nep-eec New Economics Papers
on European Economics
Issue of 2007‒01‒14
thirty papers chosen by
Giuseppe Marotta
Universita di Modena e Reggio Emilia

  1. Deeper Integration and Voting on the Common European External Tariff By Tavares, Samia
  2. European mechanical companies: Technological differences and organisational similarities By Stéphane Lhuillery; Arman Avadikyan
  3. On the benefit of African immigration to Europe. Turn in the EU immigration policy? By Kohnert, Dirk
  4. Comovements in volatility in the euro money market By Nuno Cassola; Claudio Morana
  5. Coping with People’s Inflation Perceptions During a Currency Changeover By Thomas A. Eife; W. Timothy Coombs
  6. Analysis of a liberalised German Gas Market By Philipp Scheib; Frieder Kalisch; Bernhard Graeber
  7. Economies of Scale and Spatial Scope in the European Airline Industry By Manuel Romero-Hernandez; Hugo Salgado
  8. Education and Income Inequality in the Regions of the European Union By Andres Rodriguez-Pose; Vasileios Tselios
  9. Comparing financial systems - a structural analysis By Sylvain Champonnois
  10. EU Development Policies and the Socio-Economic Disadvantage of European Regions. By Riccardo Crescenzi
  11. Regional Income Inequality and Convergence Processes in the EU-25 By Tiiu Paas; Friso Schlitte
  12. Durable Goods and Household Saving Ratios in the Euro Area By Jukka Jalava; Ilja Kristian Kavonius
  13. Unemployment Rates At the Regional and National Levels of the European Union: An Integrated Analysis By Annette Zeilstra; Paul Elhorst
  14. Gains from Financial Integration in the European Union: Evidence for New and Old Members By Yuliya Demyanyk; Vadym Volosovych
  15. Euro-Mediterranean Economic Integration: An Empirical Investigation of Trade Flows. By Giorgio Fazio
  16. Credit Growth in Central and Eastern Europe: Convergence or Boom? By Gergely Kiss; Márton Nagy; Balázs Vonnák
  17. The Enlargement of EU Towards Eastern, Central and South Europe and Its Impact on the Third Mediterranean Countries By Angelos Kotios; Yiannis Saratsis
  18. Transition Process in South Eastern Europe Compared to the Central European Transition Countries By Igor Stokovic; Lorena Skuflic
  19. New Member States of the EU: Current Trends in Regional Disparities By Josef Abrham; Milan Vosta
  20. Equilibrium Exchange Rates in EU New Members: Applicable for Setting the ERM II Central Parity? By Horvath, Roman; Komarek, Lubos
  21. Innovation and Productivity a Story of Convergence and Divergence Process in EU Countries By Aikaterini Kokkinou
  22. The Importance of Tourism in the European Mediterranean Area By Salvatore Amico; Paolo Lo Giudice
  23. Innovation Systems in the European Periphery: the Case of Ireland and Greece By Patrick Collins; Dimitrios Pontikakis
  24. Innovation and Peripherality: A Comparative Study in Six EU Member Countries By Andrew Copus; Dimitris Skuras; Kyriaki Tsegenidi
  25. Ability of the New EU Member States to Fulfill the Exchange Rate Stability Convergence Criterion By Stavarek, Daniel
  26. How strong is the impact of exports and other demand components on German import demand? Evidence from euro-area and non-euro-area imports By Stirböck, Claudia
  27. The European and the Greek Business Cycles: Are they synchronized? By Leon, Costas
  28. Italy’s path to very low fertility. The adequacy of economic and second demographic transition theories By David Kertzer; Michael White; Laura Bernardi; Giuseppe Gabrielli
  29. Has the export pricing behaviour of German enterprises changed? : Empirical evidence from German sectoral prices By Stahn, Kerstin
  30. Education and Inequality: Evidence from Spain By Budria, Santiago

  1. By: Tavares, Samia
    Abstract: Since the 1987 Single European Act, the European Union has deepened its integration process. In the case of the determination of the common external tariff, deeper integration implies that the tariff reflected union-wide preferences. If integration is still shallow, though, the observed tariff will reflect the preferences of a pivotal national government. How governments voted, however, was not public information. This paper uses a unique dataset to test the deep vs. shallow integration hypothesis in an effort to shed light on how decisions are made in the EU. Results support the deep integration hypothesis.
    Keywords: Collective decisions; deeper integration; tariffs; European Union; decisive voter
    JEL: F14 D72 F13
    Date: 2006–07–29
  2. By: Stéphane Lhuillery (Chaire en Economie et Management de l'Innovation, Ecole Polytechnique Fédérale de Lausanne); Arman Avadikyan (Bureau d'Economie Théorique et Appliquée, Université Louis Pasteur de Strasbourg)
    Abstract: All in all, French, Italian and British companies are surpassed technologically more often than not by Swiss, Austrian and German companies. This technological delay does however not show up at the organisational level.
    Keywords: R&D, innovation, organization, international comparison
    JEL: O32 O33 O57 L23
    Date: 2006–03
  3. By: Kohnert, Dirk
    Abstract: A growing number of Africans flees from their desolate economic situation or violent conflicts and political persecution at home to Europe. The European Union shares responsibil-ity for this growing economic misery, in view of its egoistic external trade policy. Neverthe-less, it intensifies the foreclosure of its external borders. Thereby, the escape routes become even more dangerous, thousands die every year. The European-African migration summits in Rabat and Tripoli in June and November 2006 even strengthened this policy of exclusion. Yet, well adapted immigration regulations would serve the interest of all parties involved. Last, but not least, it could contribute to protect the over-aged population of European mem-ber states in the long run against threatening economic decline. Even Germany and France meanwhile hesitantly accept the fact that they are an immigration country. The EU commis-sion endorses a limited and temporarily restricted immigration of Africans. However, two fundamental problems remain unsolved. Cost and benefit of immigration are distributed asymmetrically between the social classes. In addition, the EU favours the admission of high skilled labour, which tends to strengthen the 'brain drain' from Africa even more, while mil-lions of unskilled irregular migrants compete with the growing army of unemployed in the host countries. Both will aggravate the imminent danger of violent conflicts and of right-wing extremism in the immigration regions.
    Keywords: International migration; Africa; EU; economic development; international trade policy; human rights;
    JEL: O2 N37 F22 F35 F53 F42 O55 N17 O52 R23 O15 N44
    Date: 2006–12–06
  4. By: Nuno Cassola (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Claudio Morana (International Centre for Economic Research (ICER, Torino) and University of Piemonte Orientale, Faculy of Economics and Quantitative Methods, Via Perrone 18, 28100, Novara, Italy.)
    Abstract: This paper assesses the sources of volatility persistence in Euro Area money market interest rates and the existence of linkages relating volatility dynamics. The main findings of the study are as follows. Firstly, there is evidence of stationary long memory, of similar degree, in all series. Secondly, there is evidence of fractional cointegration relationships relating all series, except the overnight rate. Two common long memory factors are found to drive the temporal evolution of the volatility processes. The first factor shows how persistent volatility shocks are trasmitted along the term structure, while the second factor points to excess persistent volatility at the longer end of the yield curve, relative to the shortest end. Finally, impulse response analysis and forecast error variance decomposition point to forward transmission of shocks only, involving the closest maturities. JEL Classification: C14, C63, E41.
    Keywords: Money market interest rates; liquidity effect, realized volatility, fractional integration and cointegration, fractional vector error correction model.
    Date: 2006–12
  5. By: Thomas A. Eife (University of Heidelberg, Department of Economics); W. Timothy Coombs (University of Illinois)
    Abstract: The gap between actual and perceived inflation is one of the more unexpected consequences of the euro changeover in January 2002. In this note we argue that this gap was caused by a lack of preparation and experience of the authorities to appropriately communicate with the public during the changeover. Using principles of crisis communication we identify the mistakes made and give policy recommendations for future changeovers.
    Keywords: crisis communication, transformative explanation, perceived inflation, euro changeover
    JEL: E50 E60 Y80
    Date: 2006–12
  6. By: Philipp Scheib (EnBW Trading, Methodology & Models department); Frieder Kalisch (EnBW Trading, Methodology & Models department); Bernhard Graeber (EnBW Trading, Methodology & Models department)
    Abstract: European gas markets are experiencing fundamental change due to decrease in domestic production, increase in demand and liberalisation efforts of the European Union. Germany represents the biggest single market in Continental Europe and is also a major transit country for gas. Gas market liberalisation in Germany, however, has so far shown few effects. In this paper we look at how third party network access in an entry-exit regime with different balancing zones (“market areas”) will influence the market. We have developed a multi-regional, inter-temporal model for Germany including transit flows to and from neighbouring countries with monthly resolution. The model is based on the following assumptions: Long term import contracts will stay in effect, network access is regulated based on an entry-exit-system, domestic production will continue to decline, no new infrastructure projects that are not known today can become operational before 2009 and access to storage is not regulated. The model focuses on the transmission system, looking at transit flows between entry-exit-zones. The model proves to be a valuable tool for analysing different set-ups of market areas. Preliminary model results did not confirm the need for 19 market areas in Germany. Data availability still needs to be improved, in order to allow a more detailed analysis and produce tangible and robust results.
    Keywords: natural gas, trading, regulation, network industry, linear optimisation
    JEL: L95 L14 Q41 C61
  7. By: Manuel Romero-Hernandez; Hugo Salgado
    Abstract: In this article we use four different indices to measure cost performance of the European Airline Industry. By using the number of routes as an indicator of Network Size, we are able to estimate indicators of Economies of Scale and Spatial Scope. By estimating total and variable cost functions we are also able to calculate an index of the excess capacity of the firms. For this purpose, we use data from the years 1984 to 1998, a period during which several deregulation measures were imposed on the European airline industry. Some of the implications of this deregulation process for the cost performance of the industry are presented and discussed. Our results suggest that in the year 1998, almost all the firms had Economics of Density in their existing networks, while several of the firms also had Economies of Scale and Economies of Spatial Scope. All of the firms had excess capacity of fixed inputs. These results support our hypothesis that fusion, alliance, and merger strategies followed by the principal European airlines after 1998 are not just explained by marketing strategies, but also by the cost structure of the industry.
    Date: 2006–08
  8. By: Andres Rodriguez-Pose; Vasileios Tselios
    Abstract: The paper provides an empirical study of the determinants of income inequality across regions of the EU. Using the European Community Household Panel data set for 102 regions over the period 1995-2000, it analyses how microeconomic changes in human capital distribution affect income inequality. Human capital distribution is measured in terms of both human capital stock, as well as human capital inequality. Income and human capital inequalities are calculated by a generalised entropy index (Theil index). Different static and dynamic panel data analyses are conducted in order to reduce measurement error on inequalities and minimise potential problems of omitted-variable bias. The regression results suggest that, in the short term, human capital inequality is negatively associated to the average regional income and the average level of education of the population. The results also highlight that a highly unequal distribution of education level completed is associated to lower, rather than to higher inequality, highlighting the effectiveness of the European social system or, from a different perspective, the lack of responsiveness of EU labour market to differences in qualifications and skills. Additionally, high unemployment is associated with higher income inequality, while urbanisation has the opposite effect.
    Date: 2006–08
  9. By: Sylvain Champonnois (Princeton University, Princeton, NJ 08544 USA.)
    Abstract: This paper builds a model of investment and financing that incorporates heterogeneous firms into general equilibrium. In order to characterize the financial structure of an economy, the model connects the share of market finance in total external finance and the distribution of firm sizes into a simple structural equation, with parameters related to the cost of market finance (compared to intermediated finance). We estimate the relative cost of market finance across countries with data on external financing and firm sizes from France, Germany, Italy, Spain and the United Kingdom. Using the structural model, we propose an explanation of the empirical correlation across countries between estimated financing costs and the characteristics of the population of firms based on welfare maximization. JEL Classification: E20, E44, C13.
    Keywords: Heterogeneous firms, financing patterns, distribution of firm sizes, structural estimation, welfare analysis.
    Date: 2006–12
  10. By: Riccardo Crescenzi
    Abstract: The debate over the EU budget 2007-2013 made clear the need of an in-depth understanding of the distribution of the EU development funds. The scarce resources available need to be targeted more effectively towards the real needs of EU countries and regions in order to deliver the expected benefits. The literature on the impact of structural funds expenditure on regional growth and cohesion highlighted the reduced long-term impact of structural funds expenditure. One of the reasons for such result was identified in the biased allocation of funds among the different development axes. In this paper we assume a different perspective and focus the spatial structure of the expenditure for the Eu development policies under the 2000-2006 budget. For this purpose we collect a specific dataset for the EU-15 regions, including not only structural funds (as in the existing literature) but also rural development funds under the CAP. This extended dataset allows us to assess the spatial structure of a significant percentage of the total funds targeted towards regional development. On the basis such dataset we are able: a) to analyse the spatial concentration of structural expenditure as an important prerequisite for its effectiveness. A low degree of spatial concentration of the funds may support the hypothesis of a distribution based on political equilibrium rather than effectiveness. In addition we will be able to test the spatial association of rural and regional development funds which are rarely analysed jointly thus shedding some light on the spatial coherence of the expenditure for different policies; b) to compare the spatial concentration of EU funds with a specifically developed indicator of socio-economic disadvantage of the EU regions. This analysis will allow us to analyse the coherence of the EU regional policies with regard to the structural disadvantage of EU regions thus uncovering a potential inconsistency between policy objectives (favouring disadvantaged areas) and the beneficiaries of the funds. The paper shows that although there a certain degree of spatial association between structural and rural development expenditure the factors of socio-economic disadvantage are more spatially concentrated than the funds aimed at addressing such disadvantage.
    Date: 2006–08
  11. By: Tiiu Paas; Friso Schlitte
    Abstract: The paper investigates income inequality and convergence among the EU-25 countries and their regions at NUTS 3 (Nomenclature of Territorial Units for Statistics) level during the period 1995-2002. We measure the level of income inequality and its decomposition distinguishing the between and within country inequality as the components of the overall income inequality of EU-25, EU-15 and the new member states (NMS) of the EU recent enlargement in May 2004. In order to assess the inequality in living standards GDP in purchasing power standards (PPS) is used. In the empirical analysis of the convergence processes we consider the effects of interactions among neighbouring regions implementing spatial econometrics techniques. The estimation results are sensitive to the control for national effects. While the EU-25 and the EU-15 experienced a slow but significant process of absolute convergence there is no evidence found for regional convergence when national effects are considered. In the NMS the process of conditional convergence across regions even turns out to be significantly negative. This indicates that there were some divergence tendencies in the NMS during the period of 1995 – 2002.
    Date: 2006–08
  12. By: Jukka Jalava; Ilja Kristian Kavonius
    Abstract: The purpose of this paper is to estimate the impact of capitalising durable goods on the Euro area (EA) countries? and the EA-aggregate?s household saving ratios and disposable incomes. The reason for this exercise is twofold. Firstly, it is generally accepted that individual households regard consumer durables as assets even though they are not treated as such in the System of National Accounts 1993. Secondly, the issue is related to the definition of household saving ratios; a much discussed topic in previous years. For instance, the U.S. Federal Reserve Board publishes two separate household net saving measures. The difference between these saving ratios is that one is derived by treating expenditure on consumer durables as investments while the other one is compiled by considering them to be household final consumption expenditure as is the present convention. We find that the effect of capitalising consumer durables on EA saving ratios is significant although the impact is lower than it is in the US.
    Keywords: durable good, asset, household consumption, national accounts, saving ratio, disposable income, user cost
    Date: 2006–12–29
  13. By: Annette Zeilstra; Paul Elhorst
    Abstract: This study investigates the causes of variation in regional unemployment rates in a cross-country perspective. The explanatory variables consist of both regional-level and macro-level variables. An appropriate econometric model of random coefficients for the former and fixed coefficients for the latter variables is developed, further taking into account that observations may be correlated over time and over space and that some of the explanatory variables are not strictly exogenous. On the basis of this model a regional unemployment rate equation is estimated, using data of 143 regions across 11 EU countries derived from Eurostat, 1983-1997, and national data on labour market institutions predominantly derived from the OECD.
    Date: 2006–08
  14. By: Yuliya Demyanyk (Federal Reserve Bank of St. Louis); Vadym Volosovych (Department of Economics, College of Business, Florida Atlantic University)
    Abstract: We estimate potential welfare gains from financial integration and corresponding better insurance against country-specific shocks to output (risk sharing) for the twenty-five European Union countries. Using theoretical utility-based measures we express the gains from risk sharing as the utility equivalent of a permanent increase in consumption. We report positive potential welfare gains for all the EU countries if they move toward full risk sharing. Ten country-members who joined the Union in 2004 have more volatile or counter-cyclical consumption and output and would obtain much higher potential gains than the longer-standing fifteen members.
    Keywords: EU enlargement, financial integration, welfare gains, risk sharing
    JEL: F15 F36 E32
    Date: 2006–12
  15. By: Giorgio Fazio
    Abstract: Greater trade and financial integration are implicitly identified by the Barcelona Conference as the mechanism to promote “peace and shared prosperity†and “sustainable and balanced economic and social development†in the Euro-Mediterranean Area. Indeed, the Conference has identified the establishment of the Euro-Mediterranean Free Trade Area (FTA) as the essential element to build the Euro-Mediterranean partnership. The main objective of this paper is to verify the extent of economic integration between the countries that will form the FTA and assess the impact of European integration and enlargement on the process of Mediterranean economic integration. In particular, the use of a gravity model specification seems particularly well suited in order to compare actual and potential integration between the Euro-Mediterranean countries and estimate the integrating/disintegrating effect of EU integration and enlargement before the establishment of the Euro-Mediterranean FTA.
    Date: 2006–08
  16. By: Gergely Kiss (Magyar Nemzeti Bank); Márton Nagy (Magyar Nemzeti Bank); Balázs Vonnák (Magyar Nemzeti Bank)
    Abstract: Credit to the private sector has been growing very rapidly in a number of Central and Eastern European countries in recent years. The main question is whether this dynamics is an equilibrium convergence process or may rather pose stability risks. Using panel econometric techniques, this paper attempts to identify the equilibrium credit/GDP levels of the new EU countries, disentangling the observed growth into an equilibrium trend and an excess (boom) component. In the paper the pooled mean group estimator was used for its flexibility and efficiency. Using instrumental variable technique we tested whether long run endogeneity affects the consistency. The estimations show that large part of the credit growth in new member states can be explained by the catching-up process, and, in general, credit/GDP ratios are below the levels consistent with macroeconomic fundamentals. However, in Latvia and Estonia credit growth is found to be significantly faster than what would be justified along the equilibrium path.
    Keywords: financial deepening, credit growth, transition economies, panel econometrics, endogeneity bias.
    JEL: E44 O16
    Date: 2006
  17. By: Angelos Kotios; Yiannis Saratsis
    Abstract: The main purpose of this paper is to examine the impact of the latest and forthcoming EU enlargement on the Euro-Mediterranean relations. The answer cannot be simple and it depends on many factors, primary role amongst others has the institutional evolution of EU. For example, will the existing regime of the Euro-Mediterranean relations be sustained after the enlargement? What will the EU discussions for a European Constitution conclude to? The underlying conclusion is that a prediction on the future of Euro-Mediterranean relations is not an easy task. In this direction two main questions are raised. First, if and in what context are the Third Mediterranean Countries and the CEE Countries competitive to each other, in respect to the European Market and second what are the primary dangers for the Third Mediterranean Countries after the EU enlargement. The paper deals with these questions and presents some basic findings for the above.
    Date: 2006–08
  18. By: Igor Stokovic; Lorena Skuflic
    Abstract: The literature on transition distinguishes between two groups of transition countries: the Central and East European transition countries have been put into two groups, the seven South-East European countries (SEEC-7)1 and the five Central European countries (CEEC-5). The former group is generally less developed, receives less FDI and is more backward in terms of transformation than CEECs, which also became the EU members. However, fifteen years of transition have brought about tremendous changes, driven by broad economic reform programs, including changes in fiscal and monetary policy, widespread privatization, price and trade liberalization, and new regulatory approaches in those countries. But, if the number of population in SEECs is only twenty per cent lower than in the CEECs, the overall GDP of the former group is one third of the latter's. The analysis of the real sector shows that the macro-stabilization program agreed with the International Monetary Fund have aimed at decreasing inflation and unemployment budget deficit and equilibrating the balance of payments had brought good results in the first group of countries, but not in the second group. According to analyze of the CEECs and their experience, an increase of the FDI inflows could be crucial for the catching-up process and international competitiveness of the SEECs.
    Date: 2006–08
  19. By: Josef Abrham; Milan Vosta
    Abstract: The main aim of the article is, on the basis of a complex evaluation of regional developing factors, to formulate developing presumptions of the Czech Republic and selected new member states of the EU (Hungary, Poland and Slovakia) after their joining the European Union and therefore to appraise the impacts of the integrative process on a regional differentitaton of analyzed countries. The other aims of the study are: • To set and adopt a methodical process for an evaluation of growth potential of the regions. • To overall evaluate weaknesses in a regional structure of appraised countries of the Central Europe and main shortages from regional growth factors facilities point of view. • To formulate convergent possibilities of examined countries regions after their joining the European Union considering the core of the European Union as well as the inside of the countries themselves. • To analyze important theoretical concepts of regional development particularly with concentration on determination of main factors of regional growth. The starting point for the analyses of the regional disparities is the analyses of economic issues, demographic differentiation and its socioeconomic impact. At the same time new macroregions with stagnant economies were delinated, but also, dynamically developing regions which often spill over state bordes. In the article late development of regional disparities among regions of Czech republic and selected member states of the EU is also evaluated. This development is defined on the basis of own calculations of statistic indicators of variability. The evaluation of disparities is narrowed to the most important indicator of an economic level – GDP per capita. The basic statistic indicator for a comparison of differences is the Coefficient of Variance. The calculations of a range among regions have been included as additional. The conclusions are focused, in accord with determined aims of the study, on a complex evaluation of growth presumptions of regions of the Czech Republic and selected new member states of he EU after their joining the European Union as well as on formulation of main conclusions in relation to the evaluation of: typical trends in regional differentiations of analyzed countries, possibilities of regional growth after joining the European Union, presumptions of convergence of the average of current member states of EU, weaknesses examined regions from growth factors facilities point of view.
    Date: 2006–08
  20. By: Horvath, Roman; Komarek, Lubos
    Abstract: In this paper we discuss the estimation and methodology of the real equilibrium exchange rate partial equilibrium models and analyze to what extent the resulting estimates are applicable for setting the central parity prior to ERM II entry in the new EU member states. Given the uncertainty surrounding the estimates, we argue that they are informative in the sign rather than the size of the misalignment of the exchange rate, but may still serve as useful consistency checks for the decision on the setting of the central parity. We argue that policy makers should consider the estimates in their decision-making only if the real exchange rate is substantially misaligned.
    Keywords: Equilibrium Exchange Rate; ERM II; EU New Member States
    JEL: E58 E61 C52 F31 C53
    Date: 2006–10–20
  21. By: Aikaterini Kokkinou
    Abstract: Technology is apparently one of the main determining sources of productivity and economic growth and there is a huge literature on productivity, growth and innovation. This paper is aiming to review the main topics related to productivity, growth and innovation activities. In particular, the paper is also aiming to apply some econometric models, in order to estimate the effects of innovation activities to productivity growth in EU member states and to conclude to some safe results and policy implications.
    Date: 2006–08
  22. By: Salvatore Amico; Paolo Lo Giudice
    Abstract: Europe and Mediterranean areas have political and symbolic importance even if they have not definite limits. From a geographical point of view Europe and Mediterranean are the southern and western part of the “Eurasiaâ€, while politically speaking they represent two areas with a strong instability. However they have tourist resources that succeed in attracting the international tourism; these elements give originality and unicity to the territory of the Mediterranean area. This has an important role in the tourist field, also helped by lots of tourist activities and by the typical climate. All these aspects contribute to the creation of the “Mediterranean circular†of the coast countries. As they have not the same distribution of the tourist flows, the have the problem of unbalance in the relation between resources and utilization, especially in the north sea-side. Although these problems, tourism becomes for the mediterranean States a common activity, giving them a new economic dimension. The most important feature of the Mediterranean tourism is the diffused sea-side installation; it can cause a strong impact on the sea ecosystem and by the time it can generate a dangerous ecological situation of the mediterranean area. If we consider that 120.000.000 people live in this area with 200.000.000 tourists that during the summer period are in the sea-side countries, this means a considerable antropic presence. It is important that tourism and economic activities take into consideration the balance of the sea ecosystem because its protection is linked to the quality of sea-side people’s life and to the continuation of the tourist importance of the area. The central problem of Mediterranean tourism is that the growth must be compatible with the environmental quality and with local way of life. In this way “the hotel-countries†and other ways of hospitality can contribute to give life to the countries and territories and to diversify and to enrich the tourist offer. Our work’s aim is to analyse and verify social and economic impact of tourist flows in the mediterranean countries, considering general differences and effects.
    Date: 2006–08
  23. By: Patrick Collins; Dimitrios Pontikakis
    Abstract: Two decades ago, Greece and Ireland stood passive spectators of political, economic and technological developments at the core of an emerging European Economic Community. Away from the industrial centres of Europe, the attainment and application of new ideas, it seemed, had no place among the prescriptions of policy. The pursuit of each country’s comparative advantage dictated that they be net consumers of technological wares invented elsewhere. And while a lot has changed in the meantime, a great deal has also endured. Today, innovation is no longer confined to the fringes of industrial policy; it features prominently, throughout the continent, as ‘the solution’ to the re-discovered riddle of competitiveness. Ideas on how to best mobilise intellectual assets for innovation abound. Theory suggests that institutions are important in shaping productive efforts towards innovation; the experiences of Ireland and Greece offer a fitting testing ground. Ireland has made strides in the FDI route to prosperity, no longer labelled a cohesion country. Greece however faces pressing economic problems, in the aftermath of celebrated, largesse-fuelled growth. Over the period in question though, nowhere else have the differences between the two countries become more accentuated (and apparent), as in matters of innovation. We propose that the key to these differences lies with the drafting of policy and the consequent shaping of their institutions. We observe that importing solutions from abroad, with Greece looking to Brussels and Ireland to the US, was central to their respective experiences.
    Date: 2006–08
  24. By: Andrew Copus; Dimitris Skuras; Kyriaki Tsegenidi
    Abstract: The present work compares rates of innovative activity among firms located in peripheral dynamic and central lagging areas of the European Union. Data on 600 businesses located in twelve areas, in six countries of the EU were collected in the framework of an EU- funded research project (Aspatial Peripherality, Innovation and the Rural Economy- AsPIRE- QLK5-2000-00783). Empirical evidence shows that the regional rate of innovative activity is very well predicted by easily observable firm characteristics. Oaxaca-Blinder like decompositions between the difference in rates of innovative activity in peripheral and more central areas are undertaken. Decompositions show that the major part of the observed differential innovative activity rates is unobservable, i.e., it is due to unobserved characteristics and not due to observable firm characteristics. Unobserved characteristics may be either firm specific (human and entrepreneurial capital, etc.) or region specific (institutional environment, social capital, traditional economic factors, etc.) and constitute an unobserved type of innovation specific ‘untraded interdependencies’. This conclusion is important for planning policies to support innovation and especially to the regionalization of innovation policies. -
    Date: 2006–08
  25. By: Stavarek, Daniel
    Abstract: This paper assesses exchange rate development and volatility in six new EU member states (Cyprus, Czech Republic, Hungary, Poland, Slovakia, and Slovenia) during the period November 1996 - April 2006. The study is motivated by the unavoidable participation of the new member states’ currencies in the Exchange Rate Mechanism II and fulfillment of the exchange rate stability convergence criterion. The development of exchange rates is examined by the calculation of various rates of return and the exchange rate volatility is analyzed using moving average standard deviations of the annualized daily returns of the nominal bilateral exchange rates. The results suggest that the dilemma of “participation or non-participation in ERM II” have been solved properly so far by all countries analyzed. The three ERM II participating currencies (SIT, CYP, SKK) entered into the mechanism at the optimal time of stable exchange rate development and low volatility. On the other hand, the admissible fluctuation band ± 2.25 % seems to be still too narrow for the remaining three currencies (CZK, HUF, PLN), thus the currencies should remain out of ERM II for some time.
    Keywords: exchange rates; rate of return; volatility; ERM II; exchange rate stability criterion; new EU Member States
    JEL: F31
    Date: 2006–05
  26. By: Stirböck, Claudia
    Abstract: This paper presents a single error-correction analysis of German total, euro-area (intra) and non-euro-area (extra) import demand for the 1980-2004 period and the more recent 1993-2004 period. German import demand is mainly driven by domestic demand and foreign demand for German goods; by contrast, the price sensitivity of German imports is low. We note a greater propensity to import with respect to an increase in investment compared to a rise in consumption, yet find that export goods have the highest marginal import content. The influence of export demand on the German economy’s import demand is growing, with the marginal propensity to import being higher for extra imports than for intra imports; in addition, the reagibility of the former has intensified perceptibly since the 1990s. The price sensitivity of intra imports is not only higher but, unlike that of extra imports, is also significant and has increased at the current end.
    Keywords: Import demand intra and extra euro-area imports import content, single equation error-correction
    JEL: C22 E20 F41
    Date: 2006
  27. By: Leon, Costas
    Abstract: Recent developments in the business cycle empirical literature for the developed economies show that there is an increasing synchronization of the cycles in the sense that cycles are of approximately equal wave length, and exhibit similar lead-lag patterns and decreasing volatility over time, although this is not a universally accepted view. In this study I employ spectral analysis and a VAR model to evaluate the length, the volatility and the transmission mechanism of stochastic shocks between Greece and the Eurozone for the period 1980-2005 with quarterly data. The results verify that both areas exhibit lower volatility over time. However, synchronization of the cycles in terms of correlation and their transmission mechanism seems to become weaker over time.
    Keywords: Business Cycle Synchronization; Transmission Mechanisms; Eurozone; Greece.
    JEL: E32
    Date: 2006–08–03
  28. By: David Kertzer; Michael White (Max Planck Institute for Demographic Research, Rostock, Germany); Laura Bernardi (Max Planck Institute for Demographic Research, Rostock, Germany); Giuseppe Gabrielli (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: The deep drop of the fertility rate in Italy to among the lowest in the world challenges contemporary theories of childbearing and family building. Among high-income countries, Italy was presumed to have characteristics of family values and female labor force participation that would favor higher fertility than its European neighbors to the north. We test competing economic and cultural explanations, drawing on new nationally representative, longitudinal data to examine first union, first birth, and second birth. Our event history analysis finds some support for economic determinants of family formation and fertility, but the clear importance of regional differences and of secularization suggests that such an explanation is at best incomplete and that cultural and ideational factors must be considered.
    Keywords: Italy, event history analysis, fertility decline, living space
    JEL: J1 Z0
    Date: 2006–12
  29. By: Stahn, Kerstin
    Abstract: The question as to whether the globalisation-related increase in competitive pressure may have caused the importance of exchange rate pass-through and pricing-to-market for export pricing in Germany to shift since the 1990s is addressed by testing the long-run export pricing behaviour of German enterprises for changes in the impact of its determinants. As globalisation may have affected competitive pressure in individual product markets differently, export pricing is analysed for 11 product categories. Analytically, this problem is solved by applying the Saikkonen (1991) approach to estimate the individual export price categories in single equations. Moreover, error correction models are used to test exporters’ short-run price-setting behaviour for asymmetry, ie whether short-run increases in the export price determinants are passed through to a different extent than decreases.
    Keywords: export pricing, exchange rate pass-through, pricing-to-market, Germany
    JEL: C22 F41
    Date: 2006
  30. By: Budria, Santiago
    Abstract: How do the family and personal characteristics of an individual influence his/her edu-cational attainment? How do the labour market prospects change when he/she receives further education? This article intends to answer these two questions. To that purpose, it reviews the most recent literature for the Spanish case. The goal is to obtain fresh in-sights into the connection between education and economic inequality.
    Keywords: Inequality; demand for education; overeducation
    JEL: J31 D31
    Date: 2006–06–20

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