|
on European Economics |
| By: | Roberto A. De Santis (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany); Carlo A. Favero (IGIER – Università Commerciale Luigi Bocconi, Via Salasco 5, 20136 Milan, Italy.); Barbara Roffia (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany) |
| Abstract: | The long-run relationship between money and prices in the euro area embedded in traditional money demand models with income and interest rates broke down after 2001. We develop a money demand model where investors hold a diversi?fied portfolio with money, domestic and foreign stocks and long-term bonds in which, in addition to the classical wealth effect, also a size and an international portfolio allocation effects arise. The estimated model identifi?es three cointegrating vectors stable over the sample 1980-2007 - a long-run money demand, which depends on income and all risky assets' returns, and two equilibria for the euro area and the US fi?nancial markets. Steady state equilibrium of nominal M3 growth is estimated to be about 7% in 2007 with large standard errors mainly due to uncertainty in asset prices. The gap between actual euro area M3 growth and model-based ?fitted or predicted values helps forecast euro area inflation. JEL Classification: E41, E44, E52, G11, G15. |
| Keywords: | Euro area money demand, inflation forecasts, monetary policy, portfolio allocation. |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20080926&r=eec |
| By: | Balli, Faruk; Louis, Rosmy J.; Osman, Mohammad |
| Abstract: | In this paper, we make two contributions to the literature. First, we construct a new measurement to capture income smoothing effectively. Second, we present new empirical evidence on the linkages between international asset trading and income smoothing. We use factor income inflows instead of the commonly used net factor income and arrive at results, among others, similar to previous studies in the literature: (a) risk sharing and equity portfolio home bias are strongly correlated for EU members; and (b) Specialization in output plays a significant role in income smoothing. Our findings also confirm that the increased level of economic integration witnessed in the Euro area as a result of the monetary union fosters output specialization across EU members and leads to asymmetric output fluctuations. Cross-border financial assets’ trading within the Euro Area, though smaller in comparison to the overall OECD block, serves as a shock absorber as factor income flows to smooth domestic consumption and income. However, although we have observed a decrease in home bias for OECD members, we could not find any evidence of higher income smoothing as a result. |
| Keywords: | Capital Market Integration; Euro Portfolio Bias; Income Smoothing |
| JEL: | G11 F41 |
| Date: | 2008–08–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:10160&r=eec |
| By: | Abelardo Salazar Neaves; Oliver Hossfeld; Jan Hagen; Kai Carstensen |
| Abstract: | In this paper we analyze the money demand functions of the four largest EMU countries and of the four-country (EMU-4) aggregate. We identify reasonable and stable money demand relationships for Germany, France and Spain as well as the EMU-4 aggregate. For the case of Italy, results are less clear. From the estimated money demand functions, we derive both EMU-4 and country-specific measures of money overhang. We find that the EMU-4 overhang measure strongly correlates with the countryspecific measures, particularly since the start of EMU, and is useful to predict country-specific inflation. However, it generally does not encompass country-specific money overhang measures as predictors of inflation. Hence, aggregate money overhang is an important, but by far not an exhaustive, indicator fort he disaggregate level |
| Keywords: | Money demand, stability, money overhang, inflation forecast |
| JEL: | E41 E52 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1443&r=eec |
| By: | Edith Archambault (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, MATISSE - Modélisation Appliquée, Trajectoires Institutionnelles et Stratégies Socio-Économiques - CNRS : UMR8595 - Université Panthéon-Sorbonne - Paris I) |
| Abstract: | The European Union in its widening movement shows five clusters of Third sector organisations with complex bonds and ties with the surrounding societies and national identities In introduction, we compare briefly the Europe’s Third sector features to North America’s ones (Historical and ideological roots, relationship with central and local governments, sources of income and composition of the Third sector…) In a first part, the European Third sector is broken up into five clusters (Esping-Andersen, Salamon and Anheier) : Continental, Anglo-saxon, Nordic, Mediterranean and Oriental according to :• The relationship to the government (central/local, high/low level of taxation) • The ratio of social protection to GDP, the share of public social expenditure and the dominant type of social security regime• The main religions and their links with parts of the Third sector• The labour market situation (unemployment, flexibility, security) with a special attention devoted to female work (employment rate; full time or part time) in relation with volunteering.Then we give data issued from the Comparative Nonprofit Sector Project (CNP2, Salamon et alii, 2004) on paid employment and volunteering, level and orientation of the partnership with the government, sources of income in every cluster.The second part is devoted to the question of a likely converging evolution of these clusters :• A faster growth rate in new member states makes them catch up gradually the other ones and choose “best practices” regarding social policies and social security regimes• The trend to decentralisation in larger member states combined with the retrenchment of central government is in favour of local solutions to local issues and of public-private partnerships especially with nonprofit organisations.• Despite the ambiguities of its policy towards civil society organizations, European authorities expect them filling the gap of democracy and fighting European bureaucracies. |
| Keywords: | European and American Third sectors; public-private partnership; Continental cluster; Anglo-Saxon cluster; Nordic cluster; Mediterranean cluster; Oriental cluster; Convergence; |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:hal:ceswpp:halshs-00311749_v1&r=eec |
| By: | Mary O'Mahony; Ana Rincon-Aznar; Catherine Robinson |
| Abstract: | Differences in the growth patterns of output and employment in sectors across countries is likely to offer policy makers insight into the type of conditions that might be conducive to economic growth and prosperity. However, the relative growth of industries within Europe and indeed across the world is often obscured by a lack of comparable breakdowns or data sources. Aggregate estimates of output and employment growth often hide a great deal of heterogeneity at the sector level, and yet a closer analysis of this level is likely to shed light on the sources of differences in growth performances between countries. Therefore the purpose of this paper is to consider trends in relative output and employment trends at the sector level across Europe using a newly available harmonised data source. The sectoral detail of this section is broadly at the 2 digit NACE classification, with some further breakdown into 3-digit NACE where data are available. |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:nsr:niesrd:306&r=eec |
| By: | Martin Schneider (Oesterreichische Nationalbank, Economic Analysis Division, P.O. Box 61, A-1010 Vienna,); Gerhard Fenz (Oesterreichische Nationalbank, Economic Analysis Division, P.O. Box 61, A-1010 Vienna,) |
| Abstract: | We analyze the transmission of structural shocks between the US and the euro area within a two-country VAR framework. For that purpose, we simultaneously identify cost-push, demand and monetary policy shocks for both countries using sign restrictions. Our results show that domestic shocks explain the largest share of the forecast error variances for GDP, consumer prices and the interest rate in both countries in the short run, whilst spillovers from the other country and global factors gain importance in the medium run. The strength of the shock transmission between the two countries is quite symmetric. Our approach to the identification of structural shocks allows us to construct confidence bands that account both for estimation and identification uncertainty. We find impulse responses to domestic shocks to be significant while spillovers across countries are insignificant. |
| Keywords: | VAR, shock transmission, sign restrictions, Metropolis-Hastings, confidence intervals, bootstrap. |
| JEL: | C32 E37 E40 |
| Date: | 2008–07–21 |
| URL: | http://d.repec.org/n?u=RePEc:onb:oenbwp:145&r=eec |
| By: | Chinn, Menzie (U of Wisconsin); Frankel, Jeffrey (Harvard U) |
| Abstract: | The euro has arisen as a credible eventual competitor to the dollar as leading international currency, much as the dollar rose to challenge the pound 70 years ago. This paper uses econometrically-estimated determinants of the shares of major currencies in the reserve holdings of the world’s central banks. Significant factors include: size of the home country, rate of return, and liquidity in the relevant home financial center (as measured by the turnover in its foreign exchange market). There is a tipping phenomenon, but changes are felt only with a long lag (we estimate a weight on the preceding year’s currency share around .9). The equation correctly predicts out-of-sample a (small) narrowing in the gap between the dollar and euro over the period 1999-2007. This paper updates calculations regarding possible scenarios for the future. We exclude the scenario where the United Kingdom joins euroland. But we do take into account of the fact that London has nonetheless become the de facto financial center of the euro, more so than Frankfurt. We also assume that the dollar continues in the future to depreciate at the trend rate that it has shown on average over the last 20 years. The conclusion is that the euro may surpass the dollar as leading international reserve currency as early as 2025. |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp08-016&r=eec |
| By: | Patrick Luennemann and Dirk Mevis Author-Email1: patrick.luennemann@bcl.lu Author-Email2: dirk.mevis@bcl.lu |
| Abstract: | This paper studies the impact of Eurosystem Governing Council communication on financial markets? interest rate expectations based on evidence from bond markets, futures markets and options markets. First,we find that the level, the dispersion and the asymmetry of interest rate expectations are affected on Council meeting days. However, such effects may be relatively short-lived. Moreover, we find that interest rate expectations tend to become less volatile during the black out period. Second, monetary policy meetings tend to affect interest rate expectations much more strongly than data releases. Third, whereas the impact of monetary policy decisions seems to be particularly concentrated and strong around horizons of 2 years, the effect of euro area data releases on rate expectations seem to unfold in a more evenly distributed manner at longer horizons as well. Fourth, keywords may foster the (very) short-run predictability of the Eurosystem monetary policy. However, keywords do not seem to have a systematic impact on interest rate expectations over longer horizons. |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:bcl:bclwop:cahier_etude_30&r=eec |
| By: | Ray Barrell; Simon Kirby |
| Abstract: | This paper describes the National Institute of Economic and Social Research’s (NIESR)approach to the analysis of the implementation of the Lisbon Agenda. It forms the background to the European Commission Competitiveness Report chapter on spillovers and the Lisbon Process. The paper describes the assumptions that have been made and discusses in more depth the outline results presented in that chapter. The paper discusses both synergies and spillovers, and looks first at the impacts from policies taken unilaterally in each country one at a time and then all simultaneously in all the European Union countries. Simulations show there are a number of spillovers from the various policies and targets within the Lisbon Agenda. Our analysis suggests that if the administrative burden were to be reduced by 25 per cent then the aggregate EU unemployment rate would be ¾ percentage point lower than baseline. The results suggest synergies are strongest between the policies to increase skills and to raise R&D expenditure. Overall the effective implementation of the Lisbon Agenda would be to increase the level of output by 0.6 per cent. |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:nsr:niesrd:312&r=eec |
| By: | Belke, Ansgar (University of Duisburg-Essen); Spies, Julia (Institut für Angewandte Wirtschaftsforschung (IAW)) |
| Abstract: | The purpose of this paper is to assess the implications of the Economic and Monetary Union (EMU) accession of eight Central and Eastern European Countries (CEECs) on their share in EMU-12 imports. Overcoming biases related to endogeneity, omitted variables and sample selection, our results indicate that the common currency has boosted intra-EMU imports by 7%. Under the assumption that the same relationship between the explanatory variables and imports will hold for EMU-CEEC trade, we are able to predict the future impact of the Euro. Our findings suggest that except for the least integrated countries, Poland, Latvia and Lithuania, all CEECs can expect increases in the EMU-12 import share. |
| Keywords: | Central and Eastern European countries, Euro area enlargement, gravity model, panel estimation |
| JEL: | F15 F41 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3647&r=eec |
| By: | Felix Hüfner; Isabell Koske |
| Abstract: | In January 2009, the Slovak Republic will adopt the euro and become the 16th member of the euro area. This paper investigates the implications of euro adoption in the Slovak Republic for inflation and interest rates with an attempt to quantify their likely size as well as their consequences for the general public. The empirical analysis – which makes use of the experience of the first-wave euro area countries – suggests that the cash changeover will most likely be associated with a moderate increase in consumer prices, estimated at around 0.3%. Policy measures to reduce this effect include public information campaigns, the conversion of publicly administered prices with the exact conversion rate and the reduction of administrative obstacles to increase supply. The minor purchasing power losses associated with this price increase will not be evenly distributed across the population with higher income households and families with children expected to be harder hit than others. Even though the exchange rate vis-à-vis the euro area will be irrevocably fixed, past appreciations of the koruna are still likely to pass-through to some downward pressure on consumer prices, with the cumulative effect estimated to amount to around 1.5% up to mid-2009. In the longer run, the Balassa-Samuelson effect and other factors affecting catch-up economies may raise the Slovak inflation rate above the euro area level. As capital markets have already fully priced in euro membership, no immediate effect on short- and long-term interest rates in the wholesale markets is to be expected for January 2009. In the longer run, euro adoption can be expected to foster financial integration, thereby leading to a convergence of Slovak retail interest rates towards euro area levels. This reduction in retail interest rates will benefit the general public with mortgage borrowers likely to reap the largest benefits. A potential risk of low real interest rates is the emergence of a boom-bust cycle; prudent fiscal policy and further structural reforms, including enhanced competition, would help to counter any such developments. <P>L’adoption de l’euro par la République slovaque : les implications pour l’inflation et les taux d’intérêt <BR>En janvier 2009, la République slovaque adoptera l'euro et deviendra le 16ème membre de la zone euro. Ce document examine les implications de l'adoption de l'euro dans la République slovaque pour l'inflation et les taux d'intérêt avec une tentative d'évaluer quantitativement leur taille probable aussi bien que leurs conséquences pour la population. L'analyse empirique – qui se sert de l'expérience des pays de la zone euro de la première vague – suggère que le changement des liquidités soit très probablement associé à une augmentation modérée des prix à la consommation, estimée à peu près à 0.3 %. Les mesures politiques pour réduire cet effet incluent des campagnes publiques d'information, la conversion des prix publiquement administrés avec le taux de conversion exact et la réduction d'obstacles administratifs pour augmenter l’offre. Les pertes de pouvoir d'achat mineures associées à cette augmentation des prix ne seront pas également distribuées à travers la population; les ménages aux revenus plus élevés et les familles avec des enfants pourraient être frappés plus durement que les autres. Bien que le taux de change vis-à-vis de la zone euro soit irrévocablement fixé, les appréciations passées de la couronne slovaque pourraient encore se répercuter sur les prix à la consommation; l'effet cumulatif des effets retardés est évalué à environ 1½ pour cent jusqu'au milieu de 2009. À plus long terme, l'effet Balassa-Samuelson et d'autres facteurs affectant des économies en rattrapage peuvent accroître l'inflation slovaque au-dessus du niveau de la zone euro. Comme les marchés financiers ont déjà entièrement tenu compte de l'adhésion de l'euro, aucun effet immédiat sur les taux d'intérêt de grande clientèle à court terme ou à long terme n’est attendu pour janvier 2009. À plus long terme, on peut s'attendre à ce que l'adoption de l'euro favorise l'intégration financière, menant ainsi à une convergence des taux d'intérêt aux particuliers vers les niveaux de la zone euro. Cette réduction de taux d'intérêt aux particuliers profitera au grand public avec des emprunteurs hypothécaires récoltant probablement les plus grands avantages. Un risque potentiel lié aux taux d'intérêt réels bas est l'apparition d’une phase d’essor suivie d’une récession ; une politique fiscale prudente et des nouvelles réformes structurelles, y compris l’amélioration de la compétitivité, aideraient à résister à de tels développements. |
| Keywords: | Slovak Republic, République slovaque, inflation, inflation, interest rate, taux d'intérêt, euro changeover, adoption de l’euro |
| JEL: | E31 E43 F36 |
| Date: | 2008–08–12 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:632-en&r=eec |
| By: | Seiji Ikkatai (Institute of Economic Research, Kyoto University); Daiske Ishikawa (Institute of Economic Research, Kyoto University); Kengo Sasaki (Institute of Economic Research, Kyoto University) |
| Abstract: | We visited Belgian and Dutch companies that are covered by EU ETS in November 2007, in order to conduct interviews regarding the impact of the scheme and the resultant performance of these companies. The problems of the EU ETS that emerge from this interview are as follows: ‡@ the redundancy of emission allowance dampens the incentive to reduce the emission of CO2, ‡A the allocation scheme fails to consider inter-industrial and/or inter-district fairness, and ‡B since the duration of the National Allocation Plan is too short and highly uncertain, it is difficult to implement a long-term reduction investment plan. As European company officers pointed out, the current EU ETS has several problems. However, the recent political debate on the EU ETS seems to have entered a new dimension toward the second period of the National Allocation Plan. For instance, the cap of CO2 emission in the second period has tightened in comparison with the case in the first period, when the allowance excessive. Furthermore, in January 2008, the European Union set the goal of reducing emission by 20% from the 1990 level, by the year 2020. Moreover, the EU intends to introduce the complete auction of emission allowance after the year 2013 excluding the sector that is expected to experience serious leakage problems. The current EU ETS can be regarded as a CO2 reduction scheme in transition. The policy makers of the Japanese government should behold and draw upon the experiences of the European Union in order to implement appropriate policy measures against global warming in Japan. |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:kyo:wpaper:660&r=eec |
| By: | Amelie Constant; Martin Kahanec; Klaus F. Zimmermann |
| Abstract: | The paper studies opinions and attitudes towards immigrants and minorities and their interactions with other barriers to minorities' economic integration. Specifically, we consider the minority experts' own perceptions about these issues, the veracities and repercussions of unfavorable attitudes of natives. Employing newly available data from the IZA Expert Opinion Survey 2007 we depict main trends in the integration situation of ethnic minorities in Europe in a comparative manner. Using a unique dataset, this innovative study is the first to gauge the perspectives of expert stakeholders and ethnic minorities on their integration situation and the main barriers that hinder it. Robust findings show that ethnic minorities: face integration problems; natives' general negative attitudes are a key factor of their challenging situation; discrimination is acknowledged as the single most important integration barrier; low education and self-confidence as well as cultural differences also hinder integration; minorities want change and that it come about by policies based on the principle of equal treatment. Well designed integration policies that take the specific situation of the respective ethnic minority into account, are persistent and enforce anti-discrimination laws are desirable. |
| Keywords: | Attitudes, opinions, immigrants, ethnic minorities, labor market |
| JEL: | J15 J71 J78 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp812&r=eec |
| By: | Richard Freeman |
| Abstract: | This paper summarizes new evidence from the "Shared Capitalism" Project on the extent towhich workers' earnings depend on the performance of their firm or work group in the USand advanced European countries and on the impact of sharing arrangements on economicbehavior. The evidence shows that: 1) a large and growing proportion of workers are coveredby shared capitalism through worker profit-sharing, bonuses, or worker ownership of shares;2) outcomes for workers and firms are higher under shared capitalism than under other workand pay arrangements; and 3) that worker co-monitoring helps overcome the free riderproblem that arises when part of workers pay depends on the productivity and effort of allworkers. |
| Keywords: | Profit sharing, efficiency wages |
| JEL: | J41 J24 J33 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0882&r=eec |
| By: | Anni Nevalainen |
| Abstract: | ABSTRACT : This paper investigates the connection between firm entry and exit and labour productivity growth. The study has its theoretical foundations in modern Schumpeterian growth theory, distance to frontier model and vintage capital models. The importance of productivity enhancing restructuring has been increasingly acknowledged and all these theories depict the productivity enhancing effects that external restructuring - in particular firm entry and exit – may have. Despite the vast theoretical discussion there is only a little empirical research on the subject. Thus, this study aims at contributing to the existing empirical literature by utilizing panel data that contain information on all manufacturing subsectors from eight EU member states between 1997 and 2004. Empirical analysis is conducted with fixed effects panel regression. It is noted that firm turnover, especially firm entry enhances productivity growth, but the effects appear with a lag. Productivity enhancing effects of firm entry are the strongest three years after the initial entry. The effects of firm exit on labour productivity growth are also positive but more modest than the effects of firm entry. Results of the analysis suggest that the population of firm entrants is extremely heterogeneous. |
| Keywords: | labour productivity, manufacturing, firm entry, firm exit, modern Schumpeterian growth theory |
| JEL: | L6 O4 |
| Date: | 2008–08–25 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1152&r=eec |
| By: | Bonin, John (BOFIT); Hasan, Iftekhar (BOFIT); Wachtel, Paul (BOFIT) |
| Abstract: | Modern banking institutions were virtually non-existent in the planned economies of central Europe and the former Soviet Union. In the early transition period, banking sectors began to develop during several years of macroeconomic decline and turbulence accompanied by repeated bank crises. However, governments in many transition countries learned from these tumultuous experiences and eventually dealt successfully with the accumulated bad loans and lack of strong bank regulation. In addition, rapid progress in bank privatization and consolidation took place in the late 1990s and early 2000s, usually with the participation of foreign banks. By 2005, the banking sectors in many transition countries had developed sufficiently to provide a wide range of services with solid bank performance. Recently, banks have switched their focus from lending to enterprises in a somewhat underdeveloped institutional environment to new collateralized lending to households, which accounts for much of the recent growth of credit in many transition countries. |
| Keywords: | transition banking; bank privatization; foreign banks; bank regulation; credit growth |
| JEL: | G21 P30 P34 P52 |
| Date: | 2008–08–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2008_012&r=eec |
| By: | Heather Rolfe |
| Abstract: | Despite the removal of most barriers to movement, the proportion of apprentices and non-graduate trainees undertaking a placement abroad remains small. The paper investigates the reasons for this and explores some Mobility schemes were found to involve graduates and senior employees rather than non-graduate trainees and apprentices. One major barrier was the cost of mobility programmes, combined with scepticism about the benefits to non-graduate trainees. The broader perspective gained through mobility was seen as of limited relevance to non-graduates and it was assumed that they would not be interested. However, where mobility was practiced for apprentices and trainees, this wider experience was found to be a valuable addition to training, resulting in an appreciation of alternative ways of working and different organisational cultures. |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:nsr:niesrd:298&r=eec |
| By: | Albu, Lucian; Georgescu, George; Ghizdeanu, Ion |
| Abstract: | The main objective of Romania’s post-accession strategy stands for the convergence with the EU Member States. If the nominal convergence (low inflation rate, stability of the exchange and interest rates, contained public debt) seems more easily to be achieved, the real convergence is supposed to catch up structural gap, connected more or less to issues belonging to the development process approach. The study aims at comparative assessment of Romania’s development level within UE 27, proposing a composite index, called Relative Gap Scoring (RGS). This method is based on a scoring calculation depending on the quotient of each indicator level for a certain country and of the country’s ranked first for the respectively indicator, having the advantage to evidence the relative gaps and providing a synthetic image of their resultant. The RGS index has been constructed by the geometric aggregation of scoring resulted for 10 economic and social indicators, considered relevant for the prospective of real convergence. Examining Romania's position within the ranking of EU countries according to the RGS index, the study found that large gap of the current state of economic and social development of our country still remain. Nevertheless, it is worth mentioning that Romania stood at 42.5 percent of the EU average in 2007, while in relation to GDP per capita (PPS) at 40.4 percent, which reveals that, in terms of real convergence, the time horizon of catching up with EU countries could be shorter. |
| Keywords: | Economic and Social Development; International Comparisons; Composite Indexes; Statistical Methods |
| JEL: | C10 B40 O10 O57 |
| Date: | 2008–08–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:10170&r=eec |
| By: | Rolf Scheufele |
| Abstract: | This paper evaluates the New Keynesian Phillips Curve (NKPC) and its hybrid variant within a limited information framework for Germany. The main interest rests on the average frequency of price re-optimization of firms. We use the labor income share as the driving variable and consider a source of real rigidity by allowing for a fixed firm-specific capital stock. A GMM estimation strategy is employed as well as an identification robust method that is based upon the Anderson-Rubin statistic. We find out that the German Phillips Curve is purely forward looking. Moreover, our point estimates are consistent with the view that firms re-optimize prices every two to three quarters. While these estimates seem plausible from an economic point of view, the uncertainties around these estimates are very large and also consistent with perfect nominal price rigidity where firms never re-optimize prices. This analysis also offers some explanations why previous results for the German NKPC based on GMM differ considerably. First, standard GMM results are very sensitive to the way how orthogonality conditions are formulated. Additionally, model misspecifications may be left undetected by conventional J tests. Taken together, this analysis points out the need for identification robust methods to get reliable estimates for the NKPC. |
| Keywords: | Inflation dynamics; Phillips Curve; Weak Instruments; Optimal Instruments |
| JEL: | E31 C13 C52 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:iwh:dispap:10-08&r=eec |
| By: | Nicola Brandt |
| Abstract: | The potential to strengthen productivity growth and enhance consumer welfare through more competition is large in the energy and railway sectors. Establishing stronger vertical separation between network access provision and potentially competitive services will be the main challenge for Germany going forward. In particular, it will be a crucial point in designing the envisaged privatisation of state stakes in the railway sector market incumbent Deutsche Bahn AG. In the energy sector, concentration in the wholesale market is another crucial issue that Germany will need to tackle, including by fostering market integration with neighbouring countries as well as market entry of newcomers. A more systematic approach to tendering unprofitable transport services will be key in the railway sector. This Working Paper relates to the 2008 Economic Survey of Germany (www.oecd.org/eco/surveys/germany). <P>Récolter les fruits de l'accroissement de la concurrence dans les industries de réseau <BR>L'accroissement de la concurrence présente dans les secteurs énergétique et ferroviaire un fort potentiel de croissance accrue de la productivité et du bien-être des consommateurs. Le principal défi que doit relever l'Allemagne dans un proche avenir est l'affirmation plus marquée d'une séparation verticale entre les services d'accès aux réseaux et les services potentiellement concurrentiels. Il sera en particulier crucial de préparer la privatisation envisagée par l'État des participations qu'il détient dans Deutsche Bahn AG, opérateur historique du secteur ferroviaire. Dans le secteur de l'énergie, la concentration du marché de gros est un autre point essentiel que l'Allemagne devra traiter, notamment en favorisant l'intégration du marché avec les pays voisins et l'entrée de nouveaux acteurs. Dans le rail, il sera essentiel d'opter pour le recours plus systématique à des appels d'offres en matière de services de transport non rentables. Ce document de travail se rapporte à l’Étude économique de l’Allemagne 2008 (www.oecd.org/eco/etudes/allemagne). |
| Keywords: | network industries, industrie de réseau, Germany, Allemagne, consumption tax, corporate tax, electricity and gas markets, railways, tax expenditures, tax progressivity, marché de l’électricité et du gaz, chemins de fer |
| JEL: | L92 L94 L95 |
| Date: | 2008–08–05 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:622-en&r=eec |
| By: | Boeters, Stefan; Feil, Michael |
| Abstract: | Labour market reforms that are designed to stimulate labour supply at the lower end of the wage distribution can never be precisely restricted to affect only the target group. Spillovers to and feedback from other segments of the labour market are unavoidable and may counteract the direct effects of the reform. An adequate representation of heterogeneous labour markets becomes therefore an important issue for the assessment of reforms. We analyse the possible interactions between labour market segments in a combined, consistent microsimulation-AGE model with a flexible representation of substitution possibilities and different wage-forming regimes. We look at a stylised reform and find labour-demand cross-price elasticities between the low and medium skilled to be the main drivers of the results. Interaction with the high-skilled segment is less pronounced. |
| Keywords: | Applied general equilibrium model, microsimulation, discrete working time choice, heterogeneous labour markets, labour market reform |
| JEL: | D58 J22 J51 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:7353&r=eec |
| By: | Claus Schnabel (Chair of Labour and Regional Economics, Friedrich-Alexander-University Erlangen-Nuremberg); Joachim Wagner (Institute of Economics, Leuphana University of Lüneburg) |
| Abstract: | Using data from the social survey ALLBUS for West Germany in the period 1980 to 2006, this paper demonstrates that union members are on average older than non-unionized employees. The probability of being unionized shows the inverted U-shaped pattern in age conjectured by Blanchflower (BJIR 2007) only in very few years. It is demonstrated that both intra-cohort change and cohort replacement effects have played a roughly equal role in the substantial fall in union density since 1980. If older cohorts with high densities continue to be replaced by young cohorts with low densities, average union density will fall further. |
| Keywords: | union membership, union density, cohort effects, West Germany |
| JEL: | J51 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:93&r=eec |
| By: | Anne-Marie Brook |
| Abstract: | Globalisation, together with skill-biased technical change, is changing the composition of jobs in advanced economies and raising the level of skills required to do them. This has increased the importance of educating a large proportion of the population to much higher standards than in the past. The government in the United Kingdom has responded to this challenge by raising education spending and expanding the capacity of the education system in key areas such as pre-primary education and increasing participation in education beyond the age of 16. Nevertheless, performance on international tests of cognitive ability remains significantly below the standards of the best performing OECD countries and the education system seems to be particularly poor at ensuring good performance of pupils in the middle to bottom half of the education performance distribution. A renewed sense of urgency, together with some new approaches, is required to address the United Kingdom’s relative underperformance in literacy and numeracy. This paper proposes a number of avenues for encouraging a higher level of educational attainment, without significant further increases in expenditure. <P>Élever le niveau de formation et rompre le cycle de l’inégalité au Royaume-Uni <BR>La mondialisation, conjuguée à l’évolution technologique qui privilégie la main-d’oeuvre qualifiée, modifie la composition des emplois dans les économies avancées et entraîne un relèvement du niveau des qualifications requises pour les occuper. Aussi est-il aujourd’hui plus important d’amener une grande proportion de la population à un niveau de formation infiniment plus élevé que dans le passé. Pour relever ce défi, les pouvoirs publics au Royaume-Uni ont augmenté les dépenses d’éducation, renforcé les moyens dont dispose le système éducatif dans des secteurs clés tels que l’éducation pré-primaire, et prolongé la scolarisation au-delà de l’âge de 16 ans. Malgré cela, les résultats de ce pays aux tests internationaux d’aptitudes intellectuelles restent sensiblement inférieurs au niveau atteint par les pays de l’OCDE les plus performants et le système éducatif britannique semble avoir beaucoup de mal à faire en sorte que les élèves situés dans la moitié inférieure de la distribution des performances en éducation obtiennent de bons résultats. Une conscience redoublée de l’urgence et quelques nouvelles approches s’imposent pour remédier aux sous-performances relatives du Royaume-Uni dans la maîtrise de l’écrit et des chiffres. Cet ouvrage propose un certain nombre de pistes pour favoriser un relèvement du niveau d’instruction sans pour autant accroître encore notablement les dépenses. |
| Keywords: | United Kingdom, Royaume-Uni, education, éducation, financement, funding |
| JEL: | H52 H75 I20 I22 I28 |
| Date: | 2008–08–28 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:633-en&r=eec |
| By: | Sanromá, Esteve (University of Barcelona); Ramos, Raul (University of Barcelona); Simón, Hipólito (University of Alicante) |
| Abstract: | The existing literature on immigrant assimilation has highlighted the imperfect portability of human capital acquired by immigrants in their country of origin (Chiswick, 1978; Friedberg, 2000). This would explain the low levels of assimilation upon arrival in the new country, as well as the wide initial earnings gap. Recent studies (Chiswick and Miller, 2007 or Green, Kler and Leeves, 2007, among others) have dealt with this issue from the perspective of over-education. This study analyses the portability of immigrants’ human capital into the Spanish job market according to their geographic origin. It also aims to compare the most notable empirical regularities found in the aforementioned studies with the situation in Spain. The results obtained indicate differing degrees of the transferability of human capital depending on geographic origin, as transferability is greater for countries that are highly developed or have a similar culture or language and lower for developing countries and those with more distant cultures. The evidence is relatively disparate for the two components of human capital as although it is particularly clear for schooling, it is less so for experience. The results also confirm that in Spain immigrants suffer from over-education, in both incidence and intensity, implying a higher relative wage penalty and a greater negative impact on immigrants from the second group of countries. As an immigrant’s stay in Spain advances, a process of assimilation does exist, except for Asians and, in some circumstances, those from Sub-Saharan Africa, though the pace is very slow. |
| Keywords: | immigration, over-education, wages, assimilation |
| JEL: | J61 J31 J24 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3649&r=eec |
| By: | Jahn, Elke J. (Aarhus School of Business) |
| Abstract: | As a consequence of the rapid growth of temporary agency employment in Germany, the debate on the poor working conditions of temps, specifically their remuneration, has intensified recently. Using administrative data, the paper shows that the wage gap for German temp workers is rather large and varies between occupation and region. But temps already suffer from a marked wage decline before entering the temporary help sector. Nevertheless, temporary agency employment does not leave a long lasting scar. Two years after leaving the sector, temps no longer suffer from a wage penalty. A recent change in the law set a high incentive for temporary help agencies to pay their workers according to a sectoral collective agreement. Surprisingly, the unionization of the sector could not bring the widening wage gap to a halt. |
| Keywords: | temporary agency employment, wage differential, earnings, Germany, reform |
| JEL: | J30 J31 J42 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3663&r=eec |
| By: | Heli Koski |
| Abstract: | ABSTRACT : This study empirically explores whether the public financial support for entrepreneurial R&D affects employment growth at the firm level. The data from the Finnish companies suggests that the firms that have received public R&D funding have not generally witnessed any greater employment growth than other companies. However, we find that the public R&D support targeted to the certain types of R&D activities notably contribute to the creation of new jobs : employment in those firms that have received public funding for the R&D projects targeted to the new business areas has clearly grown relatively more than in other companies. The relationship between the firm’s total innovation and employment growth is not statistically significant. |
| Keywords: | Public R&D subsidies, technology policy, employment growth |
| JEL: | J23 L10 O33 O38 |
| Date: | 2008–08–20 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1143&r=eec |
| By: | Hany El Shamy (University of Surrey); Paul Temple (University of Surrey) |
| Abstract: | This paper considers the sources of technological change and productivity growth in the small firm sector of UK manufacturing over the period 1973- 2002, focusing on the mechanisms by which spillovers occur between the large firms which perform the bulk of R&D and smaller firms which are the recipients. It is argued that the current volume of domestic R&D generates profitable and high productivity opportunities for smaller firms. However this mechanism ignores the ways in which R&D also contributes to the more general knowledge base available to small firms as codified information which frequently takes the measurable form of industrial standards. A simple model of labour demand among small manufacturing is developed which employs two measures of technological activity intended to capture both these channels. A co-integrating relationship based upon an augmented labour demand equation is established for UK manufacturing, showing the relevance of both channels for the explanation of productivity growth in the small firm sector. |
| Keywords: | Key Words: Small firms; productivity; technological change; R&D; standards. |
| JEL: | J23 L25 L26 O32 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:sur:surrec:0708&r=eec |
| By: | Alexander Vogel (Leuphana Universität Lüneburg); Stefan Dittrich |
| Abstract: | Based on the yearly turnover tax statistics, the German turnover tax statistics panel allows for the first time detailed longitudinal analyses of nearly all economic sectors. In addition to turnover tax related variables, the dataset provides information about exports, imports and, due to the combination with the German business register (Unternehmensregister), information about employees liable to pay social insurance. The panel contains more than 4.3 million enterprises and 1.9 million of these are covered over the whole time period from 2001 to 2005. There is no other German statistics that covers nearly all economic sectors with such completeness. In the following we give an overview of the turnover tax statistics and the matching process (sections 2 and 3). Section 4 describes the variables included in the dataset and in section 5 examples of the research potential are presented. The paper closes with information about the way of data access (section 6). |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:92&r=eec |
| By: | Claus Brand (European Central Bank); Daniel Buncic (School of Economics, University of New South Wales); Jarkko Turunen (European Central Bank) |
| Abstract: | We use intraday changes in money market rates to construct indicators of news about monetary policy stemming separately from policy decisions and from official communication of the ECB, and study their impact on the yield curve. We show that communication may lead to substantial revisions in expectations of monetary policy and, at the same time, exert a significant impact on interest rates at longer maturities. Thereby, the maturity response pattern to communication is hump-shaped, while that to policy decisions is downward sloping. |
| Keywords: | money market rates; yield curve; ECB; central bank communication |
| JEL: | E43 E58 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:swe:wpaper:2008-11&r=eec |