nep-eec New Economics Papers
on European Economics
Issue of 2007‒02‒24
34 papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. "MAASTRICHT 2042 AND THE FATE OF EUROPE: Toward Convergence and Full Employment" By James K. Galbraith
  2. Current accounts in the euro area: An intertemporal approach By José M. Campa; Ángel Gavilán
  3. Structural breaks in labor productivity growth: the United States vs. the European Union By Juan F. Jimeno; Esther Moral; Lorena Saiz
  4. Economic Implications of Differences in Member State Regulations for the European Union Emission Trade System By Adriaan Perrels
  5. Active labour market policy effects for women in Europe - a survey By Annette Bergemann; Gerard van den Berg
  6. "European Welfare State Regimes and Their Generosity Toward the Elderly" By Axel Boersch-Supan
  7. On the Relationship between Fiscal Plans in the European Union: An Empirical Analysis Based on Real-Time Data By Beetsma, Roel; Giuliodori, Massimo
  8. Competition and price adjustment in the euro area By Luis J. Álvarez; Ignacio Hernando
  9. Dynamics in the European Petroleum Markets By Szymon Wlazlowski; Monica Giulietti; Jane Binner; Costas Milas
  10. The Part-Time Wage Penalty in European Countries: How Large Is It for Men? By Síle O’Dorchai; Robert Plasman; François Rycx
  11. Functional income distribution and aggregate demand in the Euro-area By Engelbert Stockhammer; Özlem Onaran; Stefan Ederer
  12. Taxation and Democracy in the EU By Ganghof, Steffen,; Philipp Genschel
  13. Money in Monetary Policy Design under Uncertainty: The Two-Pillar Phillips Curve versus ECB-Style Cross-Checking By Beck, Günter; Wieland, Volker
  14. "Global Imbalances, Bretton Woods II, and Euroland's Role in All This" By Joerg Bibow
  15. Money market uncertainty and retail interest rate fluctuations: A cross-country comparison By Burkhard Raunig; Johann Scharler
  16. Assessing Euro-Med trade preferences: the case of entry price reduction By Martinez-Gomez, Victor
  17. Modelling Euro-Mediterranean Agricultural Trade By Garcia-Alvarez-Coque, Jose-Maria; Martinez-Gomez, Victor; Villanueva, Mique
  18. Hitting and Hoping? Meeting the Exchange Rate and Inflation Criteria During a Period of Nominal Convergence By John Lewis
  19. The cross-country effects of EU holidays on domestic GDP's By Giancarlo Bruno; Claudio Lupi; Carmine Pappalardo; Gianfranco Piras
  20. "Expensive Living: The Greek Experience under the Euro" By Taun N. Toay; Theodore Pelagidis
  21. Employment, innovation and productivity: evidence from Italian microdata By Bronwyn Hall; Francesca Lotti; Jacques Mairesse
  22. Does limited access to mortgage debt explain why young adults live with their parents? By Nuno Martins; Ernesto Villanueva
  23. The Role of Overseas Chinese in Europe in Making China Global: The Case of Portugal By Annette Bongardt; Miguel Santos Neves
  24. Sectoral Transformation, Turbulence, and Labour Market Dynamics in Germany By Ronald Bachmann; Michael C. Burda
  25. Co-résidence chez les parents et indemnisation des jeunes chômeurs en Europe. By Olivia Éckert-Jaffé; Isabelle Terraz
  26. BEMOD: a DSGE model for the Spanish economy and the rest of the Euro area By Javier Andrés; Pablo Burriel; Ángel Estrada
  27. Does Competition Increase Economic Efficiency in Swedish County Councils? By Rudholm, Niklas; Nordmark, Arvid; Marklund, Per-Olov
  28. La gestion et l'évaluation du service public de l'emploi en France dans la décennie 1990. Matériaux pour une réflexion comparative internationale. By Jean-Claude Barbier
  29. Monetary policy through the “credit-cost channel”. Italy and Germany By Giuliana Passamani; Roberto Tamborini
  30. National accounts, fiscal rules and fiscal policy. Mind the hidden gaps By Maurizio Bovi
  31. Pricing to market of Italian exporting firms By Roberto Basile; Sergio de Nardis; Alessandro Girardi
  32. Tax avoidance - a natural experiment By Ohlsson, Henry
  33. District leaders as open networks: emerging business strategies in Italian industrial districts By Eleonora Di Maria; Stefano Micelli
  34. Assessing banking competition: an application to the Spanish market for (quality-changing) deposits By Juan Ayuso; Jorge Martínez

  1. By: James K. Galbraith
    Abstract: Unemployment in the European Union (EU) is a serious problem that threatens to disrupt the integration of accession countries, the character of individual countries, and the continued existence of the EU. According to Senior Scholar James K. Galbraith, European integration poses a huge conundrum for European employment because the conventional theory explaining unemployment in EuropeÐlabor market rigiditiesÐis wrong. The application of this policy will not cure European unemployment, but it could destroy the economic promise of the EU for its poorer regions and the accession countries.
    Date: 2006–11
  2. By: José M. Campa (IESE Business School); Ángel Gavilán (Banco de España)
    Abstract: This paper uses an intertemporal model of the current account to evaluate the fluctuations in current account balances experienced by Euro area countries over the last three decades. In the model current account balances are used to smooth consumption and they are driven by expectations about future income and relative prices. This simple model is not rejected for six (Belgium, France, Italy, Netherlands, Portugal, and Spain) of the ten Euro area countries examined, although the model tends to underestimate their current account volatility. The analysis also shows that the relative contributions to current account balances of future output and relative prices differ across countries. Expectations of future growth increased in all Southern European countries at the creation of the Euro but they had considerably diverged by 2005. While in Portugal these expectations are now below its historical mean, in Spain they are at a historical high.
    Keywords: intertemporal current account, financial integration, current account balances, euro area
    JEL: F32 F36
    Date: 2006–12
  3. By: Juan F. Jimeno (Banco de España; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)); Esther Moral (Banco de España); Lorena Saiz (Banco de España)
    Abstract: There is a stark contrast between the recent evolution of labor productivity (and TFP) in the US and EU countries. In the US it accelerated around the mid-1990s and there is evidence of reversion to a high-growth regime. In some EU countries, while employment-population ratios started to rise after a period of stagnant employment, labor productivity (and TFP) decelerated. In this paper we apply univariate and multivariate methods, that have been used to detect structural breaks in productivity growth in the US economy, to EU data to confirm the existence of a significant permanent shift to lower productivity growth in some European countries around the mid-1990s. We find a structural break in mean labour productivity growth in the US around the mid-1990s (towards higher growth), in Continental Europe around the early 1990s (towards lower growth) and no evidence of structural breaks in the UK.
    Keywords: structural breaks, labor productivity, markov switching models
    JEL: C22 O47
    Date: 2006–10
  4. By: Adriaan Perrels
    Abstract: This report discusses the economic implications of the regulatory organisation of the European Emission Trade System (EU ETS) in the member states, and more in particular the consequences of differences between national regulations. It is part of a larger study regarding juridical aspects of the implementation of EU-ETS (Upston-Hooper et al, 2006), which has been carried out in the framework of the CLIMBUS programme funded by TEKES.
    Keywords: Emission trading, level playing field, regulation
    Date: 2007–02–14
  5. By: Annette Bergemann; Gerard van den Berg
    Abstract: We survey the recent literature on the effects of active labor market policies on individual labor market outcomes like employment and income, for adult female individuals without work in European countries. We consider skilltraining programs, monitoring and sanctions, job search assistance, and employment subsidies. The results are remarkably uniform across studies. We relate the results to the relevant level of female labor force participation.
    Keywords: Job search, female labor supply, wages, unemployment, schooling, training,
    Date: 2006–12
  6. By: Axel Boersch-Supan
    Abstract: This paper examines the generosity of the European welfare state toward the elderly. It shows how various dimensions of the welfare regimes have changed during the past 10 to 15 years and how this evolution is related to the process of economic integration. Dimensions include general generosity toward the elderly and, more specifically, generosity toward early retirement and generosity toward the poor. Using aggregate data (EUROSTAT, OECD) as well as individual data (SHARE, the new Survey of Health, Ageing, and Retirement in Europe), the paper looks at the statistical correlations among those types of system generosity and actual policy outcomes, such as unemployment and poverty rates among the young and the elderly, and the inequality in wealth, income and consumption. While the paper is largely descriptive, it also tries to explain which economic and political forces drive social expenditures for the elderly in the European Union and whether spending for the elderly crowds out spending for the young.
    Date: 2006–11
  7. By: Beetsma, Roel; Giuliodori, Massimo
    Abstract: We investigate the interdependence of fiscal policies, and in particular deficits, in the European Union using an empirical analysis based on real-time fiscal data. There are many potential reasons why fiscal policies could be interdependent, such as direct externalities due to cross-border public investments, yardstick competition, tax competition and peer pressure among governments. The advantage of using real-time data is that they better reflect the policymakers’ intentions than revised data. Real-time data allow us to investigate how available information is mapped into policymakers’ plans, while revised data are generally 'polluted' with ad hoc reactions to unexpected developments that have taken place after the plan was made. Controlling for a large set of relevant determinants of primary cyclically adjusted deficits, we find indeed evidence of fiscal policy interdependence. However, the interdependence is rather asymmetrically distributed: the fiscal stances of the large countries affect the fiscal stances of the small countries, but not vice versa.
    Keywords: European Union; fiscal policy interdependence; monetary union; primary cyclically adjusted deficit; real-time data
    JEL: E62 H60
    Date: 2007–02
  8. By: Luis J. Álvarez (Banco de España); Ignacio Hernando (Banco de España)
    Abstract: This paper explores the role of a number of factors in explaining the heterogeneity in the degree of price stickiness across industries, on the basis of the information provided by surveys on pricing behavior conducted in nine euro area countries. The main focus is placed on the influence of competition on the degree of price flexibility. Our results suggest that the price setting strategies of the most competitive firms give them a greater capacity to react to shocks and make, in practice, for greater flexibility in their prices. The direct influence of market competition on price flexibility is corroborated by a cross-country cross-industry econometric analysis based on the information provided by surveys. This analysis also shows that the cost structure and demand conditions help to explain the degree of price flexibility. Finally, it suggests that countries in which product market regulation is more relevant are characterized by less price flexibility.
    Keywords: price setting, competition, survey data
    JEL: D40 E31
    Date: 2006–10
  9. By: Szymon Wlazlowski (Aston Business School, Aston University); Monica Giulietti (Aston Business School, Aston University); Jane Binner (Aston Business School, Aston University); Costas Milas (Keele University, Centre for Economic Research and School of Economic and Management Studies)
    Abstract: This paper analyses horizontal and vertical price dynamics in the EU petroleum markets. The results indicate that the cross-country price differentials have significant impact on the local price adjustments. The uncovered patterns can be seen as the first empirical support for the politically-charged concept of ‘‘fuel tourism’’, obtained using pan-European cross-product time-series database. Even more interestingly, when analysed in cross-country setting, the dreaded welfare transfer due to the asymmetric price transmission phenomenon is found to be less pronounced than claimed before.
    Keywords: Production, Pricing, and Market Structure; Petroleum, General Energy, Energy and Macroeconomy.
    JEL: L11 Q40 Q43
    Date: 2007–02
  10. By: Síle O’Dorchai (Université Libre de Bruxelles, DULBEA); Robert Plasman (Université Libre de Bruxelles, DULBEA); François Rycx (Université Libre de Bruxelles, DULBEA and IZA)
    Abstract: Economic theory advances a number of reasons for the existence of a wage gap between part-time and full-time workers. Empirical work has concentrated on the wage effects of parttime work for women. For men, much less empirical evidence exists, mainly because of lacking data. In this paper, we take advantage of access to unique harmonised matched employer-employee data (i.e. the 1995 European Structure of Earnings Survey) to investigate the magnitude and sources of the part-time wage penalty for male workers in six European countries (i.e. Belgium, Denmark, Ireland, Italy, Spain, and the UK). Findings show that the raw gap in hourly gross pay amounts to 16 per cent of male part-timer’s wage in Spain, to 24 per cent in Belgium, to 28 per cent in Denmark and Italy, to 67 per cent in the UK and to 149 per cent in Ireland. Human capital differences explain between 31 per cent of the observed wage gap in the UK and 71 per cent in Denmark. When a larger set of control variables is taken into account (including occupation, industry, firm size, and level of wage bargaining), a much smaller part of the gap remains unexplained by differences in observed characteristics (except in Italy). Overall, results suggest that policy initiatives to promote lifelong learning and training are of great importance to help part-timers catch up. Moreover, except for Italy, they point to a persisting problem of occupational and sectoral segregation between men working part-time and full-time which requires renewed policy attention.
    Keywords: work status, part-time employment, wage gap, decomposition, human capital, segregation
    JEL: C13 C31 J24 J31 J71
    Date: 2007–01
  11. By: Engelbert Stockhammer (Department of Economics, Vienna University of Economics & B.A.); Özlem Onaran (Department of Economics, Vienna University of Economics & B.A.); Stefan Ederer (Department of Economics, Vienna University of Economics & B.A.)
    Abstract: An increase in the wage share has contradictory effects on the subaggregates of aggregate demand. Private consumption expenditures ought to increase because wage incomes typically are associated with higher consumption propensities than capital incomes. Investment expenditures ought to be negatively affected because investment will positively depend on profits. Net exports will be negatively affected because an increase in the wage share corresponds to an increase in unit labor costs and thus a loss in competitiveness. Theoretically aggregate demand can therefore be either wage led or profit led depending on how these effects add up. The results will crucially depend on how open the economy is internationally. The paper estimates a Post-Kaleckian macro model incorporating these effects for the Euro area and finds that the Euro area is presently in a wage-led demand regime. Implications for wage policies are discussed.
    JEL: E12 E20 E22 E25 E61
    Date: 2007–02
  12. By: Ganghof, Steffen,; Philipp Genschel
    Abstract: Abstract Is corporate tax competition a threat to democracy in the EU? The answer dependscrucially on a positive analysis of the effects of tax competition on national policy autonomy.Most analyses focus on direct effects on corporate tax rates and revenues. Wecontend that this focus is too narrow. It overlooks the fact that corporate tax competitionalso has important indirect effects on the progressivity and revenue-raising potentialof personal income taxation. We elaborate on these indirect effects theoreticallyand empirically, and explore the implications for the normative debate on the EU'sdemocratic defi cit. Our fi ndings show that European integration can constrain nationalredistribution in a major way: the democratic defi cit is real. Greater political contestationover the EU's policy agenda is desirable in order to mitigate this defi cit.
    Keywords: tax policy; tax competition; democracy; harmonisation; harmonisation; normative political theory; majority voting; European Commission
    Date: 2007–02–13
  13. By: Beck, Günter; Wieland, Volker
    Abstract: The European Central Bank has assigned a special role to money in its two pillar strategy and has received much criticism for this decision. In this paper, we explore possible justifications. The case against including money in the central bank's interest rate rule is based on a standard model of the monetary transmission process that underlies many contributions to research on monetary policy in the last two decades. Of course, if one allows for a direct effect of money on output or inflation as in the empirical 'two-pillar' Phillips curves estimated in some recent contributions, it would be optimal to include a measure of (long-run) money growth in the rule. In this paper, we develop a justification for including money in the interest rate rule by allowing for imperfect knowledge regarding unobservables such as potential output and equilibrium interest rates. We formulate a novel characterization of ECB-style monetary cross-checking and show that it can generate substantial stabilization benefits in the event of persistent policy misperceptions regarding potential output. Such misperceptions cause a bias in policy setting. We find that cross-checking and changing interest rates in response to sustained deviations of long-run money growth helps the central bank to overcome this bias. Our argument in favour of ECB-style cross-checking does not require direct effects of money on output or inflation.
    Keywords: European Central Bank; monetary policy; monetary policy under uncertainty; money; Phillips curve; quantity theory
    JEL: E32 E41 E43 E52 E58
    Date: 2007–02
  14. By: Joerg Bibow
    Abstract: Approaching the issue of mounting global imbalances from the perspective of the ÒBretton Woods II hypothesis,Ó this paper argues that the popular preoccupation with ChinaÕs supposed export-led development strategy is misplaced. It also suggests, similar to JapanÕs depression, subdued growth in Euroland for most of the time since the Maastricht Treaty has been of first-order importance in these developments. Germany is identified as being at the heart of the European trouble. Globally, there is an ongoing clash between two approches to macroeconomic policy making: a highly dogmatic German approach, and a very pragmatic Anglo-Saxon one. The low levels of interest at which global demand imbalances have been smoothed out financially reflect deficient global demand in an environment of vast supply-side opportunities. After contributing greatly to the build-up of imbalances, Euroland is unlikely to play any constructive part in their unwinding. Hampered by an exchange-rate policy vacuum, a small-country mindset, and soaring intra-area imbalances, Euroland is also illpositioned to cope with fading external growth stimuli.
    Date: 2006–12
  15. By: Burkhard Raunig (Oesterreichische Nationalbank, Economic Studies Division, Vienna, Austria); Johann Scharler (Department of Economics, Johannes Kepler University Linz, Austria)
    Abstract: This paper analyzes empirically the relationship between money market uncertainty and unexpected deviations in retail interest rates in a sample of 10 OECD countries. We find that, with the exception of the US, money market uncertainty has only a modest impact on the conditional volatility of retail interest rates. Even for the US we find that the effects of money market uncertainty are spread out over time. Our results are consistent with the hypothesis that banking relationships include implicit insurance arrangements and thereby reduce uncertainty.
    Keywords: Interest Rate Pass-Through; Relationship Banking; Conditional Volatility
    JEL: E43 G21
    Date: 2007–02
  16. By: Martinez-Gomez, Victor
    Abstract: The EU protects some of its fruits and vegetables through the entry price system. This system consists on a two-tiered tariff, with high-priced exports paying an ad valorem tariff, whereas low-priced exports pay also a supplementary specific tariff. The breaking point between high and low export prices is the entry price level decided by the EU, generally the same level for all third countries. In a few cases, some Southern Mediterranean partners of the EU have agreed a reduced entry price for their exports, together with the more common ad valorem tariff reduction. Among the indicators used for gauge the value of preferences, there is no one devoted to this case of reduced entry price, hence we develop a new indicator that allows to split which part of the preferential gains corresponds to the entry price reduction and which part corresponds to the “usual” ad valorem tariff reduction. We apply this methodology to Moroccan clementines trade flows, with two main findings: 1) The entry price reduction ranges up to 39% of the economic value of preferences in some months; 2) Morocco is not maximizing the gains due to this reduction, and could take some trade and policy lessons, mainly trying to better fit to the concession or, if impossible, use it as negotiating capital in future reviews of the agreement.
    Keywords: Euro-Mediterranean Trade; trade preferences; fruits and vegetables; entry price regime
    JEL: Q17 F13
    Date: 2007–02–10
  17. By: Garcia-Alvarez-Coque, Jose-Maria; Martinez-Gomez, Victor; Villanueva, Mique
    Abstract: This paper examines the methodological problems to define a modelling approach to assess the impact of full or limited bilateral liberalisation of agricultural trade flows in the Euro-Mediterranean region. The bilateral trade liberalisation process in the region is framed by complexity, in policy instruments and in the characteristics of the products, in particular fruits and vegetables. Advantages and disadvantages of the general equilibrium and partial equilibrium approaches to simulate trade policy impacts are assessed. Caveats of existing models are related to the representation of specific policy instruments (tariffs, entry prices and other non-tariff measures) and on the seasonal nature of horticultural trade, which is of major importance in the Euro-Mediterranean Free Trade Are. The paper provides an illustration of how an imperfect substitute product model could be helpful to describe the trade effects of bilateral price changes, for given seasons.
    JEL: Q00 F13
    Date: 2006–02–02
  18. By: John Lewis
    Abstract: This paper analyses the problem faced by CEECs wishing to join the Euro who must hit both an inflation and exchange rate criterion during a period of nominal convergence. This process requires either an inflation differential, an appreciating nominal exchange rate, or a combination of the two, which makes it difficult to simultaneously satisfy the exchange rate and inflation criteria. The authorities can use their monetary policy to hit one criterion, but must essentially just "hope" to satisfy the other one. The paper quantifies the likely size and speed of these convergence effects, their impact on inflation and exchange rates, and their consequences for the simultaneous compliance with both criteria under an inflation targeting setup and under a fixed exchange rate regime. The key result is that under an inflation targeting regime, the nominal appreciation implied by convergence is not big enough to threaten a breach of the exchange rate criterion, but for countries with fixed exchange rates, inflation is likely to exceed the reference value. This result is robust to plausible changes in the assumed convergence scenario.
    Keywords: Central and Eastern Europe; Nominal Convergence; Euro Adoption
    JEL: E52 E61 E31
    Date: 2007–01
  19. By: Giancarlo Bruno (ISAE - Institute for Studies and Economic Analyses); Claudio Lupi (University of Molise, Dept. SEGeS, Faculty of Economics); Carmine Pappalardo (ISAE - Institute for Studies and Economic Analyses); Gianfranco Piras (University of Pescara, Faculty of Economics)
    Abstract: The number and the distribution of non-working days during the year has recently entered the policy debate related to the slow pace of the European economy.The fact that the number of non-working days can affect the quarter to quarter performance of GDP is well known and hardly disputable. It has recently been argued that not only domestic holidays can in principle be important in each single economy, but also foreign ones, as far as there exist strict connections among the national economies. Given the existing evidence at the national level relative to the influence of calendar effects on GDP, the first step of the econometric analysis in the present research is a check on the existence (and significance) of international spillover effects. Our investigation uses both structural time series models and the ARIMA model-based approach. These two different approaches are used jointly and their specific features are exploited to represent and estimate the time series components of our interest. The empirical evidence does not support the spillover hypothesis.
    Keywords: trading days effects, national accounts, international spillover effects
    JEL: C22 E01 E32
    Date: 2006–02
  20. By: Taun N. Toay; Theodore Pelagidis
    Abstract: Apart from its widely accepted direct advantages, the introduction of the euro has been accompanied by a surge of inflation in most of the EU member states. At the same time, wagesÐin part, wages of the unskilledÐare relatively losing ground, while the purchasing power of the average European seems also to have weakened since the introduction of the single currency. In this paper we deal with five relevant central issues to interpret "expensiveness" in Greece. First, we examine to what extent recent inflation trends are attributable to the constraints imposed by the monetary unionÐnamely negative demand disturbances in certain Greek regions. Second, we investigate to what extent these patterns are also due to the adoption of the euroÐincluding conversion period effectsÐover product market and other domestic rigidities. Third, we investigate the impact of seasonal effects on inflation, in the context of the Greek so-called traditional "petit-bourgeois capitalism." Fourth, we explore the extent to which unemployment is another factor that drives wages and purchasing power down. Fifth, we apply the Balassa-Samuelson effect to see whether it constitutes the culprit for price hikes in nontradable products in particular. We find that all the aforementioned factors contribute to the Greek expensiveness.
    Date: 2006–12
  21. By: Bronwyn Hall (Institute for Fiscal Studies and University of California, Berkeley); Francesca Lotti; Jacques Mairesse
    Abstract: Italian manufacturing firms have been losing ground with respect to many of their European competitors. This paper presents some empirical evidence on the effects of innovation on employment growth and therefore on firms' productivity with the goal of understanding the roots of such poor performance. We use firm level data from the last three surveys on Italian manufacturing firms conducted by Mediocredito- Capitalia, which cover the period 1995-2003. Using a modified version of the model proposed by Harrison, Jaumandreu, Mairesse and Peters (2005), which separates employment growth rates into those associated with old and new products, we provide robust evidence that there is no employment displacement effect stemming from process innovation. The sources of employment growth during the period are split equally between the net contribution of product innovation and the net contribution from sales growth of old products. However, the contribution of product innovation is somewhat lower than that for the four comparison European countries considered by Harrison et al.
    Keywords: Innovation, employment, productivity, Italy.
    JEL: L60 O31 O33
    Date: 2006–11
  22. By: Nuno Martins (Universidade Nova de Lisboa); Ernesto Villanueva (Banco de España)
    Abstract: Young adults leave their parents' home at a higher rate in Northern Europe and the United States than in Southern Europe, with broad implications on labor mobility, intergenerational sharing of resources and on fertility. This paper assesses if differences in household structure can be traced back to restricted access to credit for the young. To study the causal impact of getting a loan on the probability of "leaving the nest", we exploit two reforms of a Portuguese program that subsidized interest rate on mortgages signed by low- and medium- income young adults. Using a unique dataset that merges a Labor Force Survey with administrative debt records, we estimate that getting a mortgage loan increases the rate of leaving home by between 31 and 54 percentage points. We combine those estimates with an European household panel to document that if our preferred estimates held for all countries, differential use of credit markets would explain between 16% and 20% of the North-South differences in home leaving.
    Keywords: living arrangements, family structure, credit markets
    JEL: D91 J12 H53
    Date: 2006–10
  23. By: Annette Bongardt (Universidade Moderna); Miguel Santos Neves (Universidade Moderna)
    Abstract: This paper aims at analysing the characteristics and dynamics of the Chinese business community in Portugal in the context of the growing phenomenon of Chinese migration flows to Portugal and to Europe. By means of original research based on primary data obtained through questionnaires and interviews applied to Chinese entrepreneurs and business associations the paper provides an in-depth analysis of the role that this community plays both as a facilitator of China’s integration in the world economy and a potential bridge between the European Union (EU) and China. The study concludes that the Chinese business community in Portugal is rather heterogeneous, dominated by immigrants from Zhejiang province, who operate predominantly in the service sector (retail and wholesale trade), taking advantage of the guanxi network within Europe so as to make use of the advantages of the European single market in order to consolidate competitive advantages. Moreover, this community plays a pro-active role in fostering China’s integration in the global economy by acting as windows for the penetration of Chinese exports on the one hand and by capturing and channelling foreign direct investment to China on the other hand.
    Keywords: Chinese business community in Portugal; Overseas Chinese network (guanxi); EU Single Market; EU-China trade and investment relations
    Date: 2007–02
  24. By: Ronald Bachmann; Michael C. Burda
    Abstract: The secular rise of European unemployment since the 1960s is hard to explain without reference to structural change. This is especially true in Germany, where industrial employment has declined by more than 30% and service sector employment has more than doubled over the past three decades. Using individual transition data on West German workers, we document a marked increase in structural change and turbulence, in particular since 1990. Net employment changes resulted partly from an increase in gross flows, but also from an increase in the net transition "yield" at any given gross worker turnover. In growing sectors, net structural change was driven by accessions from nonparticipation rather than unemployment; contracting sectors reduced their net employment primarily via lower accessions from nonparticipation. While gross turnover is cyclically sensitive and strongly procyclical, net reallocation is countercyclical, meaning that recessions are associated with increased intensity of sectoral reallocation. Beyond this cyclical component, German reunification and Eastern enlargement appear to have contributed significantly to this accelerated pace of structural change.
    Keywords: Gross worker flows, sectoral and occupational mobility, turbulence.
    JEL: J63 J64 J62
    Date: 2007–02
  25. By: Olivia Éckert-Jaffé; Isabelle Terraz
    Abstract: La situation des pays européens au regard du chômage est d'une grande diversité. En effet, tant les performances du marché du travail que les niveaux d'indemnisation et les modes de vie des chômeurs diffèrent selon les pays. Nous montrons dans cet article que les modes de vie des chômeurs européeens dépendent essentiellement des traditions de cohabitation des jeunes dans les pays considérés.
    Date: 2007
  26. By: Javier Andrés (Banco de España; Universidad de Valencia); Pablo Burriel (Banco de España); Ángel Estrada (Oficina Económica de Presidencia del Gobierno)
    Abstract: In this paper we present the theoretical foundations and the simulation results obtained with a new dynamic general equilibrium model developed at the Banco de España for the Spanish economy and the rest of Euro area. The model is designed to help in simulating the effect of alternative shocks on the main aggregate variables. The main contributions of this work from a theoretical perspective are the modelling of a monetary union composed of two regions, the inclusion of housing as a durable good with its own sector of production and the degree and detail of the disaggregation considered for each country in the model, which replicates the Quarterly National Accounts. On the empirical side, the main contribution is the detailed calibration of the most important ratios of the Spanish and rest of the Euro area economies.
    Keywords: sdge model, open economy, simulation, shocks, macroeconomic policies
    JEL: E32 E50 F41
    Date: 2006–11
  27. By: Rudholm, Niklas (Department of Economics, University of Gävle); Nordmark, Arvid (Norrtälje Municipality); Marklund, Per-Olov (Department of Economics, Umeå University)
    Abstract: The Swedish health care system is to a large extent publicly managed by 21 local county councils. During recent years there has been a movement were local county councils have opted to allow more of the production to be performed by alternative producers (i.e. private firms, cooperatives etc.). The purpose of this paper is thus to study if local county councils who has a large proportion of health care performed by alternative producers are more economically efficient than other county councils. The results indicate that county councils with more alternative caregivers are supplying their services more efficiently.
    Keywords: Economic efficiency in health care; Data Envelopment Analysis; Tobit regression
    JEL: H40 I11 I12
    Date: 2007–02–20
  28. By: Jean-Claude Barbier (Centre d'Economie de la Sorbonne)
    Abstract: The first part of the text is devoted to an assessment of the influence of the introduction of performance contracts in the Public Employment Service (PES) in France. It shows that this management technique (“contractualism”) had a very marginal impact in the period considered (1990-2003). This, to the author, is linked to the French institutional context. The role of such an institutional context is exemplified in part 2 that presents a case study during the same period (1991-92). It is an instance of “capture” of evaluation by the French government. It shows that (i) the media alone are unable to provide alternative channels to the dissemination of “objective” information when (ii) institutional features are adverse/conducive to enhancing the quality of the public debate. The case study is chosen in the domain of labour market programmes and the Public Employment Service (PES) in the early 90s, a policy period where the public debate has been at its most contentious and controversial for the last 30 years in France.
    Keywords: France, Public Employment Service, labour market policy, programme evaluation, political communication.
    JEL: J65 J68
    Date: 2007–01
  29. By: Giuliana Passamani; Roberto Tamborini
    Abstract: In this paper we wish to extend the empirical content of the "credit-cost channel" of monetary policy that we proposed in Passamani and Tamborini (2005). In the first place, we replicate the econometric estimation of the model for Italy, to which we add Germany. We find confirmation that, in both countries, firms' reliance on bank loans (“credit channel”) makes aggregate supply sensitive to bank interest rates (“cost channel”), which are in turn driven by the inter-bank rate controlled by the central bank plus a credit risk premium charged by banks on firms. The second extension consists of a formal econometric analysis of the idea that the interest rate is an instrument of control for the central bank. The empirical results of the CCC model that, according to Johansen and Juselius (2003), innovations in the inter-bank rate qualify this variables as a "control variable" in the system. Hence we replicate the Johansen and Juselius technique of simulation of rule-based stabilization policy. This is done for both Italy and Germany, on the basis of the respective estimated CCC models, taking the inter-bak rate as the instrument and the inflation of 2% as the target. As a result, we find confirmation that inflation-targeting by way of inter-bank rate control, grafted onto the estimated CCC model, would stabilize inflation through structural shifts of the "AS curve", that is, the path of realizations in the output-inflation space.
    Keywords: Macroeconomics and monetary economics, Monetary transmission mechanisms, Structural cointegration models, Italian economy, German economy
    JEL: E51 C32
    Date: 2006
  30. By: Maurizio Bovi (ISAE - Institute for Studies and Economic Analyses)
    Abstract: Underground activities affect crucial fiscal ratios generating “gaps” both in government revenues and in national accounts. I address this topic exploiting the peculiarities of the Italian situation. First, I describe the pros and cons of the Italian method to estimate the (non trivial share of) shadow economy. This sheds some light on the reliability of GDP estimates and allows unraveling some policy-relevant national accounts gaps. Second, I examine the links between undeclared incomes, tax burden and fiscal policy in a system possibly suffering from unpleasant arithmetic. Data suggest that government revenues and tax evasion go hand-in-hand and highlight the difficulties of policymaking.
    Keywords: Fiscal Rules, National Accounts, Shadow Economy, Taxation.
    JEL: C32 C53 E26 H26
    Date: 2007–01
  31. By: Roberto Basile (ISAE - Institute for Studies and Economic Analyses); Sergio de Nardis (ISAE - Institute for Studies and Economic Analyses); Alessandro Girardi (ISAE - Institute for Studies and Economic Analyses)
    Abstract: This paper investigates the pricing-to-market (PTM) behaviour of Italian exporting firms, using quarterly survey data by sector and by region over the period 1999q1-2005q2. A partial equilibrium imperfect competition model provides the structure according to which the orthogonality of structural shocks is derived. Impulse-response analysis shows non-negligible reactions of exportdomestic price margins to unanticipated changes in cost competitiveness and in foreign and domestic demand levels, even though these effects appear to be of a transitory nature. For the period 1999-2001 a typical PTM behaviour emerges, while during the most recent years favourable foreign demand conditions allowed firms to increase their export-domestic price margins in face of a strong deterioration of their cost competitiveness. Macroeconomic implications of the observed PTM behaviour are also discussed.
    Keywords: Pricing to market, survey data, panel-VAR models
    JEL: E30 F31 F41
    Date: 2006–06
  32. By: Ohlsson, Henry (Department of Economics)
    Abstract: The objective of this paper is to empirically study if and to what extent people legally reduce their tax payments. There are few empirical studies of tax avoidance although avoidance may seriously affect the possibilities to raise tax revenue. I use a sample of Swedish siblings receiving inheritances in 2004. These children of deceased had the opportunity to avoid inheritance taxes by partly or fully ceding their inheritances to the grandchildren. My first main result is that almost two thirds of the children avoid taxes. The likelihood of avoiding taxes decreases with age. The more of the taxes a child potentially can avoid, the more she avoids. Second, only one out of four minimize their tax payments. The more of the taxes a child potentially can avoid, the more likely he is to minimize taxes. And third, siblings tend to make the same choices whether or not to avoid taxes and to minimize taxes.
    Keywords: tax avoidance; inheritances; cede to children
    JEL: D10 H24 H26
    Date: 2007–02–20
  33. By: Eleonora Di Maria (University of Padova); Stefano Micelli (University of Venice)
    Abstract: Italian industrial districts are no longer self-contained systems of small firms, where firms' competitiveness is the result of physical proximity and links with global economy are limited to export sales. A new generation of firms is taking the lead, reshaping the form of districts through their innovative strategies focused on R&D, design and ICT. Most of these firms are leaders within their markets and organize their value chains by coupling district knowledge and competencies with opportunities offered by globalization processes. The rise of these open networks contributes to the transformation of industrial districts and the real drivers of the district firm's competitiveness. Based on a survey of 650 Italian SMEs from 41 Italian districts, the paper describes the characteristics of this new firm model, compared to the traditional district one. The paper also discusses implications for districts in terms of innovation dynamics and governance.
    Keywords: district firms, open networks, global value chain, innovation, governance
    Date: 2007–02
  34. By: Juan Ayuso (Banco de España); Jorge Martínez (Banco de España)
    Abstract: Taking the Spanish market for deposits as a case study we show the importance of properly controlling for the quality of the services provided when assessing the degree of banking competition. While a simple approach based on estimating the price elasticity of the residual supply of deposit funds faced by banks does not reveal any increase in competition, such an increase is clear when the interest rate on deposits is "corrected" according to the behaviour of variables that proxy the quality of the different services embedded in a bank deposit.
    Keywords: banking competition, panel data, service quality
    JEL: G21 D40
    Date: 2006–09

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