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on European Economics |
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Issue of 2006‒09‒23
twenty-one papers chosen by Giuseppe Marotta Universita di Modena e Reggio Emilia |
| By: | Ralf Brüggemann; Helmut Lütkepohl; Massimiliano Marcellino |
| Abstract: | It is investigated whether Euro-area variables can be forecast better based on synthetic time series for the pre-Euro period or by using just data from Germany for the pre-Euro period. Our forecast comparison is based on quarterly data for the period 1970Q1 - 2003Q4 for ten macroeconomic variables. The years 2000 - 2003 are used as forecasting period. A range of different univariate forecasting methods is applied. Some of them are based on linear autoregressive models and we also use some nonlinear or time-varying coefficient models. It turns out that most variables which have a similar level for Germany and the Euro-area such as prices can be better predicted based on German data while aggregated European data are preferable for forecasting variables which need considerable adjustments in their levels when joining German and EMU data. These results suggest that for variables which have a similar level for Germany and the Euro-area it may be reasonable to consider the German pre-EMU data for studying economic problems in the Euro-area. |
| Keywords: | Aggregation, forecasting, European monetary union, constructing EMU data |
| JEL: | C22 C53 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2006-065&r=eec |
| By: | Enzo Weber |
| Abstract: | In this paper, the capital market relations between the Euro area and the USA are subject to investigation. Formally based on the uncovered interest rate parity (UIP), first a longrun equilibrium between Euro and US government bond yields is established in backward recursively estimated vector error correction models (VECMs). Subsequently, the focus lies on interest rate leadership and adjustment as well as capital market integration. One major finding shows, that the foundation of the European Monetary Union (EMU) strengthened its role relative to the USA. Furthermore, the transatlantic connections have become closer in the course time. |
| Keywords: | Capital Market, UIP, Euro, Transatlantic Relations |
| JEL: | E44 F36 C32 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2006-056&r=eec |
| By: | António Afonso (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | In order to assess the existence of expansionary fiscal consolidations in Europe, panel data models for private consumption are estimated for the EU15 countries, using annual data over the period 1970–2005. Three alternative approaches to determine fiscal episodes are used, and the level of government indebtedness is also taken into account. The results show some evidence in favour of the existence of expansionary fiscal consolidations, for a few budgetary spending items (general government final consumption, social transfers, and taxes), depending on the specification and on the time span used. On the other hand, the possibility of asymmetric effects of fiscal episodes does not seem to be corroborated by the results. JEL Classification: C23, E21, E62. |
| Keywords: | fiscal policy, expansionary fiscal consolidations, non-Keynesian effects, panel data models, European Union. |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20060675&r=eec |
| By: | Flam, Harry (Institute for International Economic Studies, Stockholm University); Nordström, Håkan (Kommerskollegium) |
| Abstract: | The gravity model is used to estimate the trade volume effects of the creation of the European currency union. The euro is estimated to have raised the level of aggregate trade between euro countries in 1998-2002 compared to 1989-1997 by 15 per cent and the level of trade with outside countries by 8 per cent. The effect is clearly increasing over time. Estimates for one-digit SITC sectors yield a concentration of effects to highly processed manufactures, indicating that the spillover is caused by increasing vertical specialization across countries. |
| Keywords: | - |
| JEL: | F10 |
| Date: | 2006–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iiessp:0746&r=eec |
| By: | Bennedsen, Morten (Department of Economics, Copenhagen Business School); Meisner, Kasper, Nielsen (Department of Economics, Copenhagen Business School) |
| Abstract: | Recent policy initiatives within the harmonization of European company laws have promoted a so-called "principle of proportionality" through proposals that regulate mechanisms opposing a proportional distribution of ownership and control. We scrutinize the foundation for these initiatives by analyzing the use of instruments to separate ownership from control across legal regimes in a sample of over 4,000 publicly traded firms from 14 Western European countries. First, we confirm the negative impact on firm value from disproportional ownership structures previously established in a sample of Asian firms by Claessens et al. (2002). Second, we show that dual class shares have a larger and more significant negative effect on firm value than pyramids and cross holdings. Third, we find that the impact of disproportionality and the underlying instruments is inversely related to the level of investor protection. Thus, dual class shares and pyramids substitute legal protection in countries with inadequate investor protection. Fourth, we find no evidence of a significant effect of disproportionality instruments on earnings performance. Finally, we discuss policy implications of these findings in relationship to the process of harmonization of the European capital markets. |
| Keywords: | Ownership Structure; Dual Class Shares; Pyramids; EU company |
| JEL: | G30 G32 G34 G38 |
| Date: | 2006–08–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cbsnow:2005_022&r=eec |
| By: | Anthony Arundel; Edward Lorenz; Bengt-Åke Lundvall; Antoine Valeyre |
| Abstract: | It is widely recognised that while expenditures on research and development are important inputs to successful innovation, these are not the only inputs. Further, rather than viewing innovation as a linear process, recent work on innovation in business and economics literatures characterises it as a complex and interactive process involving multiple feedbacks. These considerations imply that relevant indicators for innovation need to do more than capture material inputs such as R&D expenditures and human capital inputs. The main contribution of this paper is to develop EU-wide aggregate measures that are used to explore at the level of national innovation systems the relation between innovation and the organisation of work. In order to construct these aggregate measures we make use of micro data from two European surveys: the third European survey of Working Conditions and the third Community Innovation Survey (CIS-3). Although our data can only show correlations rather than causality they support the view that how firms innovate is linked to the way work is organised to promote learning and problem-solving. |
| Keywords: | National innovation systems; measuring; methodology |
| JEL: | O31 O52 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:aal:abbswp:06-14&r=eec |
| By: | Michal Mackiewicz (Institute of Economics, University of Lodz) |
| Abstract: | One of the often discussed negative aspects of the Stability and Growth Pact is the rigidity of its deficit rule. Several reform proposals aim currently at alleviating the rule in order to allow the automatic stabilizers to operate freely. However, such a reform is likely to cause even further deterioration of fiscal balances in the member countries. The empirical evidence presented in this paper shows that, in the past, increasing the structural deficit had a strong negative impact on a degree of anti-cyclical fiscal stabilization. This suggests that the reform of the Pact, through higher structural deficits, can decrease rather then increase the scope of anti-cyclical fiscal actions in the EMU member countries. |
| Keywords: | fiscal policy, stabilization policy, fiscal rules |
| JEL: | E60 E63 |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:ldz:wpaper:0099&r=eec |
| By: | Harju, Kari (Swedish School of Economics and Business Administration); Hussain, Mujahid (Swedish School of Economics and Business Administration) |
| Abstract: | Using a data set consisting of three years of 5-minute intraday stock index returns for major European stock indices and U.S. macroeconomic surprises, the conditional mean and volatility behaviors in European market were investigated. The findings suggested that the opening of the U.S market significantly raised the level of volatility in Europe, and that all markets respond in an identical fashion. Furthermore, the U.S. macroeconomic surprises exerted an immediate and major impact on both European stock markets’ returns and volatilities. Thus, high frequency data appear to be critical for the identification of news that impacted the markets. |
| Keywords: | Macroeconomic surprises; intraday seasonality; Flexible Fourier Form; conditional mean; conditional volatility; information spillover |
| Date: | 2006–09–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhb:hanken:0512&r=eec |
| By: | Vincenzo Galasso (IGIER, Università Bocconi, CSEF and CEPR) |
| Abstract: | Conventional economic wisdom suggests because of the aging process, social security systems will have to be retrenched. In particular, retirement age will have to be largely increased. Yet, is this policy measure feasible in OECD countries? Since the answer belongs mainly to the realm of politics, I evaluate the political feasibility of postponing retirement under aging in France, Italy, the UK, and the US. Simulations for the year 2050 steady state demographic, economic and political scenario suggest that retirement age will be postponed in all countries, while the social security contribution rate will rise in all countries, but Italy. The political support for increasing the retirement age stems mainly from the negative income effect induced by aging, which reduces the profitability of the existing social security system, and thus the individuals net social security wealth. |
| Date: | 2006–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:164&r=eec |
| By: | Arnaud Lefranc (Robert Schuman Center, European University Institute and THEMA, Université de Cergy-Pontoise.); Nicolas Pistolesi (THEMA, Université de Cergy-Pontoise.); Alain Trannoy (EHESS, GREQAM-IDEP) |
| Abstract: | This paper analyzes the relationship between income inequality and inequality of opportunities for income acquisition in nine developed countries during the nineties. We develop a new definition of equality of opportunity and show how it can be implemented empirically. Equality of opportunity is defined as the situation where income distributions conditional on social origin cannot be ranked according to stochastic dominance criteria. Stochastic dominance is assessed using non-parametric statistical tests. We measure social origin by parental education and occupation and use national household surveys to assess inequality of income and opportunities. USA and Italy show up as the most unequal countries both in terms of outcome and opportunity. At the opposite extreme, income distributions conditional on social origin are very close in Scandinavian countries even before any redistributive policy. The analysis highlights that inequality of outcome and inequality of opportunity can sometimes lead to different pictures. For instance, France and Germany experience a similar level of inequality of income but the former country is much more unequal than the latter from the point of view of equality of opportunity. Differences in rankings according to inequality of outcome and inequality of opportunity underscore the importance of the policymaker's choice of the conception of equality to promote. |
| Keywords: | Equality of opportunity, Income inequality, Income distribution, Lorenz dominance. |
| JEL: | D61 D63 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2006-54&r=eec |
| By: | Thorsten Vogel |
| Abstract: | Using longitudinal data on fathers and their children, this study compares the extent of intergenerational mobility in Germany and the United States and introduces an estimation strategy that corrects estimates of intergenerational earnings elasticities for a possible lifecycle bias. In contrast to previous studies, we find that the extent of intergenerational mobility is more limited in the US than in Germany. Furthermore, while the errors-in-variables problems have been dealt with extensively in the literature, the inconsistencies in standard mobility measures due to lifecycle effects have attracted much less attention. The present paper proposes an estimation method that corrects for such inconsistencies. The extent of this lifecycle bias is found to be strong in Germany but only modest in the US. |
| Keywords: | Intergenerational mobility, lifecycle bias, comparison of Germany and the US |
| JEL: | D31 J31 J62 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2006-055&r=eec |
| By: | Eckhard Wurzel |
| Abstract: | High levels of unemployment and rising social charges have lead to considerable pressure on labour markets to adjust. Major steps in labour market reform have been implemented over the last three years. These need to be followed up in several respects in order to raise the economy’s capacity to generate employment. The present tax and transfer system still implies significant disincentives for labour supply of older people and spouses, which should be eliminated. Unemployment related benefits and active labour market policies can be better geared toward activating the unemployed, while institutional reform of the Public Employment Service should continue. On the labour demand side, there remains scope to raise the efficiency of Germany's employment protection system. Also, provisions should be made to allow for a higher degree of wage flexibility across qualifications and regions to fight unemployment. Regulatory conditions in other parts of the economy interact in important ways with labour market performance, underlining the need for a broad based reform approach. This Working Paper relates to the 2006 OECD Economic Survey of Germany (www.oecd.org/eco/surveys/Germany). <P>La réforme du marché du travail en Allemagne : Comment améliorer l’efficacité <BR>Face à un chômage élevé et à un alourdissement des charges sociales, des ajustements sont devenus de plus en plus nécessaires sur les marchés du travail. D'importantes réformes du marché du travail ont été mises en oeuvre ces trois dernières années. Elles doivent être poursuivies dans plusieurs domaines afin de permettre à l'économie de créer davantage d'emplois. Le système actuel de prélèvements et de transferts dissuade encore dans bien des cas les personnes âgées et les conjoints de travailler, situation à laquelle il y aurait lieu de remédier. L'indemnisation du chômage et les politiques actives du marché du travail pourraient être conçues de manière à favoriser davantage le retour à l'emploi des chômeurs, et la réforme institutionnelle du service public de l'emploi doit être poursuivie. S'agissant de la demande de main-d'oeuvre, l'efficience du système de protection de l'emploi pourrait être améliorée. Par ailleurs, il y aurait lieu de prendre des dispositions pour permettre une plus grande flexibilité des salaires en fonction des qualifications et suivant les régions, afin de lutter contre le chômage. Les conditions de réglementation dans d'autres secteurs de l'économie interagissent de façon importante avec la performance du marché du travail, soulignant le besoin d'une approche globale des réformes. Ce document de travail se rapporte à l’Étude économique de l’OCDE de l’Allemagne (www.oecd.org/eco/etudes/Allemagne). |
| Keywords: | unemployment, chômage, employment protection legislation, législation sur la protection de l'emploi, Germany, Allemagne, employment, emploi, salaire minimum, public employment services, service public de l'emploi, minimum wage, labour market reform, unemployment benefits, labour force participation, activation strategies, wage rigidities, wage determination, policy synergies, réforme du marché du travail, allocations chômages, activité des personnes sur le marché du travail, stratégie d'activation, rigidités salariales, détermination des rémunérations, synergies des politiques |
| JEL: | J22 J23 J26 J31 J32 J33 J48 J52 J65 J68 |
| Date: | 2006–09–06 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:512-en&r=eec |
| By: | R. Magnani |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:ema:worpap:2005-11&r=eec |
| By: | Boris Augurzky (RWI Essen and IZA Bonn); Thomas K. Bauer (RWI Essen, Ruhr-University Bochum, CEPR London and IZA Bonn); Sandra Schaffner (RWI Essen) |
| Abstract: | This paper examines the effect of copayments on doctor visits using the German health care reform of 2004 as a natural experiment. In January 2004, copayments of 10 euros for the first doctor visit in each quarter have been introduced for all adults in the statutory health insurance. Individuals covered by private health insurance as well as youths have been exempted from these copayments. We use them as control groups in a difference-indifferences approach to identify the causal impact of these copayments on doctor visits. In contrast to expectations and public opinion our results indicate that there are no statistically significant effects of the copayments on the decision of visiting a doctor. |
| Keywords: | copayment, doctor visits, difference-in-differences, fixed-effect logit |
| JEL: | I11 I18 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2290&r=eec |
| By: | Antoni, Manfred (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Jahn, Elke J. (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]) |
| Abstract: | "Over the past three decades Germany has repeatedly deregulated the law on temporary agency work by stepwise increasing the maximum period for hiring-out employees and allowing temporary work agencies to conclude fixed-term contracts. These reforms should have had an effect on the employment duration within temporary work agencies. Based on an informative administrative data set we use hazard rate models to examine whether the employment duration has changed in response to these reforms. We find that the repeated prolongation of the maximum period for hiring-out employees significantly increased the average employment duration while the authorization of fixed-term contracts reduced employment tenure." (author's abstract, IAB-Doku) ((en)) |
| Keywords: | Leiharbeit, Diffusion, Leiharbeitnehmer, Persönlichkeitsmerkmale, Beschäftigungsdauer, Arbeitsmarktpolitik, Arbeitsrecht, Deregulierung, Betriebszugehörigkeit |
| JEL: | C41 J23 J40 J48 K31 |
| Date: | 2006–09–14 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:200618&r=eec |
| By: | Gerke, Wolfgang; Mager, Ferdinand; Reinschmidt, Timo; Schmieder, Christian |
| Abstract: | With this paper we seek to contribute to the literature on pension insurance systems. The financial literature tends to focus exclusively on the US pension insurance system. This is the first major empirical study to address the German occupational pension insurance (PSVaG) plan in Germany. The study is based on a Merton-type one-factor model, in which we determine the credit portfolio risk profile of the occupational pension insurance plan and compare two alternative pricing plans. We find that there is a low, yet non-negligible risk of very high losses that may threaten the existence of the occupational pension insurance plan (PSVaG). While relating risk premiums to firms’ default probabilities would cause them to diverge widely, a marginal risk contribution method would produce less pronounced differences compared to the current, uniform pricing plan. |
| Keywords: | Pension insurance, Risk-adjusted premiums, Credit portfolio risk |
| JEL: | C15 G18 G22 G23 G28 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp2:4772&r=eec |
| By: | Claudia Werker |
| Abstract: | The Lisbon strategy for growth and jobs seeks to use knowledge and innovation in the context of the European Research Area (ERA). To build the ERA the European Union (EU) implements – amongst others - regional innovation policy. Ample scientific publications have investigated how innovation drives regional dynamics. Therefore, we assess the goals of European regional innovation policy in the light of the scientific findings, which we collected and condensed by bibliometrical analysis. The general goals of the Lisbon strategy to at the same time stimulate growth and achieve cohesion of economic activities across the EU is not in line with the finding that positive cumulative and self-reinforcing processes go hand in hand with the agglomeration of economic activities. However, the goals of the specific innovation policies for the regional level are mainly in line with the scientific findings. |
| Keywords: | Region, innovation policy, European Union, bibliometrical analysis Length 28 pages |
| JEL: | O31 O33 O38 R11 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:esi:evopap:2006-11&r=eec |
| By: | Dany LANG (LEREPS-GRES) |
| Abstract: | During the last years, there has been a growing interest for the Danish “flexicurity” system all over Europe. Following the European Commission, the subtle combination of flexibility and security chosen by the Danes would even be a matrix of inspiration for the reform of the European labour markets. This paper analyses the core elements of the Danish “model” to determine whether these views are relevant. The flexible labour market, the generous welfare system, and the active labour market policy are examined. We focus on the 1993 labour market reform, which is supposed to have triggered the remarkable decrease of unemployment that took place in Denmark since 1994. |
| Keywords: | Flexicurity, unemployment, labour market |
| JEL: | J40 J48 J50 J80 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:grs:wpegrs:2006-18&r=eec |
| By: | Huizinga, Harry (Department of Economics, Copenhagen Business School); Nielsen, Søren Bo (Department of Economics, Copenhagen Business School) |
| Abstract: | Europe has seen several proposals for tax coordination only in the area of capital income taxation, leaving countries free to adjust their labor taxes. The expectation is that higher capital income tax revenues would cause countries to reduce their labor taxes. This paper shows that such changes in the mix of capital and labor taxes brought on by capital income tax coordination can potentially be welfare reducing. This reflects that in a non-cooperative equilibrium capital income taxes may be more distorting from an international perspective than are labor income taxes. Simulations with a simple model calibrated to EU public finance data suggest that countries indeed lower their labor taxes in response to higher coordinated capital income taxes. The overall welfare effects of capital income tax coordination, however, are estimated to remain positive. |
| Keywords: | None; |
| JEL: | F20 H87 |
| Date: | 2005–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cbsnow:2005_024&r=eec |
| By: | Jan Brenner (RGS Econ and RWI Essen); Michael Fertig (RWI Essen and IZA Bonn) |
| Abstract: | Utilizing subjective data to infer on fundamental issues of individual opinion is associated with severe conceptual and methodological problems. This paper addresses these problems and investigates the attitudes towards immigrants within a cross-country framework. To this end, we utilize data from the first wave of the European Social Survey (ESS) in a structural latent variable model. The determinants of attitudes towards immigrants are estimated by employing different identification restrictions on the model. Our results suggest that educational attainment as well as parental education are the main driving forces behind attitudes formation. Average attitudes across countries further seem to increase with per capita GDP. All our findings are stable across countries and identification strategies. |
| Keywords: | subjective data, identification, minorities |
| JEL: | C31 F22 J15 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2306&r=eec |
| By: | Stepán Jurajda (CERGE-EI, CEPR and IZA Bonn); Teodora Paligorova (CERGE-EI) |
| Abstract: | This paper examines the gender gaps in employment and wages among top- and lower-level managerial employees in a recent sample of Czech firms. Unlike the existing analyses of managerial gender pay gaps, we acknowledge the adverse consequences of the low and uneven representation of women for the Oaxaca-Blinder decomposition and offer an alternative set of results based on a matching procedure. Only 7% of top-level Czech managers are women and their wages are about 20 percent lower even when compared only to their comparable male colleagues. |
| Keywords: | managers, gender pay gap |
| JEL: | J31 J71 P31 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2303&r=eec |