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on European Economics |
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Issue of 2007‒06‒18
sixteen papers chosen by Giuseppe Marotta University of Modena and Reggio Emilia |
| By: | Ruud A. de Mooij (CPB Netherlands Bureau for Economic Policy Analysis, Erasmus University Rotterdam, CESifo and Tinbergen Institute.); Gaëtan Nicodème (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels and European Commission.) |
| Abstract: | In Europe, declining corporate tax rates have come along with rising tax-to-GDP ratios. This paper explores to what extent income shifting from the personal to the corporate tax base can explain these diverging developments. We exploit a panel of European data on legal form of business to analyze income shifting via incorporation. The results suggest that the effect is significant and large. It implies that the revenue effects of lower corporate tax rates – possibly induced by tax competition -- will partly show up in lower personal tax revenues rather than lower corporate tax revenues. Simulations suggest that between 10% and 17% of corporate tax revenue can be attributed to income shifting. Income shifting is found to have raised the corporate tax-to-GDP ratio by some 0.2%-points since the early 1990s. |
| Keywords: | Corporate tax; Personal tax; Incorporation; Income shifting. |
| JEL: | H25 L26 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:07-016&r=eec |
| By: | Jonsson, Thomas (Department of Economics, Umeå University) |
| Abstract: | This paper attempts to explain Common Agricultural Policy (CAP) subsidies to farmers by the in.uence of farmer interest-groups with an EU-wide membership (so called Euro-groups). The analysis is based on panel-data for .fteen commodities over the period 1986-2003. Because the CAP is set as an overall EU policy, e¤ective lobbying presents a collective action problem to the farmers in the EU as a whole. Indicators of lobbying, which are based on this perception, are found to explain part of the variation in agricultural support, suggesting that farmer Euro-groups in.uence agricultural policy within the EU. |
| Keywords: | Agricultural policy; political economy; lobbying |
| JEL: | H43 Q18 |
| Date: | 2007–06–07 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0713&r=eec |
| By: | Gabriele Galati; Philip D. Wooldridge |
| Abstract: | Well developed financial markets are a necessary condition for a currency to play a role as a reserve currency. The introduction of the euro greatly improved the functioning of euro financial markets. This paper investigates whether euro financial markets have developed sufficiently to facilitate the emergence of the euro as a reserve currency on par with the US dollar. We find that the liquidity and breadth of euro financial markets are fast approaching those of dollar markets, and as a result the euro is eroding some of the advantages that have historically supported the pre-eminence of the US dollar as a reserve currency. This strengthens the incentive for monetary authorities to reconsider the currency composition of their reserves. Nevertheless, the introduction of the euro has not yet resulted in a significant change in the currency composition of official reserve holdings. The US dollar has maintained its place as the dominant reserve currency, supported perhaps by the edge that dollar financial markets still have over euro markets in terms of size, credit quality and liquidity, as well as inertia in the use of international currencies. |
| Keywords: | international currency, foreign exchange reserves, currency composition, dollar, euro, financial markets |
| JEL: | E58 F30 F31 G11 G15 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:218&r=eec |
| By: | CAVE, Martin |
| Abstract: | Numerous proposals have been made for separation in the telecommunications sector, some of which have been implemented, including the break-up of the Bell system in the 1980s and the widespread implementation of accounting separation. In recent years, attention has been focussed on operational separation. This paper identifies the problem that this is intended to tackle, lists a number of possible variants and discusses experiences in the UK. Having specified the circumstances under which operational separation may be justified, it suggests how provisions for such separation could be made in European legislation. |
| Keywords: | telecomunications; regulation; operational separation. |
| JEL: | L51 L41 L96 L43 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:3572&r=eec |
| By: | Luigi Bonatti; Annalisa Cristini |
| Abstract: | We show analytically that the credibility problem which has affected the European Stability Pact originates from the insufficient distinction between two reasons for having binding fiscal constraints. The first reason deals with the governments’ tendency to neglect the effects of their fiscal policy on foreign governments (fiscal free-riding). The second reason follows from the governments’ tendency to raise debt by lowering taxes or increasing expenditures, and then to leave it to their successors (fiscal short-termism). An enforcement mechanism relying on governments’ collusion works if the fiscal constraints are not calibrated for curing fiscal short-termism but only for preventing fiscal free-riding. |
| Keywords: | Fiscal policy, Policy coordination, Capital formation, Free-riding, Short-termism. |
| JEL: | E6 H3 H7 O4 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpde:0714&r=eec |
| By: | SCHEUER, Alexander |
| Abstract: | For over 10 years the European Community has strived to develop suitable and proportionate answers to the phenomenon of convergence in its audiovisual regulatory policy. This article outlines the regulatory process at an EU level since the early 1980s as far as media, telecommunications and Information Society services are concerned, and analyses some of the most relevant policy papers specifically related to the adoption of the EC legal framework for the media in the digital age, before focusing on the preparatory phase leading up to the adoption of the Commission proposal for a Directive on "Audiovisual Media Services", issued in December 2005. In addition, the core of this proposal for a revised "Television without Frontiers" Directive, i.e. the extension of its scope to cover new media services provided in a non-linear manner and the introduction of a graduated regime of regulation with a lighter-touch approach in view of such services, is presented along with the main lines of debate among stakeholders. |
| Keywords: | Convergence; digital television; new audiovisual media services; EU media regulatory policy; revision of TWF Directive; electronic communications; broadcasting |
| JEL: | L82 L51 K23 L41 L96 D82 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:3517&r=eec |
| By: | Dominique Bouf (LET - Laboratoire d'économie des transports - [CNRS : UMR5593] - [Université Lumière - Lyon II] - [Ecole Nationale des Travaux Publics de l'Etat]); Yves Crozet (LET - Laboratoire d'économie des transports - [CNRS : UMR5593] - [Université Lumière - Lyon II] - [Ecole Nationale des Travaux Publics de l'Etat]); Julien Lévêque (LET - Laboratoire d'économie des transports - [CNRS : UMR5593] - [Université Lumière - Lyon II] - [Ecole Nationale des Travaux Publics de l'Etat]) |
| Abstract: | There might be various aims for the vertical separation in railways such as the one instituted by the European Commission. One aim might be to improve efficiency, another one might be to introduce competition, as a mean, precisely to improve efficiency. Vertical separation creates, by itself, some disputes between the Infrastructure manager and the so called railways undertakings. So a dispute resolution system is necessary. First, this dispute resolution system is costly and thus might offset the efficiency benefits associated to the introduction of vertical separation. Second, this dispute resolution system can create a kind of collusive agreement where there is a quasi vertical re integration which does not favor competition. The paper is organized as follows : First the various kinds of disputes are analyzed. They are presented according to the following categories : - access to the track - slots allocation ; - timetable establishment ; - adjustments to the initial timetable ; - train circulation - delays - maintenance and renewal works - safety - estate - real estate sharing; - network minor changes - new lines Secondly, the methods by which those difficulties are dealt with are presented for two countries : UK and France. The British dispute resolution system relies heavily on cooperation and contracts within the railway industry whereas the French system is more hierarchy oriented, thus generating less conflicts but which are, maybe, more difficult to solve. But we can wonder whether the present British system, together with the Network Rail status doesn't lead to a more integrated railway industry trough long term co-operation. Conversely, the difficulties that the French railway industry is presently experiencing might lead to define a dispute resolution system more able to favor some forms of competition. |
| Keywords: | Railways ; Competition ; Vertical separation ; Dispute resolution |
| Date: | 2007–06–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00092434_v1&r=eec |
| By: | Anna Cuxart; Clara Riba |
| Abstract: | With the two aims of monitoring social change and improving social measurement, the European Social Survey is now closing its third round. This paper shows how the accumulated experience of the two first rounds has been used to validate the questionnaire, better adapt the sampling design to the country characteristics and efficiently commit fieldwork in Spain. For example, the dynamic character of the population nowadays makes necessary to estimated design effects at each round from the data of the previous round. The paper also demonstrates how, starting with a response rate of 52% at first round, a 66% response rate is achieved at the third round thanks to an extensive quality control conducted by the polling agency and the ESS national team and based on a detailed analysis of the non-response cases and the incidences reported by the interviewed in the contact form. |
| Keywords: | European social survey, fieldwork, response rate, sampling design |
| JEL: | C42 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1036&r=eec |
| By: | Løchte, Peter (Department of Business Studies, Aarhus School of Business) |
| Abstract: | This paper introduces, prices, and analyzes traffic light options. The traffic light <p> option is an innovative structured OTC derivative developed independently by several <p> London-based investment banks to suit the needs of Danish life and pension (L&P) <p> companies, which must comply with the traffic light solvency stress test system introduced by the Danish Financial Supervisory Authority (DFSA) in June 2001. This monitoring system requires L&P companies to submit regular reports documenting the sensitivity of the companies’ base capital to certain pre-defined market shocks – the red and yellow light scenarios. These stress scenarios entail drops in interest rates as well as in stock prices, and traffic light options are thus designed to pay off and preserve sufficient capital when interest rates and stock prices fall simultaneously. Sweden’s FSA implemented a traffic light system in January 2006, and supervisory authorities in many other European countries have implemented similar regulation. Traffic light options are therefore likely to attract the attention of a wider audience of pension fund managers in the future. Focusing on the valuation of the traffic light option we set up a Black-Scholes/Hull-White model to describe stock market and interest rate dynamics, and analyze the traffic light option <p> in this framework. |
| Keywords: | Traffic light solvency tests; regulatory solvency requirements; asset-liability management in pension funds; hedging interest rate and stock price risk; derivatives pricing; Black-Scholes/Hull-White model |
| Date: | 2006–11–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhb:aarbfi:2006-08&r=eec |
| By: | Johansson, Mats (Institute for Futures Studies); Katz, Katarina (Department of Economics and Business, Karlstad University) |
| Abstract: | We investigate skill mismatch and its impact on gender differences in wage gap and in returns to education in Sweden 1993 to 2002.Women are more likely to have more formal education than what is normally required for their occupation (overeducation), while men are more likely to have less (undereducation).Over- and undereducation contribute far more to the gender wage gap than years of schooling and work experience. In decompositions, adjusting for skill mismatch decreases the gender wage gap by between one tenth and one sixth. This is roughly a third to a half as much as is accounted for by segregation by industry. Thus, taking skill mismatch into account is essential for the analysis of gender wage differentiation, even though it does not alter the result that the estimated returns to education are smaller for women than for men in Sweden. |
| Keywords: | Gender differentials; discrimination; over- and undereducation |
| JEL: | J16 J24 J31 J71 |
| Date: | 2007–06–07 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2007_013&r=eec |
| By: | Mario Izquierdo (Banco de España); Juan F. Jimeno (Banco de España; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)); Juan A. Rojas (Banco de España) |
| Abstract: | This paper presents a dynamic general equilibrium model designed to compute the aggregate impact of immigration, accounting for relevant supply and demand effects. We calibrate the model to the Spanish economy, allowing for enough heterogeneity in the demographic characteristics of immigrant and native workers. We consider an initial steady state characterized by the age structure of the Spanish population in 1995 and study the effects of several immigration scenarios on several macroeconomic variables (GDP, employment, productivity, etc.). |
| Keywords: | immigration, general equilbrium models |
| JEL: | E10 F22 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:0714&r=eec |
| By: | Norberg-Schönfeldt , Magdalena (Department of Economics, Umeå University) |
| Abstract: | The role of financial surprises and match quality in the dissolution of relationships is explored. The analysis is carried out both for surprises in the short term earnings and surprises in the long-run earnings capacity. It is found that positive surprises in short term earnings have a destabilizing effect for a relationship. Generally, a negative surprise in long-run earnings capacity for males has a destabilizing effect. However, if it is combined with a female positive surprise, the effect is stabilizing. Commitments become more stable the older the spouses are at the start of the relationship, and if young children are present. |
| Keywords: | Match quality; financial surprises; divorce; family structure |
| JEL: | J12 |
| Date: | 2007–06–07 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0706&r=eec |
| By: | Fernando Muñoz-Bullón; J. Ignacio García-Pérez |
| Abstract: | We analyze the Spanish temporary workers’ transitions into permanent employment and to what extent those who become unemployed are able to achieve a permanent job. Our focus is placed on the role of the individual’s sequence of temporary contracts on the probability of moving from temporary into permanent employment. We apply multiple-spell duration techniques to a longitudinal dataset of temporary workers obtained from Social Security records for the period 1996-2003. We basically find that even though transitions into permanent employment increase with tenure, temporary jobs do not constitute stepping stones towards permanent employment, since the probability of obtaining a permanent job decreases with repeated temporary jobs. Results also show that individuals with high duration of unemployment flow into permanent work less frequently. |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaddt:2007-09&r=eec |
| By: | Luc Arrondel; Hector Calvo Pardo; Xisco Oliver |
| Abstract: | We explore empirically whether earnings uncertainty and borrowing constraints deter households from the stockmarket, consistent with the predictions of theoretical studies of portfolio choice in the presence of uninsurable earnings. Recent extensions highlight the importance of the correlation between earnings and financial risks. We use a self-assessed proxy for the correlation from the DELTA-TNS 2002 cross-sectional survey. While income risk does not deter from the stockmarket those households' reporting a negative correlation, it does for those who report a non-negative sign, consistent with economic theory predictions. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:pse:psecon:2007-16&r=eec |
| By: | Daniel Schunk (Mannheim Research Institute for the Economics of Aging (MEA)) |
| Abstract: | Many motives for saving a portion of one’s income co-exist and their relative importance changes over the life-cycle. However, most existing work focuses on only one of those motives and makes simplifying assumptions about the other motives so that they can be relegated to the background. All the more it is important to investigate heterogeneity in saving behavior in the presence of various co-existing saving motives. This paper is concerned with linking heterogeneity in German households’ savings decisions to four coexisting saving motives. First, I find that the importance that households attach to the saving motives is related to how much households save at different life stages. Second, I classify the saver type of the households based on whether they engage in regular savings plans, or rather save irregularly and without a savings plan and I find that saving motives are related to the saver type of the household. The results show that heterogeneity in saving behavior along two dimensions – with respect to the saving rate and the saver type – is systematically related to the importance that households attach to different saving motives. This suggests that policy reforms that change the importance of certain saving motives in the eyes of private households might alter household saving behavior in various ways. |
| JEL: | D12 D91 E21 |
| Date: | 2007–06–07 |
| URL: | http://d.repec.org/n?u=RePEc:mea:meawpa:07124&r=eec |
| By: | Jarle Møen |
| Abstract: | Subsidies to commercial R&D can be given as R&D tax credits or through direct grants. Tax incentives have become an increasingly popular policy tool over the last decades. In this note I discuss the pros and cons of the two forms of subsidies in light of Norway’s experience with R&D policy. I review an ongoing evaluation of the Norwegian R&D tax credit introduced in 2002 and reflect on whether it is desirable for Finland to introduce a similar scheme. I suggest that this is not desirable. If Finland introduces an R&D tax credit, I argue that it should be limited to small and medium sized companies. PITÄISIKÖ SUOMEN OTTAA KÄYTTÖÖN T&K :N VEROKANNUSTIMET? POHDINTAA NORJAN TEKNOLOGIAPOLITIIKASTA SAATUIHIN KOKEMUKSIIN PERUSTUEN |
| JEL: | H25 O38 |
| Date: | 2007–06–12 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1097&r=eec |