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on European Economics |
| By: | Stephen G Hall; George Hondroyiannis; P.A.V.B. Swamy; George S. Tavlas |
| Abstract: | As part of its monetary policy strategy, the European Central Bank has formulated a reference value for M3 growth. A pre-requisite for the use of a reference value for M3 growth is the existence of a stable demand function for that aggregate. However, a large empirical literature has emerged showing that, beginning in 2001, essentially all euro area M3 demand functions have exhibited instability. This paper argues that a proper understanding of the determination of money requires a portfolio analysis where the demand for broad money is seen as just one element in the wealth portfolio. Under this framework, wealth is the variable that constitutes the total budget constraint on the holdings of assets, including money, and changes in equity prices are a key transmission channel of monetary policy. Understanding money behaviour thus requires good data on euro area wealth which at present do not exist. Our basic premise is that there is a stable demand-for-money function but that the models that have been used until now to estimate euro area money-demand are not well-specified because they do not include a measure of wealth. Using two empirical methodologies - - a co-integrated vector equilibrium correction (VEC) approach and a time-varying coefficient (TVC) approach - - we find that a demand-for-money function that includes wealth is stable. The upshot of our findings is that M3 behaviour continues to provide useful information about medium-term developments on inflation. |
| Keywords: | Money demand; VEC, time varying coefficient estimation; Euro area |
| JEL: | C20 E41 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:08/9&r=eec |
| By: | Laurent Ferrara (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, DGEI-DAMEP - Banque de France); Thomas Raffinot (CPR-Asset Management - CPR Asset Management) |
| Abstract: | Non-parametric methods have been empirically proved to be of great interest in the statistical literature in order to forecast stationary time series, but very few applications have been proposed in the econometrics literature. In this paper, our aim is to test whether non-parametric statistical procedures based on a Kernel method can improve classical linear models in order to nowcast the Euro area manufacturing industrial production index (IPI) by using business surveys released by the European Commission. Moreover, we consider the methodology based on bootstrap replications to estimate the confidence interval of the nowcasts. |
| Keywords: | Non-parametric, Kernel, nowcasting, bootstrap, Euro area IPI. |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00275769_v1&r=eec |
| By: | Lorenzo Pozzi (Erasmus University Rotterdam); Guido Wolswijk (European Central Bank) |
| Abstract: | We derive a model in which a standard international capital asset pricing (ICAPM) model is nested within an ICAPM model with market imperfections. In the latter model an idiosyncratic stochastic factor affects the return of risky assets (over a risk-free rate) on top of the systematic component that is common to all countries (and that is interacted with a timevarying idiosyncratic “beta”). We introduce asymptotic convergence from the full ICAPM model with imperfections to the standard model by multiplying the idiosyncratic factor by convergence operators. The model is then estimated using the weekly 10 year government bond spreads of Belgium, France, Italy, and the Netherlands versus Germany over the period 1991-2006. We find that the idiosyncratic components have converged towards zero for all countries after the introduction of the euro implying that the efficiency of the euro area government bond markets under consideration has increased. Full convergence has not yet occurred however. |
| Keywords: | Government bonds; euro area; interest rate spreads; state space methods |
| JEL: | E43 G12 |
| Date: | 2008–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20080042&r=eec |
| By: | František Turnovec (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic) |
| Abstract: | Increasing number of studies is focusing attention to constitutional analysis of European Union institutions and distribution of intra-institutional and inter-institutional influence in the European Union decision making. Most of the studies are related to distribution of voting power in the EU Council of Ministers as reflecting the influence of member states (or, more precisely, member states governments). Significantly less attention is paid to the analysis of European Parliament (EP). In this paper we address the following question: Taking as decisional units national chapters of European political parties, is there a difference between a priori voting power of national groups in the case of “national” coordination of voting and in the case of “partisan” coordination of voting? By coordination of voting we mean two step process: in the first step there is an internal voting in the groups of units (national or partisan), in the second step there is a voting of aggregated groups (European political parties or national representations) in the EP. In the both cases the voting has an ideological dimension (elementary unit is a party), difference is only in dimension of aggregation. Power indices methodology is used to evaluate voting power of national party groups in the cases of partisan and national coordination of voting behaviour. |
| Keywords: | a priori voting power, European Parliament, European political parties, power indices, Shapley-Shubik power index |
| JEL: | D71 D74 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2008_06&r=eec |
| By: | Kauppi, Heikki; Widgrén, Mika |
| Abstract: | This paper evaluates the determination of receipts from EU budget by considering a richer institutional structure than in earlier studies. We assume that the member states have self-interested objectives in CM trying to minimize their contributions within the given framework of the EU budget whereas EP is supposed to support benevolent objectives using its competence in non-compulsory expenditure, i.e. structural spending, internal and external policies and administration. CM exerts power in the allocation of both compulsory expenditure, mainly consisting of agricultural spending, and in non-compulsory expenditure. The purpose of this paper is not, however, to evaluate EP's influence but rather how the assumed benevolent objectives of EP and income differences turn into member states' budget receipts in a power politics based model. |
| Keywords: | EU budget; European integration; voting power |
| JEL: | C71 D70 D72 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6778&r=eec |
| By: | Ingo Geishecker; Holger Görg; Daria Taglioni |
| Abstract: | This study uses firm-level data on a large sample of European manufacturing firms to investigate the links between opening up foreign affiliates and firms' productivity. The analysis is guided by recent theoretical models of international trade with firm heterogeneity. The paper finds that while only a small share of euro area firms locate affiliates abroad, these firms account for over-proportionally large shares of output, employment and profits in their home countries. They have higher survival rates and their productivity growth is also higher. The strongest contribution is by productivity growth of existing firms with a multinational status rather than entry into the multinational status. Finally, there are performance premia for multinationals with a large number of affiliates abroad relative to those with a small number |
| Keywords: | multinational enterprises, productivity growth, productivity decomposition, survival |
| JEL: | F23 F43 L25 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1413&r=eec |
| By: | John T. Addison (Queen’s University Belfast, U.K and University of South Carolina, U.S.A., and The Rimini Centre for Economic Analysis, Rimini, Italy.) |
| Abstract: | This paper argues that the evolution of social policy – vulgo: labor market mandates – in the European Union seems to follow a set path. Intervals of activism have been followed by challenges and checks to its development, but Treaty innovations (inter al.) have provided the impetus for further activism. The classic and first case in point was the Single European Act (1976), which presaged a new bout of legislation by widening the reach of qualified majority voting. The next was Maastricht, or the Treaty on European Union (1991) and the Agreement on Social Policy, which for the first time established a firm basis for social policy. An intermediate but instructive step was passage of the Treaty of Amsterdam (1997) which formally incorporated the latter into the main body of the treaty rather than leaving it as a Protocol appended to the treaty, The most recent instance is the Treaty Establishing a Constitution for Europe, which was to morph into the Reform (or Lisbon) Treaty of December 2007. This agreement portends more fundamental reforms for two reasons. First, it implies new legislation in the area of labor relations (issues such as pay determination, the rights to strike/lockout, and the right of association) previously expressly excluded from social policy. Second, it will test some member states applying European law, which means that theoretical opt outs may be just that. And, if history is any guide, there will be subsequent consolidation to bring the labor standards set under legislation into line with European Court of Justice decisions and a further ratcheting-up of standards. JEL Classifications: |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:08-08&r=eec |
| By: | Fragkiskos Filippaios; Constantina Kottaridi |
| Abstract: | Central and Eastern European countries with the liberalisation process and the recent accession to the EU are, nowadays, well engaged in trade with partner countries and at the same time receive significant and increasing interest from foreign investors. Trade and Foreign Direct Investment can potentially enhance economic growth and development as widely evidenced in the literature; hence their relationship may be of particular interest for the region especially in the context of an enlarged EU. This paper addresses the imperative need to understand the relationship of FDI and trade as well as international investors’ behaviour by developing a new theoretical approach and providing empirical evidence. We use the most expanded data span in the current literature, from the early stages of transition in 1992 to 2006 and an enriched dataset of countries, sectors and location factors. In regards to the inward FDI vs. imports relationship, results comply with our theoretical formulation and strongly indicate an overall complementarity with each other. In the case of FDI we find strong locational characteristics such as the large market size, the gradual improvement of the macro-environment and finally the quality of labour force to play a positive role. |
| Keywords: | Central & Eastern European Countries (CEEC), Investment Development Path (IDP), inward Foreign Direct Investment (FDI), imports |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:uop:wpaper:0026&r=eec |
| By: | Christophe J. Godlewski (Laboratoire de Recherche en Gestion et Economie, Université Louis Pasteur); Ydriss Ziane (BETA, Université de Nancy) |
| Abstract: | We provide empirical evidence on the determinants of the number of bank lenders using a sample of more than 3000 loans to firms from 24 European countries. Our testable hypotheses are built upon different theoretical frameworks drawn from the existing literature, referring to firm characteristics, strategic considerations, geographical distances, bank market concentration, efficiency of legal system, and development of alternative sources of funds. Our main results show that the number and the international diversity of lenders is increased by loan and firm characteristics which reduce agency costs, and by financial structure and legal environment characteristics which mitigate expropriation risk. |
| Keywords: | Lending relationships, number of lenders, bank loans, financial governance, asymmetric information, Europe. |
| JEL: | G21 G32 G33 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:lar:wpaper:2008-11&r=eec |
| By: | Dionisius, Regina (BIBB); Mühlemann, Samuel (University of Bern); Pfeifer, Harald (BIBB); Walden, Günter (BIBB); Wenzelmann, Felix (BIBB); Wolter, Stefan (Swiss Co-ordination Center for Research in Education) |
| Abstract: | For the first time it has been made possible to merge a German and a Swiss firm-level data set that include detailed information about costs and benefits of apprenticeship training. Previous analyses based only on aggregate data showed that the net costs of training apprentices are substantial in Germany, whereas apprenticeship training is on average profitable during the training period for firms in Switzerland, even though the two training systems are rather similar. This paper analyzes the reasons for these differences with matching methods. We simulate the impact of changes in certain parameters such as wages, apprenticeship system-related factors and allocation of tasks to apprentices on the cost-benefit ratio using the counterfactual values of the other country. The results show that most of the difference in the net costs of training between the two countries can be explained by a higher share of productive tasks allocated to apprentices in Switzerland and the differences in relative wages. |
| Keywords: | apprenticeship training, cost and benefit analysis |
| JEL: | J24 J31 J44 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3465&r=eec |
| By: | Chiarini, Bruno (University of Naples, Parthenope); Marzano, Elisabetta (University of Naples, Parthenope); Schneider, Friedrich (University of Linz) |
| Abstract: | By using official time series of the Italian evaded VAT base (Ministry of Finance) for the period 1980-2004 we investigate empirically the long-run characteristics of tax evasion and the relationship with the tax burden. We focus on three important issues not analyzed so far. First, using different measures of aggregate economic activity as reference variables in estimating the average tax burden, we investigate the size and dynamics of the over-burden traceable back to tax evasion. Second, exploiting cointegration techniques, we quantify the elasticity between tax evasion and the average tax rate in Italy. We then comment on the complex dynamic interaction between tax burden and tax evasion, to ascertain whether in the Italian experience there is evidence for any “vicious circle” between them. |
| Keywords: | tax evasion, VAT evasion, effective tax rate, apparent tax rate, VECM |
| JEL: | H30 H26 O17 C32 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3447&r=eec |