nep-eec New Economics Papers
on European Economics
Issue of 2007‒07‒20
seven papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. A real-time recession indicator for the Euro area By Ferrara, Laurent
  2. Tax revenues in the European Union: Recent trends and challenges ahead By Carone, Giuseppe; Nicodème, Gaëtan; Schmidt, Jan
  3. A Two-Country NATREX Model for the Euro/Dollar By Belloc, Marianna; Federici, Daniela
  4. A Test of Endogenous Trade Bloc Formation Theory on EU Data By Baldwin, Richard; Rieder, Roland
  5. The Huddle/Tangle Hypothesis of Regional Integration: The Case of the European Union and Its Enlargement By Sanidas, Elias
  6. Returns to Apprenticeship Training in Austria: Evidence from Failed Firms By Fersterer, Josef; Pischke, Jörn-Steffen; Winter-Ebmer, Rudolf
  7. Germany’s Educational Tracking System and How It Affects Entrepreneurship By Mike Misek

  1. By: Ferrara, Laurent
    Abstract: In this paper, we propose a new coincident monthly indicator to detect in real-time the start and the end of an economic recession phase for the Euro area. In this respect, we use the methodology proposed in Anas and Ferrara (2002, 2004) as regards the recession indicator for the US, based on Markov-Switching processes popularized in economics by Hamilton (1989). By using a set of four monthly time series, we show that this start-end recession indicator (SERI) is able to reproduce all the recession phases experienced by the Euro area since 1970. Concerning the last low phase of the growth cycle in the Euro area, started in 2001, empirical results show that the Euro area experienced a « quasi-recession » phase, located between the end of the 2001 year and the beginning of 2002, without a global recession. This is due to a lack of diffusion of this phenomena among the main Eurozone countries, though it was synchronized.
    Keywords: Recession; real-time; probabilistic indicator; Euro area.
    JEL: C51 E32 C32
    Date: 2006–06
  2. By: Carone, Giuseppe; Nicodème, Gaëtan; Schmidt, Jan
    Abstract: The governments of the European Union are facing important challenges that may impact both their need and their capacity to collect taxes. First, ageing will increase some social spending while reducing the potential of some tax bases such as labour. Second, globalisation has the potential to increase the mobility of capital and of high-skilled workers, making it more difficult to rely on them as a source of revenues. Finally, the desire to shift tax away from labour and to make work pay while retaining the social models will force Member States to find alternative robust tax bases. This paper reviews the most recent trends in taxation in the European Union and discusses several tax policy issues in the light of those coming challenges.
    Keywords: Taxation; Welfare State; European Union; ageing; globalisation
    JEL: H20 H50 H10
    Date: 2007–07–11
  3. By: Belloc, Marianna; Federici, Daniela
    Abstract: This paper develops a NATREX (NATural Real EXchange rate) model for two large economies, the Eurozone and the United States. The NATREX approach has already been adopted to explain the medium-long term dynamics of the real exchange rate in a number of industrial countries. So far, however, it has been applied to a one-country framework where the "rest of the world" is treated as given. In this paper, we build a NATREX model where the two economies are fully specified and allowed to interact. Our theoretical model offers the basis for empirical estimation of the euro/dollar equilibrium exchange rate that will be carried out in future research. JEL classification: F31; F36; F47
    Keywords: Key words: NATREX; equilibrium exchange rate; euro/dollar; structural approach
    JEL: F43 F41 F36 F31
    Date: 2007–04
  4. By: Baldwin, Richard; Rieder, Roland
    Abstract: This paper empirically confronts one explanation of spreading regionalism with the European experience. The domino theory asserts that forming a preferential trade area, or deepening an existing one, produces trade diversion that generates new political-economy forces in third nations as third-nation exporters seek to redress the new discrimination and profit from newly deepened preferences. The pressure increases with the bloc’s size yet bloc size depends upon how many nations join, so a single incidence of regionalism may trigger several rounds of membership requests from nations that were previously happy to stay out. We estimate a time-series of EU trade creation and diversion over the last five decades and use these to estimate a model EU membership demands. The results provide broad support for the model and show that trade diversion has a more powerful impact on membership than trade creation.
    Keywords: Domino theory of regionalism; Endogenous trade bloc formation; EU enlargement
    JEL: F13 F15
    Date: 2007–07
  5. By: Sanidas, Elias (University of Wollongong)
    Abstract: Regional integration can be a process that resembles that of a huddle/tangle. Some countries might be more prone or keen or able to integrate than others; however there is no guarantee that this process will be smooth through time. On the contrary, integrating countries seem to hover and spin around some main stronger economically countries and form a tangle. Was there a pattern of integration for the various stages of new countries joining the EU? Was the initial momentum created by the founding countries a situation that has never changed during the last 40 years or so? Is there any tendency for sub-integration, especially for some specific groups of countries? This paper focuses on national exports as a tool of evidence that joining the EU is not a solution to long term economic growth unless a strategy is adopted to counteract the inherent tendencies of the huddle/tangle process. Various methods will be used to bring this evidence forward and answer the questions above.
    Keywords: regional integration, exports, core, clusters
    Date: 2006
  6. By: Fersterer, Josef; Pischke, Jörn-Steffen; Winter-Ebmer, Rudolf
    Abstract: Little is known about the payoffs to apprenticeship training in the German speaking countries for the participants. OLS estimates suggest that the returns are similar to those of other types of schooling. However, there is a lot of heterogeneity in the types of apprenticeships offered, and institutional descriptions suggest that there might be an important element of selection in who obtains an apprenticeship, and what type. In order to overcome the resulting ability bias we estimate returns to apprenticeship training for apprentices in failed firms in Austria. When a firm fails, current apprentices cannot complete their training in this firm. Because apprentices will be at different stages in their apprenticeship at that time, the failure of a firm will manipulate the length of the apprenticeship period completed for some apprentices. The time to the firm failure therefore serves as an instrument for the length of the apprenticeship completed both at the original firm and at other firms. We find instrumental variables returns which are similar or larger than the OLS returns in our sample, indicating relatively little selection.
    Keywords: ability bias; firm-based training; Human capital; returns to schooling
    JEL: J24 J31
    Date: 2007–07
  7. By: Mike Misek
    Date: 2007–06–22

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