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on European Economics |
| By: | Sabina Pogorelec (European Investment Bank, 100 boulevard Konrad Adenauer, L-2950 Luxembourg, Luxembourg.) |
| Abstract: | I build a quantitative two-country DSGE model of the European Union (EU) and investigate whether there are welfare gains from fiscal policy cooperation between the new EU members and the euro area (EMU). Fiscal cooperation is defined in terms ofjoint maximization of the weighted average of households’ welfare. I find that fiscal policy cooperation is welfare-reducing for both groups of countries. This result depends on a realistic assumption about the presence of foreign ownership of firms in the new EU countries. When there is no foreign ownership in the new EU countries, the euro area is indifferent between cooperating and not cooperating, but the new EU members still prefer not to cooperate with EMU in terms of fiscal policy. JEL Classification: E63; F42. |
| Keywords: | Fiscal policy cooperation; Foreign ownership of firms; Fiscal-monetary interactions; Enlarged European Union; Central and eastern European countries. |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20060655&r=eec |
| By: | Antonello D’Agostino (Central Bank and Financial Service Authority of Ireland); Roberta Serafini (European Central Bank and ISAE); Melanie Ward (European Central Bank and IZA Bonn) |
| Abstract: | This paper investigates the determinants of the service sector employment share in the EU- 15, for the aggregate service sector, four sub-sectors and twelve service sector branches. Recently, both Europe and the US have experienced an increase in the share of servicerelated jobs in total employment. Although converging in all European countries, a significant gap in the share of service jobs in Europe relative to the US persists. Understanding the main factors behind this gap is key to achieving higher employment levels in Europe. This paper focuses on the role of barriers in the EU-15 which may have hindered its ability to absorb labour supply and therefore to adjust efficiently to the sectoral reallocation of labour. We find that a crucial role in this process has been played by the institutional framework affecting flexibility in the labour market and by the mismatch between workers’ skills and job vacancies. |
| Keywords: | services, sectoral adjustment, employment share, Europe, US, institutions in the labour and product market |
| JEL: | E24 J21 J23 J24 L80 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2257&r=eec |
| By: | Gayle Allard; Peter H. Lindert |
| Abstract: | How have labor market institutions and welfare-state transfers affected jobs and productivity in Western Europe, relative to industrialized Pacific Rim countries? Orthodox criticisms of European government institutions are right in some cases and wrong in others. Protectionist labor-market policies such as employee protection laws seem to have become more costly since about 1980, not through overall employment effects, but through the net human-capital cost of protecting senior male workers at the expense of women and youth. Product-market regulations in core sectors may also have reduced GDP, though here the evidence is less robust. By contrast, high general tax levels have shed the negative influence they might have had in the 1960s and 1970s. Similarly, other institutions closer to the core of the welfare state have caused no net harm to European jobs and growth. The welfare state’s tax-based social transfers and coordinated wage bargaining have not harmed either employment or GDP. Even unemployment benefits do not have robustly negative effects. |
| JEL: | N13 N3 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12460&r=eec |
| By: | Marian Berneburg |
| Abstract: | Are financial markets efficient? One proposition that seems to contradict this is Shiller’s finding of excess volatility in asset prices and its resulting rejection of the discounted cash flow model. This paper replicates Shiller’s approach for a different data set and extends his analysis by testing for a long-run relationship by means of a cointegration analysis. Contrary to previous studies, monthly data for an integrated European stock market is being used, with special attention to equity style investment strategies. On the basis of this analysis’ results, Shiller’s findings seem questionable. While a long-run relationship between prices and dividends can be observed for all equity styles, a certain degree, but to a much smaller extent than in Shiller’s approach, of excess volatility cannot be rejected. But it seems that a further relaxation of Shiller’s assumptions would completely eliminate the finding of an overly strong reaction of prices to changes in dividends. Two interesting side results are, that all three investment styles seem to have equal performance when adjusting for risk, which by itself is an indication for efficiency and that market participants seem to use current dividend payments from one company as an indication for future dividend payments by other firms. Overall the results of this paper lead to the conclusion that efficiency cannot be rejected for an integrated European equity market. |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:iwh:dispap:16-06&r=eec |
| By: | Mihaly Simai |
| Abstract: | This paper deals with the causes and consequences of inequality and poverty in the countries east of the new frontiers of the European Union, mainly with the CIS countries. Poverty and inequalities in the former socialist countries were partly mitigated by the social policies of the state. The transition processes, however, have resulted in new distributions of income and wealth. The new structural sources of poverty and inequalities have often been more extreme. Some CIS countries have moderated poverty, which nonetheless persists in most CIS countries, in spite of some economic improvements. |
| Keywords: | transition, Central and Eastern Europe, CIS countries, transformation, poverty, inequality, social policy, health, education |
| JEL: | I3 I32 I38 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:une:wpaper:17&r=eec |
| By: | Gábor Orbán (Magyar Nemzeti Bank); Zoltán Szalai (Magyar Nemzeti Bank) |
| Abstract: | The most important mechanism through which monetary policy affects the real economy in Hungary is the exchange rate channel. With euro adoption, this mechanism will largely disappear and the impact of monetary policy will be transmitted via the interest rate channel, presently seen as rather weak. This has raised concerns that the influence of monetary policy on the real economy in Hungary could be very limited after euro adoption. On top of this, other concerns have been voiced as regards potential asymmetries in the wage-setting behaviour, the exchange rate and credit channels. Based on the experience of today’s euro area participating countries and the structural characteristics of the Hungarian economy, this paper argues that after euro adoption 1) we may expect a broadening of the scope of the interest rate channel of monetary policy after euro adoption, 2) there are no institutional obstacles in the way of the effective functioning of the expectations channel in Hungary 3) substantially different monetary conditions from that in the euro area as a result of a different trade orientation are unlikely, and, finally 4) some asymmetries in the balance sheet channel may continue to exist for some time between Hungary and the core euro area countries but its effect will be significantly smaller after euro zone entry. |
| Keywords: | monetary transmission mechanism, transmission channels, EMU participation. |
| JEL: | E52 E58 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:mnb:backgr:2005/4&r=eec |
| By: | Dirk Schindler (Department of Economics, University of Konstanz); Guttorm Schjelderup (Norwegian School of Economics and Business Administration an CESifo) |
| Abstract: | We study how harmonization of corporate tax systems affects the stability of international cartels. We show that tax base harmonization reinforces collusive agreements, while harmonization of corporate tax rates may destabilize or stabilize cartels. We also find that bilateral and full harmonization to a common standard is worse from society’s point of view than unilateral harmonization to a minimum tax standard. |
| Keywords: | Corporate tax systems, tacit collusion |
| JEL: | H87 L1 |
| Date: | 2006–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:knz:cofedp:0601&r=eec |
| By: | Kolm, Ann-Sofie (Department of Economics, Copenhagen Business School); Larsen, Birthe (Department of Economics, Copenhagen Business School) |
| Abstract: | This paper provides an assessment of Greenland's tax system and contemplates changes that may be undertaken in the future to prepare for greater economic self-reliance and for the country's participation in the wider world economy. At the outskirts of Europe, Greenland is an autonomous part of the Danish kingdom, though currently not a member of EU. However, its cooperation with European countries and its dependency on international trade renders it necessary for the tax system in Greenland to be attuned to developments in the rest of the world. Drawing on a thorough international benchmarking analysis of Greenland's tax system, the paper's special focus will be on the corporate tax system and its interplay with personal taxation, as well on as the system of import duties. In particular, we carry out computations of effective marginal and average corporate tax rates, as well as average effective tax burdens on consumption, labour income and capital income, and compare these to similar measures for EU countries. In addition, we outline how Greenland's economic policy in other areas interferes with tax policy. Especially fishery regulation, management of government-owned companies, and housing policy have major implications for the tax system. |
| Keywords: | international benchmarking; effective tax rates; Greenland |
| JEL: | H26 I21 J64 |
| Date: | 2006–11–12 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cbsnow:2003_013&r=eec |
| By: | Anna Matysiak (Max Planck Institute for Demographic Research, Rostock, Germany); Beata Nowok (Max Planck Institute for Demographic Research, Rostock, Germany) |
| Abstract: | Forecasting the population of Poland is very challenging. Firstly, the country has been undergoing rapid demographic changes. In the 1990s, Poland experienced a fundamental shift from a communist regime to a democratic regime and entered the European Union in 2004. The political, economic, and social changes that accompanied the transformation had a profound influence on the demographic patterns in this country. International migration has been one of the first consequences of Poland’s entry into the EU, and it is expected to increase in the future. Secondly, the availability of statistics for Poland on past trends is strongly limited. The resulting high uncertainty of future trends should be dealt with systematically, which is an essential part of the stochastic forecast. In this article, we present to the best of our knowledge a first stochastic forecast of the population of Poland. The forecast constitutes a valuable alternative to considering various scenarios that have been applied so far. The forecast results show that the Polish population will constantly decline during the next decades. There is a probability of 50 % that in 2050 the population will number between 27 and 35 millions compared to 38.2 in 2004. Besides, Poland will face significant ageing as indicated by a rising old-age dependency-ratio. In 45 years, there will be at least 63 persons aged 65+ per 100 persons aged 19-64, and this with a probability of 50 %. A description of the most important limitations to the official Polish demographic statistics and an analysis of past trends in fertility, mortality, and international migration are important by-products of this study. |
| Keywords: | Poland, population forecasts |
| JEL: | J1 Z0 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2006-026&r=eec |