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on European Economics |
| 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: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00129618_v2&r=eec |
| By: | Michael P Devereux; Simon Loretz |
| Abstract: | The European Commission proposes to replace the current system of taxing corporate income of separate accounting by a two-step 'consolidate and apportionment' procedure. This paper uses a large set of unconsolidated firm-level data to assess the likely impact on corporate tax revenues in each Member State. Taking pre-tax profit as given, overall tax revenues would be likely to drop by 2.5 % if companies can choose whether to participate. By contrast, if they were forced to participate, total tax revenues would be likely to increase by more than 2 %, leaving some European countries, and most notably Spain, Sweden and the United Kingdom better off. We investigate how sensitive these results are to the apportionment factors used. |
| Keywords: | Corporate Taxation; International Loss Consolidation; Apportionment Rules |
| JEL: | H25 H87 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:btx:wpaper:0706&r=eec |
| By: | Ruud A. de Mooij (CPB Netherlands Bureau for Economic Policy Analysis, Erasmus University Rotterdam, CESifo and Tinbergen Institute); Gaëtan Nicodème (European Commission, CEB (Solvay Business School) and ECARES (ULB)) |
| 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 12% and 21% 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 0.25%-points since the early 1990s. |
| Keywords: | Corporate tax; Personal tax; Incorporation; Income shifting |
| JEL: | H25 L26 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:btx:wpaper:0716&r=eec |
| By: | Christoph Spengel (University of Mannheim, Centre for European Economic Research (ZEW)); Carsten Wendt (Centre for European Economic Research (ZEW),) |
| Abstract: | The European Commission proposed to provide multinational companies with a Common Consolidated Corporate Tax Base (CCCTB) for their EU wide activities. The main goal of this proposal is the removal of existing tax obstacles to cross-border economic activity which are mainly caused by the coexistence of 27 national tax systems. This paper reviews the European Commission’s proposals and the underlying rationale. It addresses some of the key issues that arise when considering the design of the CCCTB. Among the issues under investigation are the definition of the consolidated group, the scope and technique of consolidation, the territorial scope of the consolidated tax base, the treatment of companies joining and leaving the CCCTB, and related issues. |
| Keywords: | Corporation Tax, Group taxation, tax co-ordination, European Union |
| JEL: | H21 H25 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:btx:wpaper:0717&r=eec |
| By: | Carlos Marinheiro (GEMF and Faculdade de Economia, Universidade de Coimbra) |
| Abstract: | Ever since its inception EMU has been subject to controversy. The fiscal policy rules embedded in the Treaty on European Union, and clarified in the Stability and Growth Pact (SGP), are probably the most contentious. The SGP as always being accused of being too rigid and of forcing procyclicality in fiscal policy. However, in an influential paper Galí and Perotti (2003) concluded that discretionary fiscal policy has actually become more countercyclical in EMU countries after the Maastricht Treaty. This paper concludes that this conclusion resists to several robustness tests using ex-post data, including the use of institutional variables, but not to the use of real-time data. Using ex-post data there is some evidence pointing to a more countercyclical use of discretionary fiscal policy (or at least to a decrease in the use of procyclical discretionary fiscal policy). However, the use of real-time data for the period 1999-2006 reveals that discretionary fiscal policy has been designed to be procyclical. Hence, the actual acyclical behaviour of discretionary fiscal policy in the period after 1999 seems to be simply the result of errors in the forecast of the output gap, and not the result of a change in the intentions of policy makers. As a result, there is no evidence in favour of the view that Maastricht rules have forced euro-area policy-makers to change their behaviour and design countercyclical discretionary fiscal policy. |
| Keywords: | Fiscal policy, stabilization, Stability and Growth Pact, institutional arrangements, realtime data |
| JEL: | E62 H62 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:gmf:wpaper:2007-07&r=eec |
| By: | João Silvestre; António Mendonça; José Passos |
| Abstract: | The endogeneity of optimum currency areas criteria has been widely studied since Frankel and Rose (1998) seminal paper. Literature normally suggests that there is a positive relationship between trade and business cycles correlation. This paper develops work on this subject (Silvestre and Mendonça, 2007) where we confirm this hypothesis in euro area countries and UE-15 for 1967-2003 period using OLS and 2SLS estimates. However, we also find then that trade influence on cycles synchronization diminished in the last years. Now our goal was precisely to evaluate this question. Using a non-linear model based on Beta distribution in the same sample, we concluded that trade has a decreasing marginal effect on business cycles correlation. This result shows that trade flows are important in the first stages of economic integration, but become less important as trade intensity increases. Other factors must then be considered. |
| Keywords: | European Monetary Union (EMU); Business Cycles Correlation; Optimum Currency Areas; International Trade; Beta Regression. |
| JEL: | E32 E42 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:ise:isegwp:wp222007&r=eec |
| By: | Moons C.; Garretsen H.; Van Aarle B.; Fornero J. |
| Abstract: | This paper analyses monetary policy in a stylized new-Keynesian model. A number of issues are focused upon: (i) optimal monetary policy under commitment or discretion vs. ad-hoc monetary policy based on simple rules, (ii) the effects of fiscal policies and foreign variables on monetary policy, (iii) the effects of fiscal deficit and interest rate smoothing objectives and the amount of forward-looking in the model. The model is estimated for the Euro-Area. Using simulations of the estimated model, it is analyzed how these aspects might affect monetary policy of the ECB and macro-economic fluctuations in the Euro-Area. |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:ant:wpaper:2007014&r=eec |
| By: | Joao Sousa (Banco de Portugal); Andrea Zaghini (Banca d’Italia) |
| Abstract: | We analyse the international transmission of monetary policy shocks with a focus on the effects of foreign liquidity on the euro area. We estimate two domestic structural VAR models for the euro area and then we introduce a global liquidity aggregate. The impulse responses show that a positive shock to foreign liquidity leads for the euro area to a permanent increases in M3 and in the price level, a temporary rise in real output and a temporary appreciation of the euro real effective exchange rate. Moreover, we find that innovations in global liquidity play an important role in explaining price and output fluctuations. |
| Keywords: | Monetary policy, Structural VAR, International spillovers |
| JEL: | E52 F01 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_629_07&r=eec |
| By: | Cruijsen, C. van der; Eijffinger, S.C.W. (Tilburg University, Center for Economic Research) |
| Abstract: | Central banks have become more and more transparent about their monetary policy making process. In the central bank transparency lit- erature the distinction between actual and perceived central bank trans- parency is often lacking. However, as perceptions are crucial for the ac- tions of economic agents this distinction matters. A discrepancy between actual and perceived transparency may exist because of incomplete or in- correct transparency knowledge and other (psychological) factors. Even financial experts, the most important channel through which the central bank can influence the economy, might suffer from misaligned perceptions. We investigate the mismatch between actual and perceived transparency and its relevance by analyzing data of a Dutch household survey on the European Central Bank?s transparency. To benefit from higher trans- parency perceptions the European Central Bank might feel tempted to stress its transparency strengths, but hide its transparency weaknesses. |
| Keywords: | Central bank transparency;Perceptions;Survey;CentERpanel;Behavioral Economics. |
| JEL: | D80 E52 E58 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200778&r=eec |
| By: | Huang, Can (UNU-MERIT); Soete, Luc (UNU-MERIT) |
| Abstract: | This paper addresses some of the challenges confronting the European Union and China as they build their knowledge economies, and their on-going and possible future actions to address such challenges. Fifty years after the creation of what became the European Union, we argue that there is an urgent need to develop a new European Lisbon Agenda, preparing the EU for globalization. A new and "outward-looking" Lisbon strategy would focus on three key areas: international trade in services, internationalization of research networking, and access to brains and talent. The paper shows that the success of the Chinese economy over the past three decades can be partially attributed to its ability to absorb globally advanced technology and huge flows of foreign investment, its large pool of knowledge and talent, and its enactment of a policy framework that provides incentives to domestic and foreign firms to innovate - a strategy very much reminiscent of Europe's own internal Lisbon agenda. To move further, China needs to overcome the obstacles of regional disparities, transform its industry and deepen industry-academy linkages, which are also unavoidable tasks for the sustainable development of Europe. We contend that the scope for comparative studies of the EU and China, for mutual learning from each other's experience - even for joint initiatives - is substantial. |
| Keywords: | Knowledge Economy, Industry-University Partnerships, Globalization, Internationalization, Highly Skilled Migration, European Union, China |
| JEL: | F02 F16 F22 L80 O32 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2007028&r=eec |
| By: | Elena Bellini (Fondazione Eni Enrico Mattei); Ugo Gasparino (Fondazione Eni Enrico Mattei); Barbara Del Corpo (Fondazione Eni Enrico Mattei); William Malizia (Fondazione Eni Enrico Mattei) |
| Abstract: | In recent years, interest in tourism has spread rapidly throughout many small and medium European cities, which previously have not necessarily considered themselves as tourist destinations. Tourism is increasingly seen as a potential lever towards high economic growth, measured both in terms of income and employment. In the present Working Paper we report the analysis on the economic impact undertaken in the framework of the PICTURE Project, showing the results of a novel econometric exercise to statistically assess the impacts of cultural tourism upon European municipalities. More precisely the analysis aims at estimating the effects of tourism specialisation on local income and prices. The Working Paper is built as follows. Section 1 presents and discusses secondary data about tourism facts and figures, including the economic impact of tourism upon European economies, with a focus on cultural tourism. An extensive review of literature, which identifies the main categories of impacts and the currently available methodologies to assess them, is undertaken. Section 2 focuses on the state of the art. Section 3 describes the database built for the analysis, sources and variables. In order to visually represent the spatial variability of the main parameters, a series of thematic maps at NUTS 3 level(“Maps of European tourism”), using GIS (Geographical Information System) are also included in the Working Paper. Section 4 shows the results of the econometric analysis of European panel data for the estimation of the effects of tourism specialisation on both local incomes and prices. Section 5 concludes. |
| Keywords: | Cultural Tourism, Economic Growth |
| JEL: | O4 R0 L83 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2007.85&r=eec |
| By: | António Afonso; Christophe Rault |
| Abstract: | We assess the sustainability of public finances in the EU15 over the period 1970-2006 using stationarity and cointegration analysis. Specifically, we use panel unit root tests of the first and second generation allowing in some cases for structural breaks. We also apply modern panel cointegration techniques developed by Pedroni (1999, 2004), generalized by Banerjee and Carrion-i-Silvestre (2006) and Westerlund and Edgerton (2007), to a structural long-run equation between general government expenditures and revenues. While estimations point to fiscal sustainability being an issue in some countries, fiscal policy was sustainable both for the EU15 panel set, and within subperiods (1970-1991 and 1992-2006). |
| Keywords: | intertemporal budget constraint; fiscal sustainability; EU; panel unit root; panel cointegration. |
| JEL: | C23 E62 H62 H63 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:ise:isegwp:wp202007&r=eec |
| By: | Fabrizio Balassone (Banca d'Italia - Economic Research Department); Daniele Franco (Banca d'Italia- Economic Research Department); Stefania Zotteri (Banca d'Italia - Economic Research Department) |
| Abstract: | The reliability of EMU’s fiscal indicators has been questioned by recent episodes of large upward deficit revisions. This paper discusses the causes of such revisions in order to identify ways to improve monitoring. The computation of EMU’s deficit indicator involves the assessment of accrued revenue and expenditure and the identification of transactions in financial assets. Both can open margins for opportunistic accounting. However, crosschecks between deficit and changes in gross nominal debt (the other fiscal indicator used in EMU) can reduce the scope for window dressing. Simple comparison of deficit and changes in debt can readily spotlight large inconsistencies in fiscal data. Nevertheless, consistency checks must go deeper than simple comparison, since different items in the reconciliation account between deficit and change in debt can offset each other. Econometric evidence suggests that such offset may indeed have been used to reduce the visibility of deficit-specific window dressing. Attention to the quality of statistics has increased in recent years, also in the context of the reform of the Stability and Growth Pact. In this context, the paper argues that detailed analysis of the reconciliation account between deficit and change in debt is crucial to the effectiveness of monitoring. |
| Keywords: | EMU, fiscal rules, fiscal indicators, stock-flow adjustment |
| JEL: | H61 H62 H87 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_633_07&r=eec |
| By: | Filippo Altissimo (Brevan Howard Asset Management); Riccardo Cristadoro (Banca d'Italia); Mario Forni (Università di Modena); Marco Lippi (Università La Sapienza di Roma); Giovanni Veronese (Banca d'Italia) |
| Abstract: | This paper presents ideas and methods underlying the construction of an indicator that tracks the euro area GDP growth, but, unlike GDP growth, (i) is updated monthly and almost in real time; (ii) is free from hort-run dynamics. Removal of short-run dynamics from a time series, to isolate the mediumlong-run component, can be obtained by a band-pass filter. However, it is well known that band-pass filters, being two-sided, perform very poorly at the end of the sample. New Eurocoin is an estimator of the medium- long-run component of the GDP that only uses contemporaneous values of a large panel of macroeconomic time series, so that no end-of-sample deterioration occurs. Moreover, as our dataset is monthly, New Eurocoin can be updated each month and with a very short delay. Our method is based on generalized principal components that are designed to use leading variables in the dataset as proxies for future values of the GDP growth. As the medium- long-run component of the GDP is observable, although with delay, the performance of New Eurocoin at the end of the sample can be measured. |
| Keywords: | coincident indicator, band-pass filter, large-dataset factor models, generalized principal components |
| JEL: | C51 E32 O30 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_631_07&r=eec |
| By: | M. Carmen Lima Díaz (Department of Economics, Universidad Pablo de Olavide de Sevilla); M. Alejandro Cardenete Flores (Department of Economics, Universidad Pablo de Olavide de Sevilla) |
| Abstract: | Social Accounting Matrices (SAM) are databases that complete the information provided by the input-output tables. They study the intersectorial relationships of an economy, the behaviour of consumers, the government or the foreign sector, while being able to close the income flow of rent. In this work, we deal with the European Regional Development Fund (ERDF) in Andalusia, a Spanish region classified as Objective 1 by the European Regional policy. We apply the Leontief model on the SAMs for 1990, 1995 and 1999 to get the gross output fall when we remove these regional funds. Furthermore, we develop a price model to assess the impact of this financial support on aggregate and sectorial prices. |
| Keywords: | Social Accounting Matrix, Regional Accounting, Structural Analysis. |
| JEL: | C67 D57 R15 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:pab:wpaper:07.15&r=eec |
| By: | Pesola, Jarmo (Bank of Finland Research) |
| Abstract: | This paper tests the hypothesis that the more fragile a banking system is, the more likely it is to experience problems when an unexpected shock hits. The empirical framework where this test is conducted is a reduced form model, where macroeconomic factors explain banks’ loan losses. The dependent variable is the ratio of net loan losses to lending in a panel comprising the banking sectors of nine sample countries. An econometric model is estimated on pooled annual data mostly covering the period from the early 1980s to 2002. There are three separate explanatory terms. Two of these include a surprise change both in incomes and real interest rates. Both form a separate cross-product term with lagged aggregate indebtedness. The lagged dependent variable is the third explanatory term possibly capturing the feedback effect from loan losses back to the real economy. The underlying macroeconomic account that this paper puts forward is that loan losses seem basically to be generated by strong adverse aggregate shocks under high exposure of banks to such shocks. The model has been used in connection with stress testing in the Bank of Finland. |
| Keywords: | financial fragility; unexpected macroeconomic shock; loan loss; stress test |
| JEL: | E44 G21 |
| Date: | 2007–10–09 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofrdp:2007_015&r=eec |
| By: | Mark Lorenzen; Kristina Vaarst Andersen |
| Abstract: | Using novel statistical data, the paper analyzes the geographical distribution of Richard Florida’s creative class among 445 European cities. The paper demonstrates that size matters, i.e. cities with a high proportion of creative class tend to get more creative through attraction of still more creative labor. More specifically, the distribution of the European creative class falls into three phases, each approximating a rank-size rule, with different exponents (i.e., inequality). The exponent for the smallest cities is profoundly more negative than for the middle-sized cities, and this tendency is stronger for the creative class than for the general population. Furthermore, the exponent of the largest cities is slightly less negative than the middle-sized cities, and this tendency is also stronger for the creative class. In order to explain this, the paper presents four propositions about how effects of large and small population sizes of cities may be more detrimental to attracting the creative class than attracting the population in general. Below a population size of approximately 70,000 inhabitants, there is a rapid drop of attractiveness to the creative class with decreasing city size. We propose that this may be because below this size, cities begin to drop below minimum efficient market sizes for particular creative services, below minimum labor market sizes for particular creative job types, and below minimum levels of political representation by the creative class. Above a European city population size of approximately 1,2 million inhabitants, the attractiveness of increasing city size for the creative class drops, and we propose that the creative class may respond particularly adversely to urban congestion. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:aal:abbswp:07-17&r=eec |
| By: | Goossens K. |
| Abstract: | Professional team sports generate indivisible joint-products. Neale (1964, p.2) captures this interrelatedness in the following sentence: ‘pure monopoly is disaster’. Or in short: teams need each other to produce games. Rottenberg (1956, p. 242) mentions that “The nature of the industry is such that competitors must be of approximate equal ‘size’ if any are to be successful”. The notion of competitive balance is founded upon this idea: for an attractive championship teams should not excel excessively in playing strength. In the media and the professional sports sector this idea of competitive balance receives significant attention and underlies many sports policy decisions. In Sports Economics as well competitive balance is at least relevant. Over the last four decades several events occurred that can be considered to have had an impact on competitive balance. More specifically they affect the dominance of ‘large market’ teams. We define such teams as those located in a large city combined with a large fan base. Such imbalance is what Kesenne (2004) calls a ‘bad’ imbalance. We theoretically research the impact of some major changes that caused important shifts in the revenue functions. We construct a two league –four teams model and include the market, local and national, as major determinants of the revenue functions of teams. We determine the choice of talent under both the win maximizing as the profit maximizing objective. The difference in win percentages is used to measure the competitive imbalance. We calculate the total demand function for talent and intersect it with an elastic supply formalized into a simple linear supply function. The resulting equilibrium wage is discussed where possible. We discuss three scenarios based on three successive periods in European football leagues. All periods are introduced by important changes generally discussed to influence dominance. We start from a benchmark scenario with a closed labour market in which ticket sales, based on the local market are considered to constitute the main income source. The sale of broadcast rights combined with shirt sponsoring introduces the second period. In most countries this new era began at the end of the 70ies and early 80ies. Both increased revenues substantially and are highly interrelated. Live matches persuaded sponsors to invest in the teams as well as in commercial blocks on tv. Sports fans were now able to enjoy live games of teams located in another part of the country so that the market of supporters increased with a part of the national market. The third period is marked by a combination of three events. Jean-Marc Bosman, a professional Belgian football player, changed the labour market in professional team sports at the end of the nineties. He went to court to oppose against the transfer ruling. The European Court of Justice ruled that the transfer system concerning the European international football players violated the free movement of workers constituted in Article 48 of the ECC treaty. Following the verdict of 15 december 1995, the European Commission abandoned the policy of transfer restrictions and abolished the rule to limit the number of foreign players fielded as well, giving rise to a new chapter in the European football history: a more open and competitive labour market. The abolishment was in the middle of the season and the real impact on the acquirement of talent can be assumed to begin at the earliest in season 1996-1997. In 1997 the Champions League (CL) changed its selection criteria and its revenue distribution. The ‘market pool’ came into use, designating the revenue that is divided based on the national tv-market. Teams from countries with a larger market receive a larger share. This makes it possible that a CL champion receives a lower income than teams that ended lower in the ranking. Porto for example received in 2003-2004 € 19 million while runners-up AS Monaco FC received € 26.4 million. (Uefa.com, 8 June 2004) Even though the CL, named the Champions Cup before 1992, has an extensive history of adaptations, we consider this change as the most important one to substantially influence the dominance of teams in the national competition. With the deregulation of the television market, the competition for broadcast rights intensified. Among other things, this boosted the broadcast revenues considerably. The introduction of digital television at the end of the nineties can be assumed to be the start of a continuing boom of broadcast rights and so influences the third period as well. We provide a first empirical verification by constructing a measure that incorporates the identity of teams to focus on large market teams. Two European football leagues, England and Belgium are briefly discussed. In our conclusion we provide an overview table and discuss some future research topics. |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:ant:wpaper:2006028&r=eec |
| By: | Hasan, Iftekhar; Koetter, Michael; Wedow, Michael |
| Abstract: | We test whether output growth in European economic agglomeration regions depends on financial development. To this end we suggest a relative measure of the quality of financial institutions rather than the usual quantity proxy of nancial development. In order to measure the quality of financial development we use profit efficiency derived from stochastic frontier analysis. We show that more efficient banks spur regional growth while the typically used quantity measure of financial development is negligible. Also, our results suggest an additional channel through which better banking can spur growth: the interaction of more credit with efficient banks. |
| Keywords: | Bank performance, regional growth, bank efficiency, Europe |
| JEL: | G21 O16 O47 O52 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp2:6153&r=eec |
| By: | Van Poeck A.; Veiner M. |
| Abstract: | In this paper we provide new evidence on aggregate labour market flexibility in the four largest new EU member states from Central Europe (CEEC4) and a benchmark of existing EU countries (EU9). This is done trough direct comparison of several labour market institutions from which we derive an institutional summary indicator. Another approach that we follow is the estimation of aggregate wage Phillips curves from which we obtain estimates for the wage responsiveness to unemployment in these countries. The results show that the CEEC4 cannot be regarded as an homogeneous group. The Czech Republic and Hungary are relatively flexible and comparable to the United Kingdom. Poland belongs to a subgroup with France, Germany and Italy, with reduced labour market flexibility. The results are especially problematic for the Slovak Republic where aggregate wages do not respond to unemployment, although labour market institutions are still more supportive to flexibility than in most incumbent EU countries. |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:ant:wpaper:2007016&r=eec |
| By: | Michael P Devereux (Oxford University Centre for Business Taxation, IFS, CEPR and CESifo) |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:btx:wpaper:0703&r=eec |
| By: | Luca Flabbi; Daniele Checchi (Department of Economics, Georgetown University) |
| Abstract: | Intergenerational mobility in income and education is affected by the influence of parents on children's school choices. Our focus is on the role played by different school systems in reducing or magnifying the impact of parents on children's school choices and therefore on intergenerational mobility in general. We compare two apparently similar educational systems, Italy and Germany, to see how the common feature of separate tracks at Secondary School level may produce different impacts on children choices. Using data from a cross-country survey (PISA 2003), we study the impact of parental education on track choice, showing that the greater flexibility of the Italian system (where parents are free to choose the type of track) translates into greater dependence from parental background. These effects are reinforced when moving to post-secondary education, where the aspiration to go to college is affected not only by the school type but also (in the case of Italy only) by parental education. We then move to country-specific data sets (ISTAT 2001 for Italy and GSOEP 2001 and 2002 for Germany) to study the impact of family background on post-secondary school choices: we find this impact is greatly reduced when we control for secondary school tracks. Overall, we estimate large asymmetries by gender, with women's behavior more independent from family backgrounds than men's behavior. Classification-JEL Codes: I2, J1 |
| Keywords: | gender Secondary School tracks; Education; Intergenerational Mobility |
| Date: | 2007–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:geo:guwopa:gueconwpa~07-07-08&r=eec |
| By: | Dumont M. |
| Abstract: | Some measures of technological performance indicate that a number of mainly small open EU economies have performed rather well in the 1990s, compared to the US, especially when considering exports in high-tech products. Whereas the strong performance of the Nordic EU countries will not come as a surprise, the strong growth in high-tech export shares of Belgium seems in contrast with some gloomy reports on its technological competitiveness. Market reforms and macroeconomic policies, though undoubtedly necessary to shield the European Social model from increasing global competition and the ageing of the population, may not have to be as sweeping as some suggest. |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:ant:wpaper:2006024&r=eec |
| By: | Alexius, Annika; Holmlund, Bertil |
| Abstract: | A widely spread belief among economists is that monetary policy has relatively short-lived effects on real variables such as unemployment. Previous studies indicate that monetary policy affects the output gap only at business cycle frequencies, but the effects on unemployment may well be more persistent in countries with highly regulated labor markets. We study the Swedish experience of unemployment and monetary policy. Using a structural VAR we find that around 30 percent of the fluctuations in unemployment are caused by shocks to monetary policy. The effects are also quite persistent. In the preferred model, almost 30 percent of the maximum effect of a shock still remains after ten years. |
| Keywords: | Unemployment, Monetary policy, structural VARs |
| JEL: | E24 J60 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:6161&r=eec |
| By: | Steven C. Bourassa (University of Louisville, School of Urban and Public Affairs); Martin Hoesli (University of Geneva, HEC and Swiss Finance Institute) |
| Abstract: | At 34%, Switzerland has the lowest home ownership rate in Western Europe. This is a puzzle given the economic strength of the country. We use 1998 household survey data for five Swiss cantons to explore some possible reasons for this. We estimate a tenure choice equation that allows us to analyze the impacts of a number of key variables on the ownership rate. We pay particular attention to the relative cost of owning and renting, which is a function of house prices, rents, and the user cost of owning. The latter is a function of income tax policy and expected house price inflation, among other things. We also measure mortgage underwriting criteria and consider rent control and other policies affecting rental housing. By simulating a number of hypothetical changes to taxation and other policies, underwriting criteria, and price levels, we assess the importance of these variables in explaining the ownership rate. We conclude that high house prices—relative to rents and to household incomes and wealth—are by far the most important cause of Switzerland’s low ownership rate. |
| Keywords: | Home ownership, Switzerland |
| JEL: | R21 R31 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp0704&r=eec |
| By: | Cousins, Mel |
| Abstract: | This paper examines social security increases in Ireland as a case study of the existence of political budget cycles in European countries. Ireland is an appropriate country to examine, first because it has a system of proportional representation and some studies suggest that proportional electoral systems are associated with expansions of welfare spending both before and after elections. Second, it is generally recognised that Irish political parties occupy the middle ground in terms of political ideology. Again studies would suggest that an absence of a strong ideological commitment to particular policies may make political budget cycles more likely. Utilising the distinctive nature of the public expenditure process in relation to welfare budget increases, this article examines the issue of whether or not a political budget cycle can be seen in Ireland in relation to social security expenditure. It draws a number of conclusions as to the existence and incidence of political budget cycles in an Irish context and also looks at whether political budget cycles have succeeded in their apparent objective i.e. securing election for the relevant political party. |
| Keywords: | Political budget cycle; welfare state; social security; public expenditure; Ireland |
| JEL: | I38 H55 H53 |
| Date: | 2007–06–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:5359&r=eec |
| By: | Klevmarken, N. Anders (Department of Economics); Bolin, Kristian (LUCHE); Eklöf, Matias (Department of Economics); Flood, Lennart (Department of Economics); Fransson, Urban (Göteborg University and IBF); Hallberg, Daniel (Department of Economics); Höjgård, Sören (LUCHE); Lindgren, Björn (LUCHE); Mitrut, Andrea (Department of Economics,); Lagergren, Mårten (Stockholm Gerontology Research Center) |
| Abstract: | For the purpose of studying the consequences of the ageing of the Swedish population a group of scientists have enlarged the microsimulation model SESIM - originally developed at the Swedish Ministry of Finance - with modules that simulate health status, take up of sickness benefits, retirement, the utilization of health care and social care and the dynamics of the income and wealth distributions. This paper motivates and reviews the structure of these modules with a focus on problems and solutions. It also summarizes the main results of the simulations. A complete description of the models and results are forthcoming in a volume included in the Elsevier series Contributions to Economic Analysis. |
| Keywords: | Microsimulation; Ageing; Retirement; Health status; Health care; Social care; Distribution of Income; Distribution of Wealth; Poverty |
| JEL: | C15 C50 D10 D31 H24 H31 H55 I12 I32 J10 J22 J26 R21 R23 |
| Date: | 2007–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uunewp:2007_026&r=eec |
| By: | Matteo Bugamelli (Bank of Italy, Research department) |
| Abstract: | The unsatisfactory performance of Italian export volumes in the last decade has been attributed to three factors; the product specialization still centered around traditional sectors, the small firm size and the exceptional rise in export unit values. This paper analyzes the latter with the aim of testing three alternative hypotheses: i) measurement error; ii) composition effect: globalization forcing the exit of less productive firms producing low quality goods would have raised the average quality and thus prices of exported goods; iii) pricing strategies: Italian firms would have maximized profit margins sacrificing volumes. On the basis of sample data on price variations by destination market at the firm-level, we find that: a) in the last decade (1996-2005), export unit values have overestimated export price dynamics by 2 percentage points on average every year; b) on the basis of our new export prices, the Italian loss in world market share has been smaller, but still larger as compared to France and Germany; c) the composition effect has had a limited role. |
| Keywords: | export unit values, product quality, firm size |
| JEL: | F1 L11 L15 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_634_07&r=eec |
| By: | John Creedy (The University of Melbourne); Norman Gemmell (University of Nottingham, Oxford University Centre for Business Taxation) |
| Abstract: | Observed changes in corporation tax revenues from year to year, which include the effects of changes in tax rates, deductions and compliance, appear to be highly volatile relative to profits, the tax base. This paper examines whether the ‘built-in’ fiscal drag properties of corporation tax can be expected to display similar properties. Simple, conceptual modelling demonstrates that the corporate tax revenue elasticity does indeed display this property in the presence of regular cyclical fluctuation in profit growth, suggesting that much of the observed volatility is inherent to the corporation tax system. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:btx:wpaper:0712&r=eec |
| By: | Guillem López; Ana Mosterin |
| Abstract: | The tendency for public welfare spending to be increasingly aimed at the elderly has been pointed out for the US and other developed countries. While population ageing is a common trend, it is not obvious why the shift in spending exceeds the trend in ageing, or why per capita spending on the elderly increases. We show that this is the case in Spain, identify the losers from this development, discuss the policies that underlie this trend, and propose adjustments based on Musgrave’s fixed proportions rule as an inter-generationally fair distribution. |
| Keywords: | Intergenerational equity, Musgrave’s rule, Spanish social policy and ageing |
| JEL: | I32 I38 H53 H55 J14 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1051&r=eec |