nep-eec New Economics Papers
on European Economics
Issue of 2006‒11‒25
thirty papers chosen by
Giuseppe Marotta
Universita di Modena e Reggio Emilia

  1. Common Volatility Trends in the Central and Eastern European Currencies and the Euro By Marcus Pramor; Natalia T. Tamirisa
  2. One Market, One Money, One Price? By Allington, Nigel FB; Kattuman, Paul A; Waldmann, Florian A
  3. Term Structure of Interest Rates. European Financial Integration By Elisabet Ruiz Dotras; Hortensia Fontanals Albiol; Catalina Bolance Losilla
  4. Skill diffusion by temporary migration? Returns to Western European working experience in the EU-accession countries By Anna Iara
  5. Employment and growth in Europe and the US - The role of fiscal policy composition By T. DHONT; F. HEYLEN
  6. Monetary Integration and the Cost of Borrowing By Marta Gomez-Puig
  7. Money Demand and Disinflation in Selected CEECs during the Accession to the EU By Fidrmuc, Jarko
  8. Estimating a Collective Household Model with Survey Data on Financial Satisfaction By Rob Alessie; Thomas F. Crossley; Vincent Hildebrand
  9. Does the Introduction of the Euro affect the Debt-Equity Choice? By Karin Jõeveer; Peter Tóth
  10. Integration of the Securities Market Infrastructure in the European Union: Policy and Regulatory Issues By Elias G. Kazarian
  11. Great Ratios, Balanced Growth and Stochastic Trends: Evidence for the Euro Area By M.S.Rafiq
  12. The Economic Returns to Multiple Language Usage in Western Europe By Williams, Donald R.
  13. Measures of Underlying Inflation in the Euro Area: Assessment and Role for Informing Monetary Policy By Emil Stavrev
  14. Cross-border banking: challenges for deposit insurance and financial stability in the European Union By Robert A. Eisenbeis; George G. Kaufman
  15. Social Models, Growth and the International Monetary System: Implications for Europe and the United States By Roberto Scazzieri; Lilia Costabile
  16. Convenience Yields for CO2 Emission Allowance Futures Contracts By Szymon Borak; Wolfgang Härdle; Stefan Trück; Rafal Weron
  17. Capital Flows to Central and Eastern Europe By Gian Maria Milesi-Ferretti; Philip R. Lane
  18. Preferential Trade Liberalization and the Range of Exported Products: The Case of the Euro-Mediterranean FTA By Alberto Amurgo Pacheco
  19. The dynamic behaviour of budget components and output – the cases of France, Germany, Portugal, and Spain By António Afonso; Peter Claeys
  20. Short-term Pain for Long-Term Gain: The Impact of Structural Reform on Fiscal of Outcomes in EMU By Paul van den Noord; Boris Cournède
  21. The Analysis of Coordinated Effects in EU Merger Control: Where do we stand after Sony/BMG and Impala? By Oliver Budzinski; Gisela Aigner; Arndt Christiansen
  22. Does Consumer Confidence Forecast Household Spending? The Euro Area Case By DION, David Pascal
  23. The Performance and Robustness of Interest-Rate Rules in Models of the Euro Area By Adalid, Ramon; Coenen, Gunter; McAdam, Peter; Siviero, Stefano
  24. Euro-Dollar Real Exchange Rate Dynamics in an Estimated Two-Country Model: What Is Important and What Is Not By Pau Rabanal; Vicente Tuesta
  25. Using Job Embeddedness Factors to Explain Voluntary Turnover in Five European Countries By Tanova, Cem
  26. Privatization in Western Europe Stylized Facts, Outcomes, and Open Issues By Bernardo Bortolotti; Valentina Milella
  27. The Persistent Decline in Unionization in Western and Eastern Germany, 1980-2004: What Can We Learn from a Decomposition Analysis? By Claus Schnabel; Joachim Wagner
  28. Productivity Growth, Technological Convergence, R&D, Trade, and Labor Markets: Evidence from the French Manufacturing Sector By Tehmina S. Khan
  29. The Aggregate Labor Market Effects of the Swedish Knowledge Lift Program By James Albrecht; Gerard J. van den Berg; Susan Vroman
  30. Measurement, Technological Capability, and Intra-Industry Trade: Evidence from the EU By M. Ali Choudhary; Paul Temple; Lei Zhao

  1. By: Marcus Pramor; Natalia T. Tamirisa
    Abstract: How much convergence has been achieved between Central and Eastern European (CEE) economies and the eurozone? We explore this question by comparing long-run volatility trends in CEE currencies and the euro. We find that these trends are closely correlated, pointing to convergence in the economic and financial structures of these economies. Nonetheless, the degree of commonality remains weaker than what had been found for major European currencies before the introduction of the euro. Spillovers of volatility across regional markets appear to have diminished over time, with the exception of the Hungarian forint, which remains a source of volatility shocks to regional currencies.
    Keywords: Exchange rate , volatility , GARCH , convergence , Central Europe ,
    Date: 2006–09–25
  2. By: Allington, Nigel FB; Kattuman, Paul A; Waldmann, Florian A
    Abstract: The introduction of the euro was intended to integrate markets within Europe further, after the implementation of the 1992 Single Market Project. We examine the extent to which this objective has been achieved, by examining the degree of price dispersion between countries in the euro zone, compared to a control group of EU countries outside the euro zone. We also establish the role of exchange rate risk in hampering arbitrage by estimating the euro effect for subgroups within the euro zone, utilizing differences among EU countries in participation in the Exchange Rate Mechanism. Our results, in contrast with previous empirical research, suggest robustly that the euro has had a significant integrating effect.
    JEL: G00 G0
    Date: 2005–03–21
  3. By: Elisabet Ruiz Dotras; Hortensia Fontanals Albiol; Catalina Bolance Losilla (Universitat de Barcelona)
    Abstract: In this paper we estimate, analyze and compare the term structures of interest rates in six different countries over the period 1992-2004. We apply the Nelson-Siegel model to obtain the term structures of interest rates at weekly intervals. A total of 4,038 curves are estimated and analyzed. Four European Monetary Union countriesSpain, France, Germany and Italyare included. The UK is also included as a European non-member of the Monetary Union. Finally the US completes the analysis. The goal is to determine the differences in the shapes of the term structure of interest rates among these countries. Likewise, we can determine the most usual term structure shapes that appear for each country.
    Keywords: european interest rate., level parameter, parsimonious models, slope parameter, term structure of interest rate
    JEL: C14 C51 C82 G15
    Date: 2006
  4. By: Anna Iara (The Vienna Institute of International Economic Studies (wiiw))
    Abstract: Temporary migration is of growing significance in Europe. Upon migration to a country with higher technological development that typically coincides with positive wage differentials, temporary migrants may upgrade their skills by learning on the job and subsequently import the newly acquired human capital to their source country, thus adding to international know-how diffusion and the catching up of the respective economy. This paper is the first to provide supportive evidence of this hypothesis in a cross-country East to West European perspective, using the 2003 Youth Eurobarometer dataset.
    Keywords: Central and Eastern Europe, return migration, wage premium, skill diffusion
    JEL: J61 J31 O15
    Date: 2006–08–30
  5. By: T. DHONT; F. HEYLEN
    Abstract: We analyze the impact of the composition of fiscal policy on employment and long-run growth. Our theoretical model builds on Barro (JPE, 1990) which we extend by endogenizing the decision to work and by allowing three kinds of government expenditures and three kinds of taxes. The model explains what we basically observe in the data for European countries: relatively high employment and growth in the Nordic countries, but poor employment and low growth in the core countries of the euro area. Our model can also explain employment and growth in the US.
    Keywords: fiscal policy, taxes, transfers, government spending, employment, endogenous growth
    JEL: E24 E62 J22 O41
    Date: 2006–11
  6. By: Marta Gomez-Puig (Universitat de Barcelona)
    Abstract: With the beginning of the European Monetary Union (EMU), euro-area sovereign securities adjusted spreads over Germany (corrected from the foreign exchange risk) experienced an increase that caused a lower than expected decline in borrowing costs. The objective of this paper is to study what explains that rising. In particular, if it took place a change in the price assigned by markets to domestic (credit risk and/or market liquidity) or to international risk factors. The empirical evidence supports the idea that a change in the market value of liquidity occurred with the EMU. International and default risk play a smaller role.
    Keywords: international and domestic credit risk, market liquidity, monetary integration, sovereign securities markets
    JEL: E44 F36 G15
    Date: 2005
  7. By: Fidrmuc, Jarko
    Abstract: A panel data set for six countries (Czech Republic, Hungary, Poland, Romania, Slovakia, and Slovenia) is used to estimate money demand with panel cointegration methods over the recent disinflation period. The basic money demand model is able to convincingly explain the long-run dynamics of M2 in the selected countries. However, money demand is found to have been significantly determined by the euro area interest rates and the exchange rate against the euro, which indicates possible instability of money demand functions in the CEECs. Therefore, direct inflation targeting is an appropriate monetary regime before the eventual adoption of the euro.
    Keywords: Money demand; panel unit root tests; panel cointegration; direct inflation targeting; CEECs
    JEL: E41 E58 C23
    Date: 2006–10
  8. By: Rob Alessie; Thomas F. Crossley; Vincent Hildebrand
    Abstract: We estimate a collective household model with survey data on financial satisfaction from the European Community Household Panel. Our estimates suggest that cohabitating individuals enjoy returns to scale in consumption that are towards the larger end of the range of estimates reported in the literature. They also suggest that the share of household income provided by the female partner is a significant determinant of her share of household consumption in most of the countries we study.
    Keywords: consumption, returns to scale, collective household models
    JEL: D12 D13 I31
    Date: 2006–09
  9. By: Karin Jõeveer (Keele University, Centre for Economic Research and School of Economic and Management Studies); Peter Tóth (CERGE-EI)
    Abstract: We study firms from 14 Western European countries to detect the influence of a vanishing risk premium due to exchange rate risk on equity and debt issues. According to our hypothesis, Eurozone firms in industries with relatively higher external finance dependence (EFD) issue more equity and debt after 1999 than those outside the Euro area. We could explain the above by increased net present value of projects due to cheaper equity finance when internal funds are scarce. We find that Eurozone firms in high EFD industries are more likely to issue equity, and are more likely to be equity issuers than debt issuers after 1999. Further, there is evidence that firms in our sample follow a dynamic leverage target. Our results are consistent with previous studies and theories saying that an increase in a firm’s value due to perceived growth opportunities should be financed by equity issues. The above findings suggest that joining the Eurozone among others means higher growth prospects for some industries and firms.
    Keywords: Euro introduction, external finance dependence, firm performance.
    JEL: G3
    Date: 2006–10
  10. By: Elias G. Kazarian
    Abstract: This paper examines the impact of ongoing cross-border integration of securities market infrastructure in the European Union. In particular, it analyzes the regulatory framework that has evolved to deal with the risks associated with cross-border clearing and settlement and concludes that, due to institutionalized deficiencies, the current cross-border regulatory framework may not be adequate or effective in addressing and preventing a real cross-border crisis. The paper proposes a two-tier regulatory framework for securities infrastructure in Europe entailing the creation of a centralized "federal" European regulatory framework for regional systems, in addition to the current national regulatory framework for domestic systems.
    Keywords: Securities clearing and settlement systems , cross-border integration , consolidation , systemic risk , regulatory framework , oversight ,
    Date: 2006–10–27
  11. By: M.S.Rafiq (Dept of Economics, Loughborough University, United Kingdom)
    Abstract: Following Kydland and Prescott's (1982) seminal paper, a key question that has been debated widely remains, `Are business cycles mainly the result of permanent shocks to productivity?' This paper attempts to answer this question in the context of the Euro area economy as a whole, given current efforts to understand the design of Euro-wide policies. To help shed light on the preceding question for the Euro area a common trends model is utilised, allowing for the study of growth and business cycles phenomena in a joint framework. This paper imposes a long-run restriction implied by a large class of Real Business Cycle (RBC) models - identifying permanent productivity shocks as innovations to a common stochastic trend in output, consumption and investment - to provide evidence on the role of balanced growth shocks for the Euro area business cycle. This approach is given further credibility by the finding of stationary great ratios, justifying the use of exogenous growth models in examining the significance of productivity shocks on real output fluctuations for the Euro area. The results are broadly supportive of standard RBC theory, with the finding that up to 60% of transitory fluctuations are caused by exogenous permanent productivity shocks. The model further finds that productivity shocks have useful explanatory power in illuminating certain macroeconomic historical episodes, in contrast to monetary and inflation shocks, which appear to have played a relatively minor role in driving output fluctuations.
    Keywords: Stochastic Trends, Balanced Growth, Cointegration, Open Economy.
    JEL: C32 E32
    Date: 2006–11
  12. By: Williams, Donald R. (Kent State University (USA) and CEPS/INSTEAD (Luxembourg))
    Abstract: To what extent are there economic returns to learning a second or third language? Do the benefits differ according to country? This paper examines the return to multi-lingualism in the workplace. In particular, we estimate the effect that using an additional language in one’s job has on earnings for a sample of workers in the European Community Household Panel survey. Log-earnings regressions are estimated by country with controls for standard human capital, job, and personal characteristics. Preliminary results indicate that the use of a second language in the workplace raises earnings by about 5 to 10 percent, but the results are sensitive to the specification used and vary across countries, occupations, and gender.
    Date: 2006–10
  13. By: Emil Stavrev
    Abstract: The paper evaluates the 24-month ahead inflation forecasting performance of various indicators of underlying inflation and structural models. The inflation forecast errors resulting from model misspecification are larger than the errors resulting from forecasting of exogenous variables. Also, measures derived using the generalized dynamic factor model (GDFM) overperform other measures over the monetary policy horizon and are leading indicators of headline inflation. Trimmed means, although weaker than GDFM indicators, have good forecasting performance, while indicators by permanent exclusion underperform but provide useful information about short-term dynamics. The forecasting performance of theoretically-founded models that relate monetary aggregates, the output gap, and inflation improves with the time horizon but generally falls short of that of the GDFM. A composite measure of underlying inflation, derived by averaging the statistical indicators and the model-based estimates, improves forecast accuracy by eliminating bias and offers valuable insight about the distribution of risks.
    Keywords: Underlying inflation , forecast evaluation , composite indicators , forecast risk assessment , Inflation , Euro area , Monetary policy , Economic models ,
    Date: 2006–09–11
  14. By: Robert A. Eisenbeis; George G. Kaufman
    Abstract: This paper examines the implications that alternative regulatory structures may have for resolving failed banking institutions. We place our emphasis on the European Union (EU), which is both economically and financially large and has several features relating to cross-border banking in the form of direct investment that may heighten the problems we consider. We propose four principles to ensure the efficient resolution of bank failures, should they occur, with minimum, if any, credit and liquidity losses. These principles include prompt legal closure of institutions before they become economically insolvent, prompt identification of claims and assignment of losses, prompt reopening of failed institutions, and prompt recapitalizing and reprivatization of failed institutions. Finally, we propose a mechanism to put such a scheme into place quickly in the case where a cross-border banking organization seeks to take advantage of the liberal cross-border branching provisions in the single banking license available to banks in the EU. In return for the privilege of such a license, the bank agrees to be subject to a legal closure rule as a positive capital ratio established by the EU or the home country.
    Date: 2006
  15. By: Roberto Scazzieri; Lilia Costabile
    Abstract: <p class="MsoNormal" style="text-align: justify;"><span lang="EN-GB">This paper explores the relationship between economic growth and the welfare state. We argue that: (i) the institutional constraints set by the international monetary system may be at least as effective determinants of growth differentials between countries as the different dimensions of their welfare states. We show </span><span lang="EN-GB">how this international system may impose an asymmetric discipline/flexibility mix on the macreoconomic policies of different countries, thereby influencing their growth performance.; (ii) </span><span lang="EN-GB">the European currency reshapes some of the pre-existing constraints and also open up new opportunities; (iii) in the new international setting, Europe is facing a choice between alternative models. In one alternative, the “welfare system” needs to be reduced to a minimum; in the second, its role should be enhanced and made more active, through an appropriate mix of welfare policies oriented towards the promotion of social well-being and policies oriented towards the promotion of productive capacities.</span><span lang="EN-GB"><span></span></span><b><span lang="EN-GB"></span></b></p>
    Keywords: international monetary system; macroeconomic policies; welfare state; welfare policies
    JEL: F02 F33 F43 D02 I0
    Date: 2006
  16. By: Szymon Borak; Wolfgang Härdle; Stefan Trück; Rafal Weron
    Abstract: In January 2005 the EU-wide CO2 emissions trading system (EU-ETS) has formally entered into operation. Within the new trading system, the right to emit a particular amount of CO2 becomes a tradable commodity - called EU Allowances (EUAs) - and affected companies, traders and investors will face new strategic challenges. In this paper we investigate the nature of convenience yields for CO2 emission allowance futures. We conduct an empirical study on price behavior, volatility term structure and correlations in different CO2 EUA contracts. Our findings are that the market has changed from initial backwardation to contango with significant convenience yields in future contracts for the Kyoto commitment period starting in 2008. A high fraction of the yields can be explained by the price level and volatility of the spot prices. We conclude that the yields can be interpreted as market expectation on the price risk of CO2 emissions allowance prices and the uncertainty of EU allocation plans for the Kyoto period.
    Keywords: CO2 Emission Trading, Commodity Markets, Spot and Futures Prices, Convenience Yields.
    JEL: Q28 G13 C19
    Date: 2006–11
  17. By: Gian Maria Milesi-Ferretti; Philip R. Lane
    Abstract: We examine the evolution of the net external asset positions of Central and Eastern Europe (CEEC) countries over the past decade, with a strong emphasis on the composition of their international balance sheets. We assess the extent of their international financial integration, compared with the advanced economies and other emerging markets, and highlight the salient features of their external capital structure in terms of the relative importance of FDI, portfolio equity, and external debt. In addition, we briefly describe the country and currency composition of their external liabilities. Finally, we explore the implications of the accumulated stock of external liabilities for future trade and current account balances.
    Keywords: trade balance , rates of return , net external position , FDI , Capital flows , Eastern Europe , Balance of trade , Current account , Foreign direct investment ,
    Date: 2006–08–15
  18. By: Alberto Amurgo Pacheco (IUHEI, The Graduate Institute of International Studies, Geneva)
    Abstract: The paper investigates how Preferential Trade Agreements (PTAs) affect the range of goods exported by a nation. We use the Melitz model and highly dis-aggregated data on Euro-Mediterranean trade to measure the effect of preferential trade liberalization on the range of traded products. By focusing on the zeros in the trade matrix, the paper finds evidence that at the time when the Euro-Mediterranean FTA started there was an expansion in the range of products traded by its members.
    Keywords: International Economics, Melitz model, Trade policy, development, developing countries, new goods, Euro-Med, Mediterranean, European Union, Euro-Mediterranean FTA, trade matrix, range exported products, FTA, preferential trade liberalization, zeros
    JEL: F13 F14 F15
    Date: 2006–10–09
  19. By: António Afonso; Peter Claeys
    Abstract: The main focus of this paper is the relation between the cyclical components of total revenues and expenditures and the budget balance in France, Germany, Portugal, and Spain. We try to uncover past trends behind the development of public finances that contribute to explaining the current stance of fiscal policy. The disaggregate analysis of fiscal policy in an SVAR that mixes long and short-term constraints allows us to look into the transmission channels of fiscal policy and to derive a model-based indicator of structural balance. The main conclusions are that fiscal slippages are mainly due to reversals in tax policies, which are unmatched by expenditure adjustments. As a consequence, deficits rise when economic conditions worsen but cause a ‘ratcheting up’ in the size of government in economic booms. The Stability and Growth Pact has not eradicated these procyclical policies. Bad policies in good times also contribute to aggregate macroeconomic instability.
    Keywords: fiscal indicator; structural balance; output gap; SGP; EMU; SVAR; short and longterm restrictions.
    JEL: E62 E65 E66 H61 H62
  20. By: Paul van den Noord; Boris Cournède
    Abstract: The 2005 reform of the EU Stability and Growth Pact has provided leeway for governments to let their fiscal deficit temporarily breach the 3% rule to finance the immediate budgetary cost of structural reform, such as compensation schemes to offset redistributive effects. Against this backdrop, it is useful to dispose of empirical estimates of the effect of structural reform on fiscal outcomes, not only the short term cost but also the long-run fiscal gain stemming from changes in spending parameters and better economic performance. Based on econometric estimates for a pool of 21 OECD countries, this study finds a significant net fiscal gain of structural reform. <P>Quelques coûts à court terme pour des gains durables : Les conséquences budgétaires des réformes de structure dans l’UEM <BR>La réforme du Pacte de stabilité et de croissance (PSC) de l’Union européenne opérée en 2005 a ouvert la possibilité d’autoriser les États membres à dépasser temporairement le seuil de 3% afin de financer les coûts budgétaires de court terme que les réformes de structure peuvent engendrer, comme par exemple la compensation des effets distributifs non souhaités. Dans ce contexte, il est utile de disposer d’estimations empiriques des effets budgétaires des réformes de structure, non seulement s’agissant des coûts de court terme mais aussi des gains à long terme qui résultent des modifications des programmes de dépense publique et d’une meilleure performance économique. Au moyen d’estimations économétriques réalisées sur un panel de 21 pays membres de l’OCDE, cette étude conclut que les réformes structurelles se traduisent au plan budgétaire par un gain net d’une ampleur significative.
    Keywords: fiscal policy, politique budgétaire, Economic and Monetary Union, Union économique et monétaire, stability and growth pact, pacte de stabilité et de croissance
    JEL: E61 E62 H3 H5 H6
    Date: 2006–11–03
  21. By: Oliver Budzinski (Faculty of Business Administration and Economics, Philipps Universitaet Marburg); Gisela Aigner; Arndt Christiansen (Faculty of Business Administration and Economics, Philipps Universitaet Marburg)
    Abstract: The recent Impala Judgment by the CFI on the Sony/BMG Decision by the Commission represents the most important ruling on collective dominance since Airtours. We review both the Decision and the Judgment and derive implications for the institutional and substantive development of EU Merger Control. Firstly, Impala introduces an ambitious symmetric standard of proof for prohibition and clearance decisions by the Commission. While alleviating fears of an increasing number of false positives in the aftermath of Airtours, this entails the problem of how to deal with cases in which neither the existence, nor the absence of anticompetitive effects can be proven to the required standard. Secondly, the ongoing process of increasing the role of third parties in European Merger Control is fuelled. Thirdly, Impala has the potential to herald a comeback of coordinated effects analysis, further precising the conditions for establishing this kind of anticompetitive effect. Additionally, given the characteristics of the music industry, we criticise a lack of in-depth economic analysis of non-price competition issues, such as innovations and product diversity.
    Keywords: merger control, coordinated effects, standard of proof, music industry, collusion, Impala, Sony/BMG
    JEL: K21 L41 L13 L82
    Date: 2006
  22. By: DION, David Pascal
    Abstract: The following analysis, based on error correction models, suggests that consumer confidence, together with traditional macroeconomic variables, contains a forecasting and explicative power on consumption. By including consumer confidence in a consumption function, consumer confidence releases a significant coefficient. Such a confidence-augmented consumption model provides good forecasting results.
    Keywords: Consumer confidence; consumption function; forecasting; consumer attitudes and behaviour; households
    JEL: D12 C52 D11 E27 E21 C53
    Date: 2006–11–22
  23. By: Adalid, Ramon; Coenen, Gunter; McAdam, Peter; Siviero, Stefano
    Abstract: In this paper, we examine the performance and robustness of optimized interest-rate rules in four models of the euro area that differ considerably in terms of size, degree of aggregation, relevance of forward-looking behavioral elements, and adherence to microfoundations. Our findings are broadly consistent with results documented for models of the U.S. economy: backward-looking models require relatively more aggressive policies with, at most, moderate inertia; rules that are optimized for such models tend to perform reasonably well in forward-looking models, while the reverse is not necessarily true; and, hence, the operating characteristics of robust rules (i.e., rules that perform satisfactorily in all models) are heavily weighted towards those required by backward-looking models.
    Keywords: macroeconomic modelling; model uncertainty; monetary policy rules; robustness; euro area
    JEL: G00 G0
    Date: 2005–02–10
  24. By: Pau Rabanal; Vicente Tuesta
    Abstract: We use a Bayesian approach to estimate a standard two-country New Open Economy Macroeconomics model using data for the United States and the euro area, and we perform model comparisons to study the importance of departing from the law of one price and complete markets assumptions. Our results can be summarized as follows. First, we find that the baseline model does a good job in explaining real exchange rate volatility but at the cost of overestimating volatility in output and consumption. Second, the introduction of incomplete markets allows the model to better match the volatilities of all real variables. Third, introducing sticky prices in Local Currency Pricing improves the fit of the baseline model but does not improve the fit as much as introducing incomplete markets. Finally, we show that monetary shocks have played a minor role in explaining the behavior of the real exchange rate, while both demand and technology shocks have been important.
    Keywords: Real exchange rates , Bayesian estimation , model comparison , Euro , U.S. dollar , Real effective exchange rates , Economic models ,
    Date: 2006–08–03
  25. By: Tanova, Cem (Faculty of Business and Economics, Eastern Meditterranean University)
    Abstract: This paper investigates actual voluntary turnover from the employee's perspective using a large European dataset integrating the available job factors related to job embeddedness and other variables that have been related to turnover in previous turnover models. The study shows that the traditional turnover model, where ease of movement and desire of movement are regarded as important predictors of turnover, receives support. However, the study also shows the job embeddedness factors play a key role in predicting turnover as well, even after the role of demographic and ease and desire of movement variables are taken into consideration. Thus, this shows that the turnover decision is not only about the individual's attitudes towards work or about the actual opportunities in the labor market, but these decisions are the result of an analysis of complex web of factors that are labeled job embeddedness.
    Date: 2006–07
  26. By: Bernardo Bortolotti (Fondazione Eni Enrico Mattei); Valentina Milella (Fondazione Eni Enrico Mattei)
    Abstract: Privatization has certainly been one of the main events of the economic and financial history of the 20th century. Between 1997 and 2004 more than 4,000 privatization operations were carried out in the world, bringing to governments revenues for over 1,350US$billion. Western Europe emerges as the most important region, having implemented the greatest number of privatizations and raised a half of global revenues. The relevance of Western Europe in the process can be ascribed to several factors. This paper investigates the causes of this process, summarizes the main trends of privatization activity at the country level, analyzes the main privatization drivers and provides an account of the main findings of the effects of privatization at the macro and microeconomic level.
    Keywords: Privatization, State-Owned Sector, Capital Markets, Financial Development
    JEL: L33
    Date: 2006–10
  27. By: Claus Schnabel (University of Erlangen-Nuremberg and IZA Bonn); Joachim Wagner (University of Lueneburg and IZA Bonn)
    Abstract: An empirical analysis of various waves of the ALLBUS social survey shows that union density fell substantially in western Germany from 1980 to 2004 and in eastern Germany from 1992 to 2004. Such a negative trend can be observed for men and women and for different groups of the workforce. Regression estimates indicate that the probability of union membership is related to a number of personal and occupational variables such as age, public sector employment and being a blue collar worker (significant in western Germany only). A decomposition analysis shows that differences in union density over time and between eastern and western Germany to a large degree cannot be explained by differences in the characteristics of employees. Contrary to wide-spread perceptions, changes in the composition of the workforce seem to have played a minor role in the fall in union density in western and eastern Germany.
    Keywords: union membership, union density, Germany, decomposition
    JEL: J51
    Date: 2006–10
  28. By: Tehmina S. Khan
    Abstract: Total factor productivity (TFP) of 14 manufacturing sectors in France has kept up with that of the United States during 1980-2002 and remained well above that of the United Kingdom. Estimates using a dynamic panel equilibrium correction model indicate that sectors further behind the technological frontier experience faster productivity growth and that spending on research and development and trade with technologically advanced economies positively influences TFP growth, but not the speed of convergence. Conversely, TFP growth is negatively related to some key labor market variables, namely the replacement ratio and the ratio of the minimum wage to the median wage.
    Keywords: Economic growth , Total Factor Productivity (TFP) , Research and Development (R&D) , labor market institutions , trade , technological convergence ,
    Date: 2006–10–20
  29. By: James Albrecht (Georgetown University, IFAU Uppsala, CESifo and IZA Bonn); Gerard J. van den Berg (Free University Amsterdam, IFAU Uppsala, CEPR, IFS and IZA Bonn); Susan Vroman (Georgetown University, IFAU Uppsala, CESifo and IZA Bonn)
    Abstract: The Swedish adult education program known as the Knowledge Lift (1997-2002) was unprecedented in its size and scope, aiming to raise the skill level of large numbers of lowskill workers. This paper evaluates the potential effects of this program on aggregate labor market outcomes. This is done by calibrating an equilibrium search model with heterogeneous worker skills using pre-program data and then forecasting the program impacts. We compare the forecasts to observed aggregate labor market outcomes after termination of the program.
    Keywords: job search, returns to education, program evaluation, wages, unemployment, Swedish labor market, calibration
    JEL: J21 J64 J31 J24 I21 C31
    Date: 2006–10
  30. By: M. Ali Choudhary (University of Surrey); Paul Temple (University of Surrey); Lei Zhao (University of Surrey)
    Abstract: In this paper we develop models of intra-industry trade in which the technological infrastructure associated with measurement activity plays a role in determining the ability of firms to differentiate their products, making them more marketable, and hence promoting intra-industry trade. We observe that public support for the measurement infrastructure is an important element of public support for industry, while publicly available technical standards provide a significant means by which firms make use of this infrastructure. As an empirical test for the importance of the measurement infrastructure, we consider bi-lateral intra-industry trade flows between economies in the EU and find that both a measure of the cross industry importance of the measurement infrastructure – as proxied by standards - as well as the degree of investment in the ability to measure – as proxied by the use of instruments – are important correlates of intraindustry trade. The econometric analysis suggests that differences in national measurement infrastructures continue to play an important role in determining EU trade flows.
    Keywords: Intra-industry trade, technology, product differentiation, manufacturing
    JEL: F12 F14 F15 L1 L60
    Date: 2006–08

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