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on European Economics |
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Issue of 2007‒10‒27
twenty-six papers chosen by Giuseppe Marotta University of Modena and Reggio Emilia |
| By: | Claire Economidou; Clemens Kool |
| Abstract: | This paper empirically investigates output and consumption asymmetries in the Eurozone and enlarged EU over the period 1992-2007, and their consequences for monetary policy. Our results reveal that the introduction of the euro has little impact on output asymmetry so far; however, it has led to somewhat greater consumption smoothing. The UK, Denmark and Sweden are no less asymmetric than the average Eurozone member state and could probably enter the EMU without significant macroeconomic costs. New EU member states are diverse but display higher output and, in particular, consumption asymmetries. This warrants caution against too quick expansion of the EMU. |
| Keywords: | Integration, Macroeconomic Asymmetries, Welfare Gains, Risk Sharing, Euro |
| JEL: | E32 F15 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:use:tkiwps:0724&r=eec |
| By: | Michael Ehrmann; Marcel Fratzscher; Refet S. Gürkaynak; Eric T. Swanson |
| Abstract: | We study the convergence of European bond markets and the anchoring of inflation expectations in euro area countries using high-frequency bond yield data for France, Germany, Italy and Spain. We find that Economic and Monetary Union (EMU) has led to substantial convergence in euro area sovereign bond markets in terms of interest rate levels, unconditional daily fluctuations, and conditional responses to major macroeconomic data announcements. Our findings also suggest a substantial increase in the anchoring of long-term inflation expectations since EMU, particularly for Italy and Spain, which since monetary union have seen their long-term interest rates become much lower, much less volatile, and much better anchored in response to news. Finally, the reaction of far-ahead forward interest rates to macroeconomic announcements has converged substantially across euro area countries and even been eliminated over time, thus underlining not only market integration but also the credibility that financial markets attach to monetary policy in the euro area. |
| Keywords: | Bond market |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:2007-24&r=eec |
| By: | Beechey, Meredith J; Johannsen, Benjamin K; Levin, Andrew |
| Abstract: | This paper compares the recent evolution of long-run inflation expectations in the euro area and the United States, using evidence from financial markets and surveys of professional forecasters. Survey data indicate that long-run inflation expectations are reasonably well-anchored in both economies, but also reveal substantially greater dispersion across forecasters’ long-horizon projections of U.S. inflation. Daily data on inflation swaps and nominal-indexed bond spreads - which gauge compensation for expected inflation and inflation risk - also suggest that long-run inflation expectations are more firmly anchored in the euro area than in the United States. In particular, surprises in macroeconomic data releases have significant effects on U.S. forward inflation compensation, even at long horizons, whereas macroeconomic news only influences euro area inflation compensation at short horizons. |
| Keywords: | central bank communication; ECB; euro-area inflation; inflation compensation |
| JEL: | E31 E52 E58 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6536&r=eec |
| By: | Luis Rivera (CLACDS-INCAE); Hugo Rojas-Romagosa (CPB (the Hague)) |
| Abstract: | Using a global CGE model, we assess the potential macro-economic effects of a future European Union - Central American Association Agreement (EU-CAAA). Currently, many agricultural products from Central America (CA) enter duty-free to the European Union (EU); with two notable exceptions: bananas and sugar. We find that liberalizing the access to both products will bring significant gains to CA, while excluding them from the negotiations will bring no static gains. If trade facilitation mechanisms are implemented and we allow for the expected increase in FDI inflows to CA, welfare gains improve for all scenarios but are conditions on the level of EU agricultural liberalization. |
| Keywords: | EU-CAAA FTA, trade policy, free trade agreement, CGE models, bananas, sugar |
| JEL: | F13 F15 C68 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:lnz:wpaper:20071001&r=eec |
| By: | Lawrence Christiano; Roberto Motto; Massimo Rostagno |
| Abstract: | The US Federal Reserve cut interest rates more vigorously in the recent recession than the European Central Bank did. By comparison with the Fed, the ECB followed a more measured course of action. We use an estimated dynamic general equilibrium model with financial frictions to show that comparisons based on such simple metrics as the variance of policy rates are misleading. We find that - because there is greater inertia in the ECB's policy rule - the ECB's policy actions actually had a greater stabilizing effect than did those of the Fed. As a consequence, a potentially severe recession turned out to be only a slowdown, and inflation never departed from levels consistent with the ECB's quantitative definition of price stability. Other factors that account for the different economic outcomes in the Euro Area and US include differences in shocks and differences in the degree of wage and price flexibility. |
| JEL: | C51 E47 E52 E58 F0 F00 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13521&r=eec |
| By: | Andrés Rodríguez-Pose (London School of Economics); Vassilis Tselios (London School Of Economics) |
| Abstract: | The geography of education, especially at subnational level, is a huge black box. Basically nothing is known about the distribution of educational attainment and inequality across regions in Europe. This paper addresses this gap in the literature by mapping educational attainment and inequality in 102 regions in western Europe, using data extracted from the European Community Household Panel (ECHP) covering more than 100,000 individuals over the period 1995-2000. The results of this Exploratory Spatial Data Analysis (ESDA) reveal a strong correlation between levels of educational attainment and inequality across regions in Europe. Regions with similar educational conditions tend to cluster, often within national borders. In addition a North-South and an urban-rural dimension is evident. Northern regions and large European metropoli have not only the most educated labour force, but also the lowest levels of inequality. Educational inequality seems to be, in any case, a fundamentally within region phenomenon. 90 percent of the educational inequality in Europe takes place among individuals living in the same region. |
| Keywords: | educational attainment; educational inequality; regions; exploratory spatial data analysis; Europe; urbanisation; EU North-South divide |
| Date: | 2007–09–24 |
| URL: | http://d.repec.org/n?u=RePEc:imd:wpaper:wp2007-18&r=eec |
| By: | Christian Dreger; Konstantin Kholodilin; Kirsten Lommatzsch; Jiri Slacalek; Przemyslaw Wozniak |
| Abstract: | In this paper we investigate the effects of EU enlargement on price convergence. The internal market is expected to boost integration and increase efficiency and welfare through a convergence of prices in product markets. Two principal drivers are crucial to explain price developments. On the one hand, higher competition exerts a downward pressure on prices because of lower mark ups. On the other hand, the catching up process of low income countries leads to a rise in the price levels and higher inflation over a transition period. Using comparative price levels for 41 product categories price convergence can be established. However, the speed of convergence is rather slow, with half lives around 10 years. The enlargement has slightly stimulated convergence towards the mean price, and this impact is robust across different groups of countries. Moreover, the driving forces of convergence are explored. In line with theoretical predictions, the rise in competition exerts a downward pressure on prices, while catching up of low income countries leads to a rise in price levels and higher inflation. The findings have important implications, as price convergence facilitates the working of common economic policies. |
| Keywords: | EU enlargement, price convergence, catching up and competition |
| JEL: | E31 F15 C33 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp730&r=eec |
| By: | FÈVE, Patrick; MATHERON, Julien; SAHUC, Jean-Guillaume |
| JEL: | E31 E32 E52 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:7771&r=eec |
| By: | Mark Mink; Jan P.A.M. Jacobs; Jakob de Haan |
| Abstract: | We develop multivariate measures of synchronicity and co-movement of business cycles. In addition to synchronicity, the co-movement measure takes differences between cycle amplitudes into account that have been overlooked in most previous studies. We apply the new measures to the euro area. Synchronicity and co-movement for the region as a whole do not exhibit a clear upward tendency. Although several countries saw the similarity of their business cycle vis-`a-vis the euro area reference cycle increase, national business cycles remain fairly diverse. Changes in business cycle amplitudes cause most of the observed change in cycle co-movement. |
| JEL: | E32 F02 F42 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:acb:camaaa:2007-19&r=eec |
| By: | Karl Aiginger (WIFO); Alois Guger (WIFO); Thomas Leoni (WIFO); Ewald Walterskirchen (WIFO) |
| Abstract: | In the tradition of Esping-Andersen a number of welfare state models have been characterised. In this paper we analyse the economic and social performance of these different welfare regimes on an encompassing empirical basis both in the long run and with respect to their adaptability to the challenges of the last decades. While the differences with regard to growth dynamics had been very small in decades after the World War II (1960-1990), growth rates as well as the employment and social policy records have diverged in the past 15 years. The best performance is revealed for the extreme types of the Scandinavian model and for the liberal Anglo-Saxon model, while the continental model produced low growth and increasing unemployment. The reforms primarily in the Scandinavian countries allow us to delineate elements of a "New Welfare State Architecture" which on the one hand upholds important characteristics of a European social model, but on the other hand allows welfare states to be competitive in the globalising economy. The vision of such a European socio-economic model could be the redirection of incentives in such a way that the welfare state is able to shift from a burden (increasing costs and lowering flexibility) to a productive force. |
| Keywords: | welfare state, social model, economic performance, reform policies |
| Date: | 2007–10–16 |
| URL: | http://d.repec.org/n?u=RePEc:wfo:wpaper:y:2007:i:303&r=eec |
| By: | Andrés Rodríguez-Pose (London School of Economics); Hans-Martin Zademach (University of Munich) |
| Abstract: | This paper investigates the patterns of corporate mergers and acquisitions (M&As) involving firms located in the EU25 as well as in the four EFTA countries between 1998 and 2003. It first uncovers the \'cross-border balance\' of M&As across European states, before identifying, through quantitative multiple regression analysis and insights from qualitative, interview-based research, the extent to which the spatial perspective sheds light onto the factors that may explain the detected levels and patterns of corporate takeovers across Europe. The results indicate that the traditional motives of access to new and core markets, the effects of geographical proximity, and the internalisation of \'localised capabilities\' (proxied by a skilled and innovative labour pool) represent the key drivers of European M&As. Institutional factors, such as European integration, assessments of country risk, or language barriers, as well as structural factors (e.g. unemployment or education) appear to be - at least at the intra-European scale - less influential. |
| Keywords: | mergers & acquisitions; theory of the firm; spatial proximity; agglomeration economies; localised capabilities; economic integration; Europe |
| Date: | 2007–09–24 |
| URL: | http://d.repec.org/n?u=RePEc:imd:wpaper:wp2007-19&r=eec |
| By: | Ruud Egging; Steven A. Gabriel; Franziska Holz; Jifang Zhuang |
| Abstract: | In this paper, we present a detailed and comprehensive complementarity model for computing market equilibrium values in the European natural gas system. Market players include producers and their marketing arms which we call "transmitters", pipeline and storage operators, marketers, LNG liquefiers, regasifiers, tankers, and three end-use consumption sectors. The economic behavior of producers, transmitters, pipeline and storage operators, liquefiers and regasifiers is modeled via optimization problems whose Karush-Kuhn-Tucker (KKT) optimality conditions in combination with market-clearing conditions form the complementarity system. The LNG tankers, marketers and consumption sectors are modeled implicitly via appropriate cost functions, aggregate demand curves, and ex-post calculations, respectively. The model is run on several case studies that highlight its capabilities, including a simulation of a disruption of Russian supplies via Ukraine. |
| Keywords: | European natural gas market, global LNG market, mixed complementarity problem |
| JEL: | C61 L95 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp732&r=eec |
| By: | Lukasz Grzybowski (Competition Commission, UK); Chiraz Karamti (Telecom Paris - ENST); |
| Abstract: | This paper provides an insight into the antitrust investigation initiated by the French competition authority, which found that mobile operators exchanged strategic information and agreed to fix market shares in years the 2000-2002. The empirical analysis is based on the comparison of mobile markets in France and Germany and uses aggregate industry-level data on subscriptions and prices. The penetration of mobile phones at the end of 1999 was higher in France than in Germany, but this situation was reversed by the end of 2002. In the same time period, minimum prices of mobile services in France, computed for a defined low-usage basket, were on average by about 58% lower than the corresponding prices in Germany. The results of binomial logit demand estimation suggest two explanations for this situation. First, there is a significant difference between price elasticities of demand in these two countries. Second, consumers seem to perceive mobile telephony as a substitute to fixed-line connection in France and as a complement in Germany. However, in a separate reduced-form estimation we do not find a significant effect of prices for fixed-line services on mobile prices in either country. Furthermore, the estimation results suggest that the share-fixing agreement in France could have slowed down subscriptions, but we fail to find that it had an adverse effect on prices. |
| Keywords: | mobile telephony, binomial logit, reduced-form, share-fixing |
| JEL: | L13 L43 L93 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0724&r=eec |
| By: | David Grubb |
| Abstract: | Le taux de chômage au Luxembourg - minime pendant les années 70 et 80 puis en forte augmentation, bien que toujours bas par rapport aux autres pays, dans les années 90 - est depuis 2004 à près de 5%. Ce rapport compare d’abord la situation au Luxembourg avec celle de "pays de référence" qui ont également un bon niveau de protection sociale, mesuré par le niveau des allocations de chômage et du revenu minimum. La petite taille du pays et le rôle important du travail frontalier présentent certains avantages pour le Service public de l’emploi (SPE) et ils génèrent certaines contraintes supplémentaires, mais les options de politique comme leurs impacts attendus restent globalement similaires à ceux expérimentés par les autres pays de référence. Plusieurs de ces pays (le Norvège, la Suède, la Suisse) avaient également des taux de chômage très bas jusque dans les années 80. En général, les pays qui ont introduit une indemnisation généreuse du chômage dans les années 70 ont subi des niveaux de chômage plus élevés environ 20 ans plus tard. Selon cette perspective, le Service public de l’emploi (SPE) au Luxembourg a réussi à maintenir le chômage à des niveaux relativement bas plus longtemps que presque partout ailleurs. L'augmentation progressive du chômage inscrit par rapport au chômage au sens de l'enquête entre 1975 et 2000 témoigne pourtant d’une tendance de fond : la gestion rigoureuse et la stigmatisation du chômage qui décourageait les chômeurs de s’inscrire dans les premières années a été remplacée par une situation où les demandeurs inscrits ne sont pas disponibles pour tout type de travail. L'introduction du revenu minimum garanti (RMG) en 1986 et les élargissements des droits à l'indemnisation passive conditionnée à l’inscription comme demandeur d’emploi en 2002 et 2003 ont aussi contribué à l'augmentation du nombre de clients du Service public de l’emploi difficiles à placer... <BR>Luxembourg’s unemployment rate - which was extremely low in the 1970s and 1980s, and in the 1990s increased considerably but still remained low compared with other countries - has since 2004 been close to 5%. This report first compares Luxembourg’s experience with that of "reference countries", which also provide a high level of social protection. as measured by the level of unemployment insurance and minimum income benefits. The country’s small size and the importance of cross-border commuting in the country has certain advantages for the Public Employment Service (PES) and generates some additional constraints, but the policy options remain generally similar to those tried by the other reference countries. Several of these countries (Norway, Sweden, and Switzerland) also had very low unemployment into the 1980s. In general, the countries which first introduced generous unemployment benefits only in the 1970s suffered high levels of unemployment about 20 years later, and from this point of view the PES in Luxembourg has managed to keep unemployment relatively low longer than almost anywhere else. The steady increase in the level of registered unemployment relative to unemployment in the sense of the labour force survey from 1975 to 2000 indicates progressive change: the rigorous management and the stigmatisation of unemployment which motivated unemployed people not to register in the early years has been progressively replaced by a situation where some people who register are not available for all types of work. The introduction of a minimum income benefit in 1986 and various extensions of entitlement to passive benefits in 2002 and 2003 have also increased the number of PES clients who are difficult to place... |
| JEL: | H83 I38 J08 J60 J68 |
| Date: | 2007–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:oec:elsaab:59-fr&r=eec |
| By: | NATICCHIONI PAOLO; RICCI ANDREA; RUSTICHELLI EMILIANO |
| Abstract: | In this paper we apply quantile regressions to investigate the evolution of Educational Wage Premia (EWP) in Italy from 1993 to 2004. Using SHIW data (Bank of Italy) and different classifications for educational attainments, we show that EWP have generally decreased over time across the wage distribution. In particular, the falling of EWP in the private sector is striking, considering both continuous and categorical specifications for education, at all quantiles of the distribution. Different patterns are observed in the public sector, where EWP remain basically stable over time. A number of robustness checks and various econometric specifications are also applied in order to address sample selection issues. Our findings also provide additional evidence in favour of the thesis that the increasing patterns in inequality and EWP, and the related interpretations concerning skill-biased changes, are much less pronounced in continental Europe than in Anglo Saxon countries. |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceiswp:260&r=eec |
| By: | Arie Kapteyn; James P. Smith; Arthur van Soest; James Banks |
| Abstract: | Many western industrialized countries face strong budgetary pressures due to the aging of the baby boom generations and the general trends toward earlier ages of retirement. We use the American PSID and the European Community Household Panel (ECHP) to explain differences in prevalence and dynamics of self-reported work disability and labor force status. To that end we specify a two-equation dynamic panel data model describing the dynamics of labor force status and self-reported work disability. When we apply the U.S. parameters to the equations for the thirteen European countries we consider, the result is generally that work disability is lower and employment is higher. Furthermore, measures of employment protection across the different countries suggest that increased employment protection reduces reentry into the labor force and hence is a major factor explaining employment differences in the pre-retirement years. |
| JEL: | C81 I12 J28 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13536&r=eec |
| By: | Karl Aiginger (WIFO) |
| Abstract: | The remarkable success of Sweden over the past 15 years has come after decades of sluggish growth, during which Sweden managed to lose its substantial lead in per-capita income. This fits to the critique that welfare cost and high taxes reduce growth and endangers competitiveness. Since that however, Sweden engaged in a remarkable strategy of reforming the budget process, increasing the flexibility of the labour market and boosting investment into the future. Incentives are changed in the direction of promoting flexibility and to adapt to changes inferred by globalisation. |
| Keywords: | Welfare models, corporatism, economic performance, competitiveness |
| Date: | 2007–10–16 |
| URL: | http://d.repec.org/n?u=RePEc:wfo:wpaper:y:2007:i:302&r=eec |
| By: | Giorgia Giovannetti (Università degli Studi di Firenze, Dipartimento di Scienze Economiche); Giorgio Ricchiuti (Università degli Studi di Firenze, Dipartimento di Scienze Economiche); Margherita Velucchi (Università degli Studi di Firenze, Dipartimento di Statistica “G. Parenti”) |
| Abstract: | The birth of new enterprises and their survival in the market are often seen as a crucial variable of economic growth and competitiveness in a modern economy. This paper focuses on business demography of Italian firms, using a merged dataset between Capitalia-Reprint and AIDA, to identify the relationships among firms’ characteristics their demographic dynamics and survival. We show that size and technological level increases survival probability. Internationalized firms show higher failure risk: on average the competition is stronger on international markets, forcing firms to be more efficient. Finally, a long lasting successful internationalized firm is a high-tech, large and innovating firm. |
| Keywords: | Business Demography, Survival, Competitiveness, Internationalization |
| JEL: | C41 L11 L25 F21 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2007_07&r=eec |
| By: | Vassiliki Koutsogeorgopoulou; David Turner |
| Abstract: | Since 2004, the fiscal deficit has been brought down by over 5% of GDP to below the 3% limit in 2006, which is a major achievement. The government plans a more gradual reduction over coming years so that overall balance or surplus is reached no later than 2010. However, fiscal consolidation should continue, possibly at a more rapid pace than planned, given the high level of government debt, favourable outlook for output growth, and long-term fiscal costs of ageing which are estimated to be among the largest in the OECD. There are as yet no specific proposals to reform pensions, which account for most of the prospective ageing-related increase in public expenditure, although the government is expected to announce reforms following the publication of a report from a Committee of Experts. Delaying fiscal consolidation, particularly the urgently needed pension reform, would have substantial longer-term costs in terms of higher taxes and additional debt service costs, including an increase in the risk premium paid on government debt. In addition, this would heavily skew the tax burden towards future generations. Consolidation should focus on reducing primary spending and on enhancing tax revenues. This can be achieved particularly through increased efficiency of public administration and by measures to tackle tax evasion and further broaden the tax base. Ensuring long-run fiscal sustainability will also require the implementation of wide-ranging reforms in the key area of health care, as well as an early decision to introduce a comprehensive reform of the pension system. <P>Les coûts d’un report de la consolidation budgétaire : une étude dans le cas de la Grèce <BR>La réduction du déficit budgétaire, ramené de 5 % du PIB en 2004 à moins de 3 % en 2006, est une réussite majeure. Les autorités prévoient une diminution plus progressive dans les prochaines années jusqu’à ce que le budget soit en équilibre ou excédentaire, au plus tard en 2010. Cependant, l’assainissement budgétaire devrait se poursuivre – peut-être à un rythme plus rapide que prévu - étant donné le niveau élevé de la dette publique, les perspectives favorables à la croissance de la production et les coûts budgétaires à long terme du vieillissement, qui sont parmi les plus élevés de la zone OCDE. Il n’est pas encore prévu d’initiatives spécifiques pour réformer les retraites, principale source de l’accroissement prévisible des dépenses publiques résultant du vieillissement, même si le gouvernement doit annoncer des mesures dans le courant de cette année. Différer l’assainissement des finances publiques, surtout la réforme des retraites qui s’impose d’urgence, entraînerait des coûts à long terme considérables sous forme d’une hausse de la fiscalité et d’un alourdissement du service de la dette, avec notamment une augmentation de la prime de risque appliquée à la dette publique. De surcroît, ceci reviendrait à transférer une lourde charge fiscale aux générations futures. Les efforts d’assainissement devraient tendre surtout à réduire les dépenses primaires et accroître les recettes fiscales. On peut y parvenir par l’amélioration de l’efficacité de l’administration publique en particulier, et en luttant contre la fraude et en prenant d’autres mesures pour élargir la base d’imposition. Pour garantir la viabilité budgétaire à long terme, il faudra aussi engager des réformes d’envergure dans le secteur clé de la santé et décider promptement de lancer une réforme complète du système de retraite. |
| Keywords: | ageing, pensions, retraites, vieillissement, fiscal consolidation, deficit, déficit |
| JEL: | H26 H55 H62 H63 |
| Date: | 2007–10–18 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:582-en&r=eec |
| By: | Cheshire, Paul; Hilber, Christian A. L. |
| Abstract: | Office space in Britain is the most expensive in the world and regulatory constraints are the obvious explanation. We estimate the ‘regulatory tax’ for 14 British office locations from 1961 to 2005. These are orders of magnitude greater than estimates for Manhattan condominiums or office space in continental Europe. Exploiting the panel data, we provide strong support for our hypothesis that the regulatory tax varies according to whether an area is controlled by business interests or residents. Our results imply that the cost of the 1990 change converting commercial property taxes from a local to a national basis – transparently removing any fiscal incentive to permit local development – exceeded any plausible rise in local property taxes. |
| Keywords: | Land use regulation; regulatory costs; business taxation; office markets. |
| JEL: | H3 Q15 J6 R52 |
| Date: | 2007–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:5435&r=eec |
| By: | Raquel Lago González; Jose A. Lopez; Jesús Saurina |
| Abstract: | Access to external finance is a key determinant of a firm's ability to develop, operate and expand. To date, the literature has examined a variety of macroeconomic and microeconomic factors that influence firm financing. In this paper, we examine access by Spanish firms to external financing, both from bank and non-bank sources. We use dynamic panel data estimation techniques to estimate our models over a sample of 60,000 firms during the period from 1992 to 2002. We find that Spanish firms are quite dependent on short-term non-bank financing (such as trade credit), which makes up about 65 percent of total firm debt. Our results indicate that this type of financing is less sensitive to firm characteristics than short-term bank financing. However, we also find that short-term bank debt seems to be accessed more during economic expansions, which may suggest a substitution away from non-bank financing as firm conditions improve. Short-term bank debt also seems to be accessed more as funding rates rise, possibly again suggesting a substitution away from higher-priced non-bank alternatives. Using data from the Spanish Credit Register maintained by the Banco de Espana, we find that the impact of funding costs on access to external financing, whether from banks or non-banks, is affected by the nature of borrowing firms' bank relationships and collateral. In particular, we provide evidence of a potential hold-up problem in loan markets. Moreover, collateral plays a key role in making long-term finance available to firms. |
| Keywords: | Bank competition |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:2007-22&r=eec |
| By: | Edmark, Karin (IFAU - Institute for Labour Market Policy Evaluation) |
| Abstract: | This study tests for strategic competition in public spending on childcare and primary education, and care for the elderly, using panel data on Swedish municipalities over 1996-2005. The high degree of decentralization in the organization of the public sector implies that Swedish data is highly suitable for this type of study. The study is not limited to interactions in the same type of expenditure, but also allows for effects across expenditures. The results give no robust support for the hypothesis that municipalities react on the spending policy of neighbouring municipalities in the decision on own spending on care of the elderly, childcare and education. |
| Keywords: | Strategic interactions; spatial econometrics; decentralization; local public spending |
| JEL: | C31 H72 H77 |
| Date: | 2007–10–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2007_022&r=eec |
| By: | Robert Moffitt |
| Abstract: | A long-standing issue in the literature on education is whether marginal returns to education fall as education rises. If the population differs in its rate of return, a closely related question is whether marginal returns to higher education fall as a greater fraction of the population enrolls. This paper proposes a nonparametric method of estimating marginal treatment effects in heterogeneous populations, and applies it to this question, examining returns to higher education in the UK. The results indicate that marginal returns to higher education fall as the proportion of the population with higher education rises, consistent with the Becker Woytinsky Lecture hypothesis. |
| JEL: | C21 J24 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13534&r=eec |
| By: | Silva, Maria; Leitão, João; Raposo, Mário |
| Abstract: | This paper aims to identify the barriers to innovation that influence the innovation capability of Portuguese industrial firms. The literature review about innovation makes use of two references approaches: (i) the systemic; and (ii) the networks and inter-organizational relationships. The database is obtained through the Community Innovation Survey II (CIS II) conducted by EUROSTAT. Furthermore, from the results several public policies are proposed in order to overcome the restraining factors of the entrepreneurial innovative capability. |
| Keywords: | Innovation; Entrepreneurial Innovative Capability. |
| JEL: | O38 O31 |
| Date: | 2007–10–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:5408&r=eec |
| By: | Julie Zissimopoulos; Nicole Maestas; Lynn A. Karoly |
| Abstract: | The authors examine how public and private pension and health insurance systems affect retirement transitions. In many countries, public and private pension eligibility, as well as access to health insurance varies between self-employed and wage and salary workers, and these differences are likely to cause differential retirement patterns both within and across countries. They use the variation in these institutional features within and across the United States and England to analyze retirement patterns. Based on longitudinal data from the Health and Retirement Study (HRS) in the United States and the English Longitudinal Survey of Ageing (ELSA) they find that the higher labor force exit rate of wage and salary workers compared to self-employed workers is due to defined benefit pension incentives created by the public and private pension systems. Higher rates of labor force exit at ages 55 and older in England compared to the United States are due in part to the availability of publicly provided health insurance. |
| Keywords: | retirement, self-employment, health insurance, pensions |
| JEL: | J26 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:ran:wpaper:528&r=eec |
| By: | ; Lietz C |
| Abstract: | The aim of this paper is to evaluate whether policy reforms in Austria between 1998 and 2005 were successful in meeting redistributive objectives and in reducing poverty. For the analysis we use the tax/benefit micro-simulation model EUROMOD. Due to the sequence of reforms and the use of two datasets, the period under review is split into two parts: 1998 to 2003 and 2003 to 2005. Important changes in the first period were the tax reform 2000, the introduction of the universal childcare benefit (“Kinderbetreuungsgeld”) as well as increases in family-targeted benefits and tax reliefs. We find that the policy reforms were in general clearly progressive and family-friendly. However, as with elderly people, the situation did not improve for all population groups at risk of poverty. In the period from 2003 to 2005 the tax reform 2004/05 was introduced and contributions to health insurance were raised. We find that the measures had no significant impact on poverty and income distribution; however, in total they increased the disposable income for almost all population groups. The analysis is completed by the assessment of the redistributive impact of two hypothetical policy changes in favour of lower income groups, namely the continuous introduction of employees’ social security contributions above the lower threshold for contributions (“Geringfügigkeitsgrenze”) and the yearly indexation of family benefits. |
| Keywords: | Austria, policy reform, inequality, redistribution, micro-simulation, |
| JEL: | C8 D31 I3 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:ese:emodwp:em3/07&r=eec |