baele (Tilburg University, The Netherlands.); Annalisa Ferrando (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Peter Hördahl (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Elizaveta Krylova (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Cyril Monnet (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | In this paper, we present a set of specific measures to quantify the state and evolution of financial integration in the euro area. Five key markets are considered, namely the money, corporate bond, government bond, credit and equity markets. Building upon the law of one price, we developed two types of indicators that can be broadly categorised as price-based and news-based measures. We complemented these measures by a number of quantity-based indicators, mainly related to the evolution of the home bias. Results indicate that the unsecured money market is fully integrated, while integration is reasonably high in the government and corporate bond market, as well as in the equity markets. The credit market is among the least integrated, especially in the short-term segment. |
| Keywords: | financial integration, EMU, law of one price. |
| JEL: | G12 G14 G15 G18 |
| Date: | 2004–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20040014&r=eec |
| By: | Andrew Clark; Fabien Postel-Vinay |
| Abstract: | We construct indicators of the perception of job security for various types of jobs in 12 European countriesusing individual data from the European Community Household Panel (ECHP). We then consider the relationbetween reported job security and OECD summary measures of Employment Protection Legislation (EPL)strictness on one hand, and Unemployment Insurance Benefit (UIB) generosity on the other. We find that, aftercontrolling for selection into job types, workers feel most secure in permanent public sector jobs, least secure intemporary jobs, with permanent private sector jobs occupying an intermediate position. We also find thatperceived job security in both permanent private and temporary jobs is positively correlated with UIBgenerosity, while the relationship with EPL strictness is negative: workers feel less secure in countries wherejobs are more protected. These correlations are absent for permanent public jobs, suggesting that such jobs areperceived to be by and large insulated from labor market fluctuations. |
| Keywords: | Perceived Job Security, Employment Protection Legislation, Unemployment Insurance Benefits |
| JEL: | J28 J65 I31 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0678&r=eec |
| By: | Holger Patzelt; Dodo zu Knyphausen-Aufseß; Yasmin Habib |
| Abstract: | Motivated by the different development stages of both, the venture capital (VC) as well as the life science industry in the USA and Europe, we investigate portfolio strategies of US-American and European VC firms active in this sector. We analyse portfolios of 88 VCs financing a total of 1050 life science ventures. Our results show that US life science VCs are equally likely to have a focus on early stage ventures and to diversify across investment stages as their European counterparts. However, the latter invest more in the US industry than vice versa, more in traditional life science technologies developing therapeutics and diagnostics, and less in new medical technology and healthcare/IT firms. Regarding the VCs' internationalisation strategies, our results reveal that VCs investing globally and US VCs focusing on their home market invest more in medical technology and healthcare/IT and less in diagnostics firms than European VCs with European investees only. We conclude that European life science ventures developing medical and healthcare/IT technologies should internationalise early enough into the USA in order to access the US VC market. Therapeutics and diagnostics companies in the USA, on the other hand, may find good opportunities to raise VC in Europe. |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:esi:egpdis:2005-31&r=eec |
| By: | Bart Hobijn; Andrea Tanbalotti (Research and Statistics Group Federal Reserve Bank of New York); Federico Ravenna |
| Keywords: | Monopolistic Competition, Sticky Prices, Inflation, Euro. |
| JEL: | E31 E63 L89 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed005:659&r=eec |
| By: | Reiner Martin (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Moreno Roma (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Isabel Vansteenkiste (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | In the course of the 1990s, the EU has embarked on an ambitious regulatory reform programme for a number of European network industries, such as telecommunications, energy and transport. This paper analyses the potential benefits of successful reforms in these sectors with a focus on the price effects of regulatory reforms. Following a review of the existing empirical literature in this field, the paper discusses the evolution of the current regulatory framework for network industries in the EU. An empirical analysis of the main determinants of recent price developments in these industries provides evidence that regulatory reform measures had a substantial downward impact on prices in the four sectors under review. |
| Keywords: | Network Industries, Panel Data, Price effects, Regulatory Reforms. |
| JEL: | E30 L33 L51 L93 L94 L95 L96 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20050028&r=eec |
| By: | Márcio Antônio Salvato; João Victor Issler; Angelo Mont'alverne Duarte |
| Abstract: | We investigate whether business cycles are all alike computing the welfare costs of business cycles for European-Union (EU) as the solution of the problem proposed by Lucas (1987). Because these countries have a long tradition of integration and trade, it is a "natural experiment" to investigate how similar their welfare costs of business cycles are. Using standard assumptions on preferences and a reasonable reduced form for consumption, we computed welfare costs using three alternative trend-cycle decomposition methods, but focusing on the multivariate Beveridge-Nelson decomposition. Our results show that welfare costs are very different across EU countries and between US and EU countries, and thus it is a strong evidence that business cycles are not alike in Europe. |
| JEL: | E32 C32 C53 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:anp:en2005:031&r=eec |
| By: | Jesper Berg (Danmarks Nationalbank, Havnegade 5, 1093 Copenhagen K, Denmark.); Annalisa Ferrando (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Gabe de Bondt (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Silvia Scopel (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | This occasional paper explains why the bank lending survey was developed by the ECB and describes its main features. It discusses the importance of credit developments for both the economy and the functioning of monetary policy, and further clarifies why the survey was introduced. Furthermore, the paper demonstrates that the value added of implementing a bank lending survey for the euro area lies in particular in the way it provides greater insight into developments in credit standards, non-interest rate credit conditions and terms, the risk perception of banks and the willingness of banks to lend. Credit standards are the internal guidelines or criteria of a bank which reflect the bank’s loan policy. The terms and conditions of a loan refer to the specific obligations agreed upon by the lender and the borrower. This occasional paper also considers similar surveys conducted by the Federal Reserve System in the US and by the Bank of Japan. |
| Keywords: | Survey; Banks; Credit Standards; Credit Markets; European Central Bank; Federal Reserve; Bank of Japan |
| JEL: | E43 E51 G21 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20050023&r=eec |
| By: | Sjef Ederveen (CPB Netherlands Bureau for Economic Policy Analysis); Albert van der Horst (CPB Netherlands Bureau for Economic Policy Analysis); Paul Tang (CPB Netherlands Bureau for Economic Policy Analysis) |
| Abstract: | A stronger focus on jobs and growth is part of an effort to renew the Lisbon strategy. Yet the view that economic expansion contributes to maintaining Lisbon’s other goals of social cohesion as well as the environment is somewhat optimistic. First, there are structural trade-offs among the central elements of the Lisbon strategy. Escaping these trade-offs temporarily is sometimes possible but requires policy changes. Second, higher productivity (growth) may not provide more structural room for governments to manoeuvre. It leads to higher tax receipts but also to higher public expenditures since public sector wages and social security benefits are linked to productivity. In contrast, more employment (jobs) is associated with a smaller public sector. But to engineer the increase in employment, changes in welfare state arrangements are needed. In other words, focussing solely on the sick child will probably harm the other children. Looking back, employment has kept expanding in the European Union whereas the productivity growth rate has been falling. The latter is not easily explained by (falling) investment in knowledge. Instead, the current relatively low productivity growth rate largely reflects success in the past. Many European countries have caught up with the United States, having seen comparatively fast employment growth in the late 1990s. Looking forward, we argue that the combination of the Open Method of Coordination (OMC) with national action plans, the way the EU wants to achieve its goals, is both too little and too much: European interference with national employment polices has a weak basis, while the OMC may not provide member states with a strong enough commitment to pursue an innovation agenda. |
| Keywords: | Jobs and growth, Lisbon agenda, productivity slowdown, Open Method of Coordination |
| JEL: | F15 F21 F43 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:epr:enepwp:035&r=eec |
| By: | Alberto Musso (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Thomas Westermann (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | For monetary policy purposes it is useful to apply a concept of potential output growth that looks through the fluctuations inherent in most model based estimates. Growth accounting can be a useful tool in this respect, given its focus on average developments in real GDP growth and supply side factors over medium to longer-term horizons. This paper describes the assumptions and measurement issues underlying the growth accounting framework and applies it to euro area data for the period 1980 to 2003. It shows that growth in measured total factor productivity has been the single most important contributor to real GDP growth over this period. However, the contribution to growth from this factor declined between the 1980s and the 1990s, while that from labour increased. Looking forward, the projected demographic developments imply a reduction in average real GDP growth in the coming decades unless compensation is achieved from other supply-side factors. |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20050022&r=eec |
| By: | Frank Dierick (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | Over time, the banking, insurance and securities sectors have become increasingly interlinked and one way through which this occurs is via financial conglomerates. Such groups, in particular those that combine banking and insurance, have over time become more important in Europe. They require an appropriate regulatory and supervisory set-up to deal with the specific risks they raise. In the EU, this regulatory set-up was introduced with the Financial Conglomerates Directive (2002) and which Member States are now implementing into national law. The Directive introduces a regime of supplementary supervision, in addition to the one that already exists for the regulated entities of the conglomerate. The Directive covers areas such a capital requirements, intra-group transactions, large exposures, organisational requirements and information exchange between authorities. The paper further compares the regime in the US and the EU. It concludes with issues that might require attention from authorities in the future. |
| Keywords: | cross-sector risk, European Union, financial conglomerate, financial regulation, financial supervision. |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20040020&r=eec |
| By: | Henning Ahnert (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Geoff Kenny (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | In this paper we review the well-known problem of how to measure price developments when the quality of the underlying goods and services is changing over time. The importance of appropriate methods to take account of quality change is highlighted from the perspective of monetary policy. In particular, we highlight the need for credible and transparent price indicators. In this context, we review the hedonic approach to calculating quality-adjusted price indices and assess the available information on their effects as well as their potential for improving credibility and comparability. Current practices as regards quality adjustment in the European Union (EU) are also discussed, with particular emphasis on the Harmonised Index of Consumer Prices (HICP). Overall, we give a qualified endorsement of hedonics for specific product categories and make some suggestions about how the work on quality adjustment in the EU can be further developed, focusing in particular on the role of hedonics. |
| Date: | 2004–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20040015&r=eec |
| By: | Sandra Deungoue (GATE CNRS) |
| Abstract: | The purpose of this study is to analyze the observed changes in payment behaviours by underlining the influence of factors such as financial opening, regulations and technological innovation. We show how forces acting in order to mould the national retail banking markets into a Single Payment Area (SPA) within the European Monetary Union (EMU) have impacted the payment instruments demand. We analyse the integration process and measure the importance of its major steps by testing the convergence of payment behaviours. We develop a model of conditional convergence concerning the use of five payment instruments: cash, card, cheque, credit transfer, and direct debit. The tests of conditional convergence are carried out using the techniques of instrumental variables on annual panel data in EMU. The results demonstrate that convergence occurs on demand for all payment methods except cheque. |
| Keywords: | Bank supply, Convergence, Retail payment market |
| JEL: | D12 F36 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:0501&r=eec |
| By: | V. Anton Muscatelli, Tiziano Ropele and Patrizio Tirelli |
| Abstract: | We Assess the extent to which fiscal policy, as automatic stabilisers, can stabilise national economies within EMU. We use a two-country New Keynesian DGE model with liquidity constrained consumers, sticky prices, and a home bias in the composition of national consumption bundles. The model allows a variety of channels for fiscal policy, and is estimated using Euro area data. We analyse the interaction of monetary and fiscal policies in EMU and demonstrate that, perhaps surprisingly, macroeconomic adjustment is not always facilitated by fiscal stabilisers in the case of certain types of shocks. The stabilising effects of fiscal policy at the national level are strictly dependent on the existence of home bias in consumption. |
| JEL: | E58 E62 E63 |
| URL: | http://d.repec.org/n?u=RePEc:gla:glaewp:2005_20&r=eec |
| By: | Carlo Rosa; Giovanni Verga |
| Abstract: | This paper analyses the ECB communication, focusing in particular on its transparencydimension. We posit that if the ECB is transparent about its future policy decisions, then weshould be able to forecast fairly well its future interest rate setting behaviour. We find thatthe predicting ability of the European monetary authority's words, is similar to the oneimplied by market-based measures of monetary policy expectations. Moreover, the ECB'swording provides complementary, rather than substitute, information with respect toeconomic and monetary variables. |
| Keywords: | ECB communication, transparency, monetary policy forecast, empirical reactionfunction, Euribor rate curve |
| JEL: | E43 E52 E58 G14 |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0694&r=eec |
| By: | C.S.Savva; D.R.Osborn; L.Gill |
| Abstract: | This paper investigates the transmission of price and volatility spillovers across the New York, London, Frankfurt and Paris stock markets under the framework of the multivariate EGARCH model. The model is extended to allow dynamic conditional correlations, with the correlations allowed to change with the introduction of the Euro. By using daily closing prices recorded at 16:00 London time (pseudo-closing prices) we find evidence that domestic stock returns and volatilities are influenced by the behavior of foreign markets, with both volatilities and conditional correlations responding asymmetrically to news/innovations in other markets. The findings also indicate that the correlations of returns have increased for all markets since the launch of the Euro, with that between Frankfurt and Paris experiencing the largest increase. |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:man:cgbcrp:64&r=eec |
| By: | Leena Mörttinen; Paolo Poloni (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Patrick Sandars (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Jukka Vesala |
| Abstract: | This paper presents the methodological and statistical framework for macro-prudential analysis of the financial condition of the EU banking sector that has been adopted by the European System of Central Banks (ESCB). The framework is also a central component of broader financial stability assessments carried out by the ECB in co-operation with national authorities. The framework has three main building blocks, which draw on a large number of macro-prudential indicators. The first block is designed for assessing the financial condition of the banking sector. The second building block provides a framework for analysing potential sources of risk and vulnerability to which banks are exposed and an assessment of the importance of related exposures. The final part of the analysis deals with the resilience of banks vis-à-vis these different sources of risk and vulnerability. Analysing the impact of the identified risks on banks’ financial condition is the ultimate objective of the ESCB banking sector stability analysis. |
| Keywords: | Financial stability, Banking sector, Macro-prudential analysis and indicators, Financial sector statistics. |
| JEL: | C82 E44 E58 G21 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20050026&r=eec |
| By: | Carlo Rosa; Giovanni Verga |
| Abstract: | In its Monthly Bulletin of November 2002, the European Central Bank (ECB) stated that themonthly press conference held by its President represents one of its most importantcommunication channels and that it provides a comprehensive summary of the policyrelevant assessment of economic developments. After providing a glossary to translate thequalitative information of the press conferences into an ordered scale, we verify empiricallywhether and to what extent market expectations react to the information released by the ECB.We found that the public not only understand but also believe the signals sent by theEuropean monetary authority. |
| Keywords: | communication, credibility, ECB, glossary, Repo, Euribor, news approach |
| JEL: | E50 E52 E58 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0682&r=eec |
| By: | Henrik Enderlein (Freie Universität Berlin, JFKI, Lansstr. 7-9, 14195 Berlin, Germany.); Johannes Lindner (DG-International and European Relations, European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Oscar Calvo-Gonzalez (DG-International and European Relations, European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Raymond Ritter (International Monetary Fund, Washington D.C., USA.) |
| Abstract: | This paper reviews current discussions on reforming the European Union (EU) budgetary procedure and assesses the main reform proposals that have been suggested thus far. It argues that prospects for reforms are presently hampered by the complex interplay between supranational and intergovernmental decision modes and the requirement of any budgetary procedure to strike a balance between efficiency and legitimacy. The paper reviews the main criticisms of the present budgetary procedure and the related reform proposals, which are assessed on the basis of relevant theoretical literature as well as brief comparisons with the federal budget of the United States. The paper argues that the current EU budgetary procedure maximises efficiency and legitimacy, given the present state of political integration in the EU. Significant modifications to the budgetary procedure would depart from that equilibrium. |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20050027&r=eec |
| By: | Ester Faia; Alessia Campolmi (Economics Universitat Pompeu Fabra) |
| Keywords: | inflation differentials, labor and product market differences, EMU |
| JEL: | F J |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed005:118&r=eec |
| By: | Ulf Sverdrup |
| Keywords: | implementation; interest intermediation; national interest; legitimacy |
| Date: | 2005–10–17 |
| URL: | http://d.repec.org/n?u=RePEc:erp:arenax:p0205&r=eec |
| By: | Guido Wolswijk (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Jakob de Haan |
| Abstract: | This paper reviews recent developments in the management of government debt in the euro area, covering both theoretical and practical aspects. It focuses on key aspects of debt management; the objectives of debt management, its organisation, the maturity of debt, inflation-indexation, currency-denomination, the ownership of debt, and debt issuing and trading practices. Main adjustments include an increase in autonomy of debt management agencies, and a convergence in debt maturities and in debt issuing strategies. Issuance of inflation-indexed bonds and the use of interest rate swaps have increased strongly. While the share of government debt denominated in non-domestic currencies is falling, foreign ownership of euro area government debt is increasing markedly. The observed changes in recent years in part reflect the introduction of the euro and the related integration of European capital markets. |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20050025&r=eec |
| By: | Sascha O. Becker (CES, CESifo and IZA Bonn); Samuel Bentolila (CEMFI, CEPR and CESifo); Ana Fernandes (University of Bern); Andrea Ichino (EUI, CEPR, CESifo and IZA Bonn) |
| Abstract: | The age at which children leave the parental home differs considerably across countries. In this paper we argue that lower job insecurity of parents and higher job insecurity of children delay emancipation. We provide aggregate evidence which supports this hypothesis for 12 European countries and which helps account for the increase in coresidence in the 1990s. We also give microeconometric evidence for Italy, a country for which we have access to household-specific information on job security of fathers and coresidence. In the late 1990s, approximately 75% of young Italians aged 18 to 35 were living at home and they had only a 4% probability of emancipation in the 3 subsequent years. We show that this probability would have increased by 4 to 10 percentage points if their fathers had gone from perceiving to have a fully secure job to expecting to be unemployed for sure. |
| Keywords: | coresidence, youth emancipation, job security |
| JEL: | J1 J2 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1836&r=eec |
| By: | Byström, Hans (Department of Economics, Lund University) |
| Abstract: | In this paper we suggest a simple way of backing out market-wide risk-neutral default probability (and default density) distributions from quoted credit default swap (CDS) index spreads. We apply the approach to two market-wide European portfolios represented by two frequently traded iTraxx Europe CDS indexes, and the resulting analytical default probability term structures are updated on a daily basis. We believe such instantaneous default probability term structures to be useful not only for risk managers in commercial banks but also for hedge funds and others involved in speculation and arbitrage as well as for supervisory authorities like central banks in their quest for financial stability. |
| Keywords: | iTraxx; credit default swap index; default probability; term structure |
| JEL: | C20 G33 |
| Date: | 2005–10–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2005_044&r=eec |
| By: | Angela Maddaloni (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Darren Pain (Bank of England, Threadneedle Street, London EC2R 8AH, United Kingdom.) |
| Abstract: | The recent corporate failures in the US and in Europe have considerably damaged investors’ confidence in the functioning of financial markets and the ability of the regulatory framework to safeguard their interest and prevent fraud. These episodes demonstrate that market failures exist, which can undermine the effectiveness of market discipline to ensure the appropriate allocation of capital. Specifically the paper considers four particular features of financial markets that may have given rise to market failures: (a) perverse incentives/conflict of interests, (b) destabilising trading/investment strategies, (c) lack of disclosure/transparency and (d) concentrated versus fragmented ownership structures. The paper reviews the theoretical arguments and empirical evidence related to these four possible types of market failures, illustrating these with evidence drawn from the most recent corporate scandals. The last part of the paper is devoted to the policy responses both in the US and in Europe to prevent these failures. |
| Date: | 2004–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20040017&r=eec |
| By: | Reinhard Petschnigg (Oesterreichische Nationalbank, Otto Wagner Platz 3, 1011 Vienna, Austria.) |
| Abstract: | The paper takes a closer look at the institutional set-up of financial markets in the United States of America and investigates whether the US can serve as a model for the EU. The overall conclusion is that the US institutional set-up as a whole does not seem to be a suitable benchmark for the EU as it is the outcome of specific historical, political and economic circumstances, which differ substantially from those in the EU. Nevertheless, there are features which could provide inspiration for further debate on the EU institutional framework, such as the prominent role of federal regulatory agencies (including the central bank and its role as "umbrella supervisor" over financial holding companies), the capacity of the Office of the Comptroller of the Currency (OCC) as a federal institution to remove barriers to cross-border activities, and the elements of choice for the supervised entities in the regulatory system, which allow for some regulatory competition. |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20050035&r=eec |
| By: | Alexandre Ziegler (HEC, University of Lausanne and FAME); François-Xavier Delaloye (HEC, University of Lausanne); Michel Habib (Swiss Banking Institute, University of Zurich) |
| Abstract: | Over the period 2002 to 2003,Switzerland and the European Union (EU) were engaged in negotiations regarding banking secrecy. The EU's stated goal was for Switzerland to abolish banking secrecy. Switzerland refused and offered to impose a withholding tax on interest income instead. The two parties eventually agreed on the latter solution. We examine the effect of these negotiations on the share prices of four Swiss banks: UBS, Credit Suisse Group (CSG), Julius Baer (Baer), and Vontobel. Overall, investors believe that bank profitability will not be impacted by the imposition of the withholding tax. The event-by-event response of the share prices differs across banks. Whereas the two universal banks (UBS and CSG) primarily react to the threat of sanctions on their EU-based operations, the private banks (Baer and Vontobel) react strongly to events suggesting that banking secrecy might be abolished. |
| Keywords: | Banking Secrecy; Switzerland; Event Study |
| JEL: | G14 G18 G21 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:fam:rpseri:rp157&r=eec |
| By: | Filippo Altissimo (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Evaggelia Georgiou (Bank of Greece, 21, E. Venizelos Avenue, 10250 Athens, Greece.); Teresa Sastre (Banco de España, Alcalá 50, 28014 Madrid, Spain.); Maria Teresa Valderrama (Österreichische Nationalbank, Otto-Wagner-Platz 3, 1011 Vienna, Austria.); Gabriel Sterne (Bank of England, Threadneedle Street, London EC2R 8AH, United Kingdom.); Marc Stocker (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Mark Weth (Deutsche Bundesbank, Wilhelm-Epstein-Strass 14, 60431 Frankfurt am Main, Germany.); Karl Whelan (Central Bank of Ireland, Dame Street, Dublin 2, Ireland.); Alpo Willman (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | Do asset prices affect real activity? This question has taken on a new importance in recent years, as asset values first surged at the end of 1990s and, thereafter, dramatically retreated. This report reviews the available theoretical and empirical evidence regarding asset price and wealth effects in Europe and some other major economies. The main focus of this report is on consumption effects via the wealth channel, reflecting the bulk of literature on the effects of asset prices. However, asset price effects on investment via the Tobin’s-Q channel, balance sheet and confidence channels are also reviewed. The available evidence supports the view that the wealth channel is the most important of various channels. There is little empirical evidence indicating that the Tobin’s-Q, balance-sheet and confidence channels play any major independent role in the transmission of asset price effects to economic activity. |
| Keywords: | household wealth, wealth channel, asset price, marginal propensity to consume, cost of capital. |
| JEL: | D1 D3 D9 G11 |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20050029&r=eec |
| By: | Julia Darby, V. Anton Muscatelli and Graeme Roy |
| Abstract: | Cross-country evidence on sub-central governments’ responses to cuts in grants received from central government shows the typical response is to adjust expenditure rather than offset cuts by raising ‘own’ revenues. Spending cuts are focused on the wage bill and, disproportionately, on capital expenditure. Even where countries have greater flexibility to offset the centrally imposed cuts, through a high degree of expenditure decentralisation, tax and borrowing autonomy, they tend not to exercise these powers. So, centrally imposed cuts result in expenditure restraint at the sub-central level, but the adjustment appears to suffer from short-termism, given the disproportionate focus on capital spending. |
| JEL: | E62 E63 H62 H77 |
| URL: | http://d.repec.org/n?u=RePEc:gla:glaewp:2005_18&r=eec |
| By: | Matthieu Bussière (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany); Jarko Fidrmuc (Oesterreichische Nationalbank, University of Munich and Comenius University Bratislava); Bernd Schnatz (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany) |
| Abstract: | This paper analyses the rapid trade integration of the Central and Eastern European countries (CEECs) with the euro area in the past ten years and draws implications for further integration. We use as benchmark an enhanced gravity model estimated for a large sample of bilateral trade flows across 61 countries since 1980. We show that a careful examination of the model's fixed effects is crucial for the proper interpretation of the results - simply extracting the predicted values of the regression (“in-sample”) – as commonly done in the literature – leads to distorted results as it fails to properly account for the transition process. We therefore propose a two-stage “out-ofsample” approach. The results suggest that trade integration between most of the largest CEECs and the euro area is already relatively well advanced, while some Baltic and South Eastern European countries still have significant scope for trade integration. |
| Keywords: | Gravity Model, Panel Data, Central and Eastern European Countries, Free Trade Agreement, Transition Economies. |
| JEL: | C23 F15 F14 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20050545&r=eec |
| By: | Peter Backé (DG-International and European Relations, European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Christian Thimann (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Olga Arratibel (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Oscar Calvo-Gonzalez (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Arnaud Mehl (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Carolin Nerlich (DG-International and European Relations, European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | This paper reviews the strategies announced by the ten countries joining the European Union in May 2004 with regard to their intentions for participation in ERM II and the adoption of the euro. The paper examines the economic rationale of the monetary integration strategies declared by most acceding countries with a view to identifying also their potential risks. It does so by making use of several different approaches, including a short review of nominal convergence and a more extensive discussion from an optimum currency area perspective. An important part of the analysis is devoted to the implications of real convergence – i.e. catching-up growth in income and adjustment of the real economic structures towards those prevailing in the euro area – on the patterns of economic dynamics in acceding countries. Other aspects covered are the risks for external competitiveness in the convergence process and the appropriate pace of fiscal consolidation. |
| Date: | 2004–02 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20040010&r=eec |
| By: | Zsolt Darvas (Corvinus University, Budapest); Gabor Vadas (Magyar Nemzeti Bank) |
| Abstract: | Decomposing output into trend and cyclical components is an uncertain exercise and depends on the method applied. It is an especially dubious task for countries undergoing large structural changes, such as transition countries. Despite their deficiencies, however, univariate detrending methods are frequently adopted for both policy oriented and academic research. This paper proposes a new procedure for combining univariate detrending techniques which is based on revisions of the estimated output gaps adjusted by the variance of and the correlation among output gaps. The procedure is applied to the study of the similarity of business cycles between the euro area and new EU Member States. |
| Keywords: | combination, detrending, new EU members, OCA, output gap, revision |
| JEL: | C22 E32 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:mnb:wpaper:2005/05&r=eec |
| By: | Werner Eichhorst (IZA Bonn); Ole Wintermann (Bertelsmann Foundation) |
| Abstract: | Policy advice can help political actors design and implement institutional reforms through the generation of political and substantial legitimacy. This article clarifies the institutional preconditions of effective supply and transfer of policy advice with particular respect to the field of labor market and social policy reform and to corporatist arrangements where academic think tanks and social partner bodies for policy advice exist side by side. It shows how policy advice is structured and to what it extent it could influence actual policy-making in Germany, the Netherlands, and Sweden over the last decade. Our main argument is that the structure of policy advice is essential for its effectiveness, with highly reputable and less contested expert committees and research institutes providing balanced policy-oriented advice are most influential and conducive to furthering labor market and welfare state reforms in corporatist settings. In combination with a shadow of hierarchy spent by government they can also facilitate social partner consensus. Hence, an appropriate supply of policy advice can help ensure sufficient legitimacy for institutional reforms and increase societal problem-solving capacities. If government is weak for institutional reasons and policy advice rather fragmented, challenged and less policy-oriented, like in the German case, policy advice can not realize its full potential. |
| Keywords: | policy advice, corporatism, labor market reforms, public policy |
| JEL: | H83 J58 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1845&r=eec |
| By: | Patrick Lünnemann (Banque centrale du Luxembourg, Département Monétaire, Economique et Statistique, 2, Boulevard Royal, L-2983 Luxembourg, Luxembourg.); Thomas Y. Mathä (Banque centrale du Luxembourg, Département Monétaire, Economique et Statistique, 2, Boulevard Royal, L-2983 Luxembourg, Luxembourg.) |
| Abstract: | This paper uses micro-level price data and analyses the behaviour of consumer prices in Luxembourg. We find that the median duration of consumer prices is roughly 8 months. The median durations of energy and unprocessed food are about 1.5 and 5 months, while prices of services typically change fewer than once a year. For some product types, such as non-energy industrial goods and processed food, a relatively large share of the observed price changes is reverted afterwards. With the exception of services, individual prices do not show signs of downward rigidity. On average, price decreases are as large as price increases. Price changes are determined both by state- and time-dependent factors. Accumulated price and wage inflation, wage adjustment due to indexation, the cash changeover and a larger number of competitors increase the probability of a price change, while pricing at attractive pricing points and price regulation have the opposite effect. |
| Keywords: | Price setting, consumer prices, rigidity, wage indexation, sales. |
| JEL: | E31 C23 C41 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20050541&r=eec |
| By: | Jo Blanden; Stephen Machin; John Van Reenen |
| Abstract: | This paper reports results from a recent survey we conducted on the union status of over 650firms in the private sector of the UK. Compared to earlier periods, the survey shows that since 1997 there hasbeen a slight fall in derecognition, but a relatively large increase in union recognition. Almost 11% of firmsreport experiencing some new recognition, whilst 7% reported some derecognition. In the late 1980s newrecognitions among similar firms were much lower (3% between 1985 to 1990 according to Gregg and Yates,1991). In our survey, new recognitions were more prevalent in larger firms and in regions and industries whereunion membership was already high. New recognitions were less likely to have occurred in companies withhigher wages, higher productivity and higher capital intensity. The 'blip up' in new recognitions is consistentwith the idea that the incoming Labour government had a positive effect on the ability of unions to gainrecognition, either through the 1999 legislation or more indirectly through changing the political climate. |
| Keywords: | unions, productivity, employment legislation |
| JEL: | J51 K31 L25 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0685&r=eec |
| By: | Chiara Criscuolo; Ralf Martin |
| Abstract: | We study the productivity of US owned plants in the UK. Using a new dataset that identifies foreignand domestic MNEs, we find that UK MNEs are less productive than US affiliates, but as productiveas non US foreign affiliates. We investigate the source of the US and MNE advantage. We findevidence confirming that the MNE advantage is driven by sharing superior firm level assets acrossplants and by cherry picking the better plants in a country. The additional superiority of US firmsseems entirely driven by their particular ability to takeover the best British plants. Thirdly, the studyfeatures a novel approach to TFP calculation. |
| Keywords: | Multinational Firms, Productivity, Foreign Ownership, US leadership, Double Fixed-Effects |
| JEL: | F23 L60 |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0672&r=eec |
| By: | VASILEIOS VLACHOS (UNIVERSITY OF MACEDONIA) |
| Abstract: | With the application of Ordinary Least Squares based on quarterly data of growth rates for inflation and unemployment for the period 2001 – 2003, the study concludes that a trade-off between inflation and unemployment does not exist in the Greek economy. Although the findings indicate that the EMU has no costs on the evolution of unemployment levels in Greece, the factors that generate the economic indicators on which the regression analysis is based point to the opposite direction. The utilization of the structural funds to date, the organization of the Olympic Games and the expansion of household debt are substitutes for the restrained government expenditure and have “temporary positive effects” on the level of aggregate demand. As long as Greece does not meet the expectations on competitiveness that were set as a standard for introducing the Euro, it will experience high levels of unemployment that it will probably not be able to cope with. |
| Keywords: | EMU, Greece, inflation, unemployment |
| JEL: | E24 E31 R11 R51 |
| Date: | 2005–11–18 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpma:0511020&r=eec |
| By: | Filippo Reganati; Edgardo Sica |
| Abstract: | According to the main economic literature, foreign direct investment (FDI) from Multinational Enterprises (MNEs) can generate positive externalities to host countries, increasing the domestic firms’ productivity. Recently, the attention of researchers has moved from the analysis of ''horizontal'' spillovers – i.e. those benefits to local enterprises at an intraindustrial level - towards the investigation of ''vertical'' spillovers phenomenon – i.e. the diffusion of positive effects on domestic economies at an inter-industry level. In this paper we investigate the presence of both these two kinds of spillovers using a firm-level panel data of domestic and foreign firms in the Italian manufacturing sector. The results show the lack of ''horizontal'' spillovers and, at the same time, the presence of ''vertical'' ones. |
| Keywords: | FDI; MNEs; Spillovers; Italian manufacturing sector |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:ufg:qdsems:23-2005&r=eec |
| By: | Hakkala, Katariina (The Research Institute of Industrial Economics); Zimmermann, David (The Research Institute of Industrial Economics) |
| Abstract: | The paper serves as a documentation of the survey IUI has conducted on Swedish multinational firms (MNEs) in 2004. It describes recent trends in the operations of Swedish multinational firms participating in the survey and foreign direct investment (FDI) of Swedish firms in general. The survey is a follow-up of the surveys made by IUI since 1970s. The database covers information about the Swedish part of manufacturing multinational firms and the foreign affiliates of the firms. The following years are covered: 1965, 1970, 1974, 1978, 1986, 1990, 1994, 1998 and 2003. |
| Keywords: | Multinational Enterprises; Foreign Direct Investment; Spillovers; Research and Development |
| JEL: | F21 F23 |
| Date: | 2005–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0650&r=eec |
| By: | Lorentowicz, Andzelika; Marin, Dalia; Raubold, Alexander |
| Abstract: | Feenstra and Hanson (1997) have argued in the context of the North American Free Trade Agreement that US outsourcing to Mexico leads to an increase in the skill premium in both the US and Mexico. In this paper we show on the example of Austria and Poland that with the new international division of labor emerging in Europe Austria, the high income country, is specializing in the low skill intensive part of the value chain and Poland, the low income country, is specializing in the high skill part. As a result, skilled workers in Austria are losing from outsourcing, while gaining in Poland. In Austria, relative wages for human capital declined by 2 percent during 1995-2002 and increased by 41 percent during 1994-2002 in Poland. In both countries outsourcing contributes roughly 35 percent to these changes in the relative wages for skilled workers. Furthermore, we show that Austria?s R&D policy has contributed to an increase in the skill premium there. |
| JEL: | P45 J31 F23 F21 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:715&r=eec |
| By: | Sedef Akgüngör (Department of Economics, Faculty of Business, Dokuz Eylül University); Pýnar Falcýoðlu (Department of Management, Iþýk University) |
| Abstract: | The dynamics of industrial agglomeration across the regions and the reasons for such agglomeration have been the focus of interest particularly in exploring the effects of economic integration of regions on the spatial distribution of economic activity. In this context, following the predictions of the literature on economic geography, Turkey’s integration with the European Union as a candidate member is a likely cause of changes in economic dispersion of the economic activity over the years. The major objective of the study is to complement the findings of the studies on industrial agglomeration in Turkey’s manufacturing industry by exploring whether specialization and concentration patterns have changed over time and to expose the driving forces of geographic concentration in Turkey’s manufacturing industry, particularly during Turkey’s economic integration process with the European Union under the customs union established in 1996. Industrial concentration and regional specialization are measured by GINI index for NUTS 2 regions at the 2-digit level for the years between 1992 and 2001. To investigate which variables determine industry concentration, the systematic relation between the characteristics of the industry and geographical concentration is tested. A regression equation is estimated, where the dependent variable is GINI concentration index and the independent variables are the variables that represent the characteristics of the sectors. The major finding of the study is that Turkey’s manufacturing industry has a tendency for regional specialization. Increase in the average value for regional specialization supports the prediction developed by Krugman that regions become more specialized with regional integration. But there is no evidence for increased industrial concentration in Turkish manufacturing industry, contrary to the expectations. As for the answer to which variables determine industry concentration, the analysis supports the hypothesis that the firms tend to cluster in regions where there are economies of scale and there are significant linkages between firms, supporting the predictions of new trade theory and economic geography. |
| Keywords: | Regional specialization, geographical concentration, economic integration, geographical economics |
| JEL: | L60 R10 R11 R12 R15 |
| URL: | http://d.repec.org/n?u=RePEc:deu:dpaper:0105&r=eec |
| By: | Marco Francesconi (University of Essex and IZA Bonn); Stephen P. Jenkins (ISER, University of Essex, DIW Berlin and IZA Bonn); Thomas Siedler (ISER, University of Essex, DIW Berlin and IZA Bonn) |
| Abstract: | We analyze the impact on schooling outcomes of growing up in a family headed by a single mother. Growing up in a non-intact family in Germany is associated with worse outcomes in models that do not control for possible correlations between common unobserved determinants of family structure and educational performance. But once endogeneity is accounted for, whether by using sibling-difference estimators or two types of instrumental variable estimator, the evidence that family structure affects schooling outcomes is much less conclusive. Although almost all the point estimates indicate that non-intactness has an adverse effect on schooling outcomes, confidence intervals are large and span zero. |
| Keywords: | childhood family structure, lone parenthood, educational success, sibling differences, instrumental variables, treatment effects |
| JEL: | C23 D13 I21 J12 J13 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1837&r=eec |
| By: | Lorraine Dearden; Howard Reed; John Van Reenen |
| Abstract: | It is standard in the literature on training to use wages as a sufficient statistic for productivity. But there aremany reasons why wages and productivity may diverge. This paper is part of a smaller literature on the effectsof work-related training on direct measures of productivity. We construct a panel of British industries between1983 and 1996 containing training, productivity and wages. Using a variety of econometric estimationtechniques (including system GMM) we find that training is associated with significantly higher productivity.Raising the proportion of workers trained in an industry by one percentage point (say from the average of 10%to 11%) is associated with an increase in value added per worker of about 0.6% and an increase in wages ofabout 0.3%. Furthermore, we find that the magnitude of the impact of training on wages is only half as large asthe impact of training on productivity, implying that the existing literature has underestimated the importance oftraining. We also show evidence using complementary datasets (e.g. from individuals) that is suggestive ofexternalities of training and imperfect competition. |
| Keywords: | Productivity, training, wages, panel data |
| JEL: | J31 C23 D24 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0674&r=eec |
| By: | Miroslav Verbic (Institute for Economic Research Ljubljana) |
| Abstract: | The article represents a construction of a quarterly econometric model of the Slovenian economy and an analysis of fundamental relationships of the Slovenian economy. For this purpose we formed a system of identities, consistent with the national accounts, and of stochastic equations, consistent with economic theory as well as institutional and constitutional characteristics of the Slovenian economy. The present econometric model of the Slovenian economy SIQM 2.1 consists of 97 equations and covers the period of 1997:1 – 2003:4. Adequacy of the model, i.e. its ability to reproduce the actual economic developments in the period under investigation, was verified by performing dynamic simulations. It was established that the results are econometrically satisfactory and in part even quite favourable. |
| Keywords: | economic transformation, model construction and estimation, model evaluation and testing, simultaneous equation models, Slovenia |
| JEL: | C3 C51 C52 |
| Date: | 2005–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpem:0511015&r=eec |