|
on European Economics |
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Issue of 2007‒03‒03
eighteen papers chosen by Giuseppe Marotta University of Modena and Reggio Emilia |
| By: | Ulrich Fritsche; Vladimir Kuzin |
| Abstract: | Inflation differentials in the Euro area are mainly due to a sustained divergence of wage developments across the Euro area, and narrower differences in labour productivity growth (Alvarez et al., 2006). We investigate convergence of inflation using unit labour cost (ULC) growth and applying PANIC (Bai and Ng, 2004) and cluster procedures (Hobijn and Franses, 2000, Busetti et al., 2006) to Euro area countries as well as US States, US Census Regions and German Länder. Euro area differs in that dispersion in general (and its fraction due to idiosyncratic factors in specific) is larger and common factors are much less important in explaining the variance of ULC growth. We report evidence for convergence clusters in all countries. |
| Keywords: | Unit labor costs, inflation, European Monetary Union, Germany, United States of America, convergence, convergence clubs, panel unit root tests, PANIC |
| JEL: | E31 O47 C32 C33 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp667&r=eec |
| By: | Fabiosa, Jacinto F.; Beghin, John C.; Dong, Fengxia; Elobeid, Amani; Fuller, Frank H.; Matthey, Holger; Tokgoz, Simla; Wailes, Eric |
| Abstract: | Following a historical agreement on the EU enlargement, 10 new member states (NMS) acceded to the European Union on May 1, 2004. Although the European Union has expanded its membership in the past, this enlargement is unique in terms of its scope and diversity of the countries, area, and population involved. Thus, the effects of the EU enlargement on current and future member countries and on world commodity markets require careful consideration as the European Union is a major player in these markets. We analyze the effects of the Common Agricultural Policy (CAP) reform and enlargement on the EU-15, the NMS, and world agricultural markets. We compare three 10-year comprehensive agricultural outlook scenarios. In a "pre-enlargement" scenario, all pre-enlargement policies of the EU-15 are held in place and the 10 NMS maintain their independent economic policies and older technologies as if nothing happens. The second scenario considers the CAP reform in the EU-15. The third scenario is the 2004 Food and Agricultural Policy Research Institute (FAPRI) baseline projection, which incorporates both the CAP reforms and accession of the 10 NMS with the associated domestic and trade policy reforms and some convergence in technology within the EU-25. With prices in most commodities in the acceding countries historically below EU-15 prices, accession leads to a moderate decrease in the EU-15 prices, whereas for the 10 NMS, domestic prices of many commodities increase substantially. Holding income levels constant, consumption levels of agricultural products in these countries decrease in most instances because of higher food prices, while production levels rise. The impact of the two reforms on world markets is moderate to negligible. The CAP reform has a moderate impact on the EU-15. |
| Keywords: | CAP reform, Common Agricultural Policy, EU enlargement, European agriculture, New Member States. |
| Date: | 2007–02–23 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:12729&r=eec |
| By: | Bergemann, Annette (Free University Amsterdam); van den Berg, Gerard (IFAU - Institute for Labour Market Policy Evauation) |
| 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 skill-training 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; monitoring; participation |
| JEL: | J64 |
| Date: | 2007–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2007_003&r=eec |
| By: | Dominique Finon (CIRED - Centre international de recherche sur l'environnement et le développement - [CIRAD : UMR56][CNRS : UMR8568] - [Ecole des Hautes Etudes en Sciences Sociales][Ecole Nationale des Ponts et Chaussées][Ecole Nationale du Génie Rural des Eaux et des Forêts]); Catherine Locatelli (LEPII - Laboratoire d'Economie de la Production et de l'Intégration Internationale - [CNRS : FRE2664] - [Université Pierre Mendès-France - Grenoble II]) |
| Abstract: | This article analyses the economic risk associated with the dominant position of the Russian vendor in the European market, with a view to assessing the relevance of possible responses by European nations or the EU. It considers various aspects of the Russian vendor's dependence on the European market, before turning to the risks that Gazprom exerts market power on the European market. It concludes by considering the relevance of the possible responses open to the EU and member states to limit any risks by creating a gas single buyer or more simply by encouraging the development of a denser pan-European network, with additional sources of supply and increased market integration. |
| Keywords: | GAZPROM ; INTERNATIONAL GAS MARKET ; DEPENDENCE ; EUROPEAN GAS MARKET |
| Date: | 2007–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00129618_v1&r=eec |
| By: | Aurélien Eyquem (CREM - CNRS) |
| Abstract: | We explore the welfare implications of several fiscal policies in an estimated two-country New Open Economy Macroeconomics (NOEM) model of the EuropeanMonetary Union (EMU). The model features incomplete financial markets and home bias in final consumption baskets. We define the optimal monetary and fiscal policy and contrast the (small) contribution of financial markets incompleteness to welfare losses. We also investigate the welfare implications of simple public spending rules. We find (i) that welfare maximizing public spending rules imply significant welfare losses with respect to the optimal policy - equivalent to an average 7.3% drop in permanent consumption and (ii) that estimated public spending rules imply low welfare losses with respect to welfare maximizing rules - equivalent to an average 1% drop in permanent consumption. In our framework, these losses can be reduced by either promoting a deeper trade integration in the EMU, or by increasing the number of available fiscal instruments. |
| Keywords: | Monetary Union, Fiscal Stabilization, Optimal Monetary and Fiscal Policy, Welfare Analysis, Fiscal Rules |
| JEL: | E52 E61 E62 E63 F32 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:tut:cremwp:200705&r=eec |
| By: | Christos S. Savva; Denise R. Osborn; Len Gill |
| Abstract: | This study extends the dynamic conditional correlation model to allow day-specific correlations of shocks across international stock markets. The properties of the resulting periodic dynamic conditional correlation (PDCC) model are examined, with the model then applied to study the intra-week interactions between six developed European stock markets and the US over the period 1993 - 2005. We find very strong evidence of periodic effects in the conditional correlations of the shocks. The highest correlations are generally observed on Thursdays, with these Thursday correlations in some cases being twice those on Monday or Tuesday. Prior to estimating the PDCC model, periodic mean and volatility effects are removed using a PAR model for returns combined with a periodic EGARCH specification for the variance equation. Strong periodic mean effects are found for returns in the French, Italian and Spanish stock markets, whereas such effects are present in volatility for all stock markets except Italy. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:man:cgbcrp:77&r=eec |
| By: | Philip Vermeulen (European Central Bank); Daniel Dias (Banco de Portugal); Maarten Dossche (National Bank of Belgium); Erwan Gautier (Banque de France); Ignacio Hernando (Banco de España); Roberto Sabbatini (Banca d’Italia); Harald Stahl (Deutsche Bundesbank) |
| Abstract: | This paper documents producer price setting in 6 countries of the euro area: Germany, France, Italy, Spain, Belgium and Portugal. It collects evidence from available studies on each of those countries and also provides new evidence. These studies use monthly producer price data. The following five stylised facts emerge consistently across countries. First, producer prices change infrequently: each month around 21% of prices change. Second, there is substantial cross-sector heterogeneity in the frequency of price changes: prices change very often in the energy sector, less often in food and intermediate goods and least often in non-durable non- food and durable goods. Third, countries have a similar ranking of industries in terms of frequency of price changes. Fourth, there is no evidence of downward nominal rigidity: price changes are for about 45% decreases and 55% increases. Fifth, price changes are sizeable compared to the inflation rate. The paper also examines the factors driving producer price changes. It finds that costs structure, competition, seasonality, inflation and attractive pricing all play a role in driving producer price changes. In addition producer prices tend to be more flexible than consumer prices. |
| Keywords: | price-setting, producer prices |
| JEL: | E31 D40 C25 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:0703&r=eec |
| By: | Kari Alho; Nuutti Nikula |
| Abstract: | The paper considers time series evidence on the relationships, and possible trade-offs, between productivity and employment, and on the impact of taxes in this connection. First, a theoretical model is built for an open economy leading to the identification of technology, non-technology and labour and capital tax wedge shocks, as based on their long-run effects. Then structural VAR models are estimated for the EU-15 and some other OECD countries to infer the above relationships. Our conclusion is that there is in the EU a fairly uniform and significant short-run negative impulse on employment from a positive productivity shock, while this becomes smaller and statistically insignificant over time in most, but not in some member countries. The former situation is interpreted to be an indication of nominal and the latter that of real or structural rigidity in the economy. In the US, there is no such trade-off, either in the short or long run. The impulse response of the shocks in the tax wedge on labour in the EU-15 is a fairly sizeable and significant negative impact on employment both in the short and long run, while the effects of capital income tax shocks are negative on productivity, but not significant in statistical terms. |
| Keywords: | Productivity, employment, taxes, EU |
| JEL: | O49 H29 J20 |
| Date: | 2007–02–27 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1074&r=eec |
| By: | C. Reggiani; G. Rossini |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:579&r=eec |
| By: | Van Kerm, Philippe (CEPS/INSTEAD) |
| Abstract: | Micro-data estimates of welfare indices are known to be sensitive to observations from the tails of the income distribution. It is therefore customary to make adjustments to extreme data before estimating inequality and poverty statistics. This paper systematically evaluates the impact of such adjustments on indicators estimated from the EU-SILC (Community Statistics on Income and Living conditions) which is expected to become the reference source for comparative statistics on income distribution and social exclusion in the EU. Emphasis is put on the robustness of cross-country comparisons to alternative adjustments. Results from a sensitivity analysis considering both simple, classical adjustments and a more sophisticated approach based on modelling parametrically the tails of the income distribution are reported. Reassuringly, ordinal comparisons of countries are found to be robust to variants of data adjustment procedures. However, data adjustments are far from innocuous. Cardinal comparisons of countries reveal sensitive to the treatment of extreme incomes, even for seemingly small adjustments. |
| Keywords: | social indicators; poverty and inequality ; extreme incomes ; parametric tail ; EU-SILC |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:irs:iriswp:2007-01&r=eec |
| By: | David G. Blanchflower; Andrew Oswald |
| Abstract: | Recent research has argued that psychological well-being is U-shaped through the life cycle. The difficulty with such a claim is that there are likely to be omitted cohort effects (earlier generations may have been born in, say, particularly good or bad times). Hence the apparent U may be an artifact. Using data on approximately 500,000 Americans and Europeans, this paper designs a test that makes it possible to allow for different birth-cohorts. A robust U-shape of happiness in age is found. Ceteris paribus, well-being reaches a minimum, on both sides of the Atlantic, in people's mid to late 40s. The paper also shows that in the United States the well-being of successive birth-cohorts has gradually fallen through time. In Europe, newer birth-cohorts are happier. |
| JEL: | I1 J0 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12935&r=eec |
| By: | Joachim Wagner (Institute of Economics, University of Lüneburg) |
| Abstract: | Using unique recently released nationally representative high-quality data at the plant level, this paper presents the first comprehensive evidence on the relationship between productivity and size of the export market for Germany, a leading actor on the world market for manufactured goods. It documents that firms that export to countries inside the euro-zone are more productive than firms that sell their products in Germany only, but less productive than firms that export to countries outside the euro-zone, too. This is in line with the hypothesis that export markets outside the euro-zone have higher entry costs that can only by paid by more productive firms. |
| Keywords: | Exports, productivity, micro data, Germany |
| JEL: | F14 D21 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:43&r=eec |
| By: | Valérie Revest (CEPN - Centre d'économie de l'Université de Paris Nord - [CNRS : UMR7115] - [Université Paris-Nord - Paris XIII]) |
| Abstract: | This article explores the issue of the failure of the French New Market, a French Financial market, in the light of the dynamics of organisational rules between 1996 and 2005. The French New Market (FNM) was created in 1996 in order to finance European growing firms. After its creation, this market successively expanded, declined and finally disappeared in 2005. The dynamics testifies a lack of consistency and relevance in the rules during this period, given the identity and of the FNM. More generally, we show that rules changes shed light on how such a market functions, and also attest as to whether it flourishes or encounters difficulties. |
| Keywords: | Financial Market, French New Market, Rules, Dynamics, Functioning |
| Date: | 2007–02–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00130094_v1&r=eec |
| By: | Cliff L. F. Attfield; Jonathan R. W. Temple |
| Abstract: | Standard macroeconomic models suggest that the ‘great ratios’ of consumptionto output and investment to output should be stable functions of structural parameters. We examine whether the ratios are stationary for the US and UK, allowing for structural breaks that could reflect timevarying parameters. We find stronger evidence for stationarity than previous work. We then use the long-run restrictions associated with the stationarity of the great ratios to extract measures of trend output from the joint behaviour of consumption, investment and output. This approach isattractive because it uses information from several series without requiring restrictive assumptions. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:man:cgbcrp:75&r=eec |
| By: | Halbersma, R.S. (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics); Mikkers, M.C.; Motchenkova, E. |
| Abstract: | In 2005, competition was introduced in part of the hospital market in the Netherlands. Using a unique dataset of transaction and list prices between hospitals and insurers in the years 2005 and 2006, we estimate the influence of buyer and seller concentration on the negotiated prices in the first two years after the institutional change. First, we use a traditional Structure-Conduct-Performance model (SCP-model) along the lines of Melnick et al. (1992) to estimate the effects of buyer and seller concentration on price-cost margins. Second, we model the interaction between hospitals and insurers in the context of a generalized bargaining model (Brooks et al., 1997). In the SCP-model, we obtain that the concentration of hospitals (insurers) has a significantly positive (negative) impact on the hospital price-cost margin. In the bargaining model, we also find a significant negative effect of insurer concentration on the bargaining share of hospital, but no significant effect of hospital concentration on the division of the gains from bargaining. In both models we find a significant impact of idiosyncratic effects on the market outcomes, consistent with the fact that the Dutch hospital sector is not yet in a long-run equilibrium. |
| Keywords: | Competition; Market Structure; Hospitals; Insurers; Bargaining |
| JEL: | I11 L1 C7 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:vuarem:2007-4&r=eec |
| By: | Daunfeldt, Sven-Olov (The Swedish Retail Institute (HUI)); Praski-Ståhlgren, Ulrika (The Department of Economics); Rudholm, Niklas (The Swedish Retail Institute (HUI)) |
| Abstract: | The purpose of this paper is to study, using a comprehensive Swedish panel data set, whether investors are less willing to realize capital gains when the marginal tax rate on capital gains is relatively high. In Sweden capital gains are taxed independently of ordinary income at a flat rate, making it possible to avoid endogenity problems and to include direct measures of capital gains taxation in the empirical analysis. The results indicate that a 10% increase in capital gains tax rate reduces the number of realizations of capital gains with 8.7% and the realized amount, given the decision to realize, with 1.9%. In addition, wealthy individuals seem to respond more to changes in capital gains tax rates than less-wealthy individuals. |
| Keywords: | Capital gains realizations; tax avoidance; panel data |
| JEL: | H24 H31 |
| Date: | 2007–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:huiwps:0006&r=eec |
| By: | Hans G. Bloemen (Vrije Universiteit Amsterdam); Elena Stancanelli (CNRS, GREDEG, Nice, and OFCE, Sciences-Po, Paris) |
| Abstract: | This paper provides new estimates of the impact of the French tax credit on the employment outcomes of women. We model simultaneously the employment probability and the determinants of programme eligibility. We improve on earlier studies in this field that, using a single evaluation equation framework, predicted ex-ante programme eligibility. Within this framework, we also allow for hours responses. The data for the analysis are drawn from the French labour force surveys of years 1999 to 2002. We find no significant impact of the tax credit on either employment or hours of French women. |
| Keywords: | policy evaluation; difference-in-difference estimator; labour supply |
| JEL: | C34 I38 J21 |
| Date: | 2007–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20070016&r=eec |
| By: | Philippe Lemistre (LIRHE - Laboratoire Interdisciplinaire de recherche sur les Ressources Humaines et l'Emploi - [CNRS : UMR5066] - [Université des Sciences Sociales - Toulouse I]); Nicolas Moreau (LIRHE - Laboratoire Interdisciplinaire de recherche sur les Ressources Humaines et l'Emploi - [CNRS : UMR5066] - [Université des Sciences Sociales - Toulouse I]) |
| Abstract: | The purpose of this article is to reevaluate the returns to geographic mobility and to the level<br />of education, taking into account the interaction between these two variables. We have at our<br />disposal an original French database that permits precise calculation of the distance between<br />the place of education and the location of first employment. We thus capture mobility without<br />a priori regarding the geographical areas selected, and we use kilometric thresholds to<br />estimate the returns to spatial mobility. Our results suggest decreasing returns to spatial<br />mobility as the distance covered rises and increasing returns to mobility with higher levels of<br />education. In addition, for all levels of education, including the lowest, returns to geographic<br />mobility prove to be positive, for one threshold at least and several distances. |
| Keywords: | spatial mobility; returns to schooling; earnings function |
| Date: | 2007–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00131849_v1&r=eec |