|
on European Economics |
| By: | Carmen Martínez-Carrascal (Banco de España); Annalisa Ferrando (European Central Bank) |
| Abstract: | This paper analyses the impact that firms' financial position has on investment decisions using panel data from a large sample of non-financial corporations (around 120,000 firms) in six euro area countries (Belgium, Germany, France, Italy, the Netherlands and Spain). The results indicate that financial position is important to explain capital expenditures, as financial pressure appears relevant in explaining investment dynamics when it is proxied by cash flow, indebtedness and debt burden. The results also show differences in the sensitivity of investment rates to changes in financial pressure across countries, which appears to be especially large in the Netherlands and Italy and relatively small in Germany. |
| Keywords: | financial pressure, fixed investment, balance sheet channel, panel data |
| JEL: | C33 E22 G32 J23 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:0820&r=eec |
| By: | Filippo di Mauro (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Katrin Forster (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | Against the background of increasing competition and other significant structural changes implied by globalisation, maintaining and enhancing competitiveness has evolved into one of the prime concerns in most countries. Following up on previous work (see in particular ECB Occasional Papers No. 30 and No. 55), this Occasional Paper examines the latest developments and prospects for the competitiveness and trade performance of the euro area and the euro area countries. Starting from an analysis of most commonly used, traditional competitiveness indicators, the paper largely confirms the findings of previous studies that there have been substantial adjustments in euro area trade. Euro area firms have taken advantage of the new opportunities offered by globalisation, and have at the same time been increasingly challenged by emerging economies. This is primarily reflected in the loss of export market shares which have been recorded over the last decade. While these can partly be related to the losses in the euro area’s price competitiveness, further adjustment also seems warranted with regard to the export specialisation. Compared with other advanced competitors, the euro area remains relatively more specialised in labourintensive categories of goods and has shown only a few signs of a stronger specialisation in research-intensive goods. Nevertheless, the paper generally calls for a more cautious approach when assessing the prospects for euro area competitiveness, as globalisation has made it increasingly difficult to define and measure competitiveness. Stressing the need to take a broader view on competitiveness, specifically with a stronger emphasis on productivity performance, the paper also introduces a more elaborate framework that takes into account the interactions between country-specific factors and firm-level productivity. It thus makes it possible to construct more broadly defined competitiveness measures. Pointing to four key factors determining the global competitiveness of euro area countries – market accessibility, market size, technological leadership of firms and institutional set-up – the analysis provides further arguments for continuing efforts to increase market integration and strengthen the competitive environment within Europe as a mean of enhancing resource allocation and coping with the challenges globalisation creates. JEL Classification: F15, F43, O52 |
| Keywords: | Globalisation, competitiveness, productivity |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20080097&r=eec |
| By: | António Afonso (BCE - Banque Centrale Européenne - BCE); Christophe Rault (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR6221 - Université d'Orléans) |
| Abstract: | We use a 3-step analysis to assess the sustainability of public finances in the EU27. Firstly, we perform the SURADF specific panel unit root test to investigate the meanreverting behaviour of general government expenditures and revenues ratios. Secondly, we apply the bootstrap panel cointegration techniques that account for the time series and cross-sectional dependencies of the regression error. Thirdly, we check for a structural long-run equation between general government expenditures and revenues via SUR analysis. While results imply that public finances were not unsustainable for the EU panel, fiscal sustainability is an issue in most countries, with a below unit estimated coefficient of expenditure in the cointegration relation. |
| Keywords: | fiscal sustainability, EU, panel cointegration. |
| Date: | 2008–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00322086_v1&r=eec |
| By: | Jörg Döpke (University of Applied Sciences, Department Economics, Geusaer Strasse, 06217 Merseburg, Germany.); Jonas Dovern (Kiel Institute for the World Economy (IfW Kiel), Düsternbrooker Weg 120, 24105 Kiel, Germany.); Ulrich Fritsche (University Hamburg, Department of Economics and Politics and DIW Berlin, Von-Melle-Park 9, 20146 Hamburg, Germany.); Jiri Slacalek (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.) |
| Abstract: | We estimate the sticky information Phillips curve model of Mankiw and Reis (2002) using survey expectations of professional forecasters from four major European economies. Our estimates imply that inflation expectations in France, Germany and the United Kingdom are updated about once a year, in Italy about once each six months. JEL Classification: D84, E31. |
| Keywords: | Inflation expectations, sticky information, Phillips curve, inflation persistence. |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20080930&r=eec |
| By: | Javier J. Pérez (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Diego J. Pedregal (Universidad de Castilla-la-Mancha, Real Casa de La Misericordia, Calle Altagracia, 50, 13003 Ciadad Real, Spain.) |
| Abstract: | We use a newly available dataset of euro area quarterly national accounts fiscal data and construct multivariate, state-space mixed-frequencies models for the government deficit, revenue and expenditure in order to assess its information content and its potential use for fiscal forecasting and monitoring purposes. The models are estimated with annual and quarterly national accounts fiscal data, but also incorporate monthly information taken from the cash accounts of the governments. The results show the usefulness of our approach for real-time fiscal policy surveillance in Europe, given the current policy framework in which the relevant official figures are expressed in annual terms. JEL Classification: C53, E6, H6. |
| Keywords: | Fiscal policies, Mixed frequency data, Forecasting, Unobserved Components Models, State Space, Kalman Filter. |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20080937&r=eec |
| By: | Jukka Jalava (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Ilja Kristian Kavonius (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.) |
| Abstract: | The present System of National Accounts (SNA93) treats durable consumption goods as consumption goods rather than investment although rentals for owner occupied households is imputed into GDP. We argue that households de facto treat the purchase of durable goods as investments and thus, the treatment of durables as capital assets conceptually does not differ from the present treatment of owner occupied dwellings. This is not captured by the economic analysis based on current statistical conventions. The purpose of this paper is to estimate the effect of durable goods and ICT on euro area economic growth and productivity change; when expenditure on consumer durables is recorded as capital investment. The capitalization of consumer durables impacts both the levels and growth rates of the capital stock, productivity and GDP. Our growth accounting computations demonstrated that the capital services of durables contributed one-tenth of economic growth and one-eight of labour productivity growth in 1995-2004. ICT's impacts were larger, i.e., one-fifth of GVA growth and one-sixth of labour productivity growth. JEL Classification: E01, E21, E22, J24, O11. |
| Keywords: | durable good, asset, productivity, ICT, technological transformation, user cost, household production. |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20080940&r=eec |
| By: | Filippo di Mauro (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Rasmus Rueffer (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Irina Bunda (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | In addition to its direct effects on the global trading and production structure, the ongoing process of globalisation may have important implications for the interaction of exchange rates and the overall economy. This paper presents evidence regarding possible changes in the role of exchange rates in a more globalised economy. First, it analyses the link between exchange rates and prices, showing that there is at most a moderate decline in exchange rate pass-through for the euro area. Next, it turns to the effect of exchange rate changes on trade flows. The findings indicate that the responsiveness of euro area exports to exchange rate changes may have declined somewhat as a result of globalisation, reflecting mainly shifts in the geographical and sectoral composition of trade flows. The paper also provides a firm-level analysis of the impact of exchange rate changes on corporate profits, which suggests that overall this relationship appears to be relatively stable over time, although there are important crosscountry differences. In addition, it studies the overall impact of exchange rates on GDP and the potential role of valuation effects as a transmission channel in the case of the euro area. JEL Classification: E3, F15, F31. |
| Keywords: | Globalisation, exchange rate, trade exchange rate pass-through, valuation effects. |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20080094&r=eec |
| By: | David G. Mayes (Bank of Finland); María J. Nieto (Banco de España); Larry Wall (Federal Reserve Bank of Atlanta) |
| Abstract: | This paper presents a stylized mechanism aimed at dealing with the cross border agency problems that arise in supervising and resolving cross border banking groups in the European Union (EU). The authors assume that PCA policies have been implemented by the national supervisors and explore the institutional changes needed in Europe if PCA is to be effective as an incentive compatible mechanism. The paper identifies these changes starting with enhancements in the availability of information on banking groups to supervisors. Next, the paper considers the collective decision making by supervisors with authority to make discretionary decisions within the PCA framework as soon as a bank of a cross border banking group falls below the minimum capital standard. Finally, the paper analyzes the coordination measures that should be implemented if PCA requires the bank to be resolved. |
| Keywords: | banking supervision, European Union, Prompt Corrective Action |
| JEL: | G28 K23 F20 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:0819&r=eec |
| By: | Karen Crabbé; Hylke Vandenbussche |
| Abstract: | Corporate tax rates in Europe have been falling rapidly; as a consequence tax competition within the EU is fiercer than in the rest of the OECD. This paper analyzes heterogeneity in corporate tax rate changes between EU-15 countries as a function of the proximity to the EU-10 new member states. The average corporate tax rate in the new member states has always been considerably lower than the average in the EU-15 countries. Their entry into the EU eliminated capital barriers, in principle allowing firms to locate in one of the new EU-10 with full access to the European Market. Our results indicate that EU-15 countries physically closer to Central-Europe experienced more tax competition. Next we use a spatial regression framework to more formally test the hypothesis that distance to a low tax region affects countries' tax reaction functions. |
| Keywords: | Spatial tax competition, Corporate taxes, fiscal reaction function |
| JEL: | H25 H77 H39 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:lic:licosd:21608&r=eec |
| By: | Gianluca Cafiso (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.) |
| Abstract: | This paper assesses the Euro’s influence upon European trade by estimating two different indicators. The first is the so-called “Rose Effect”, while the second is the “Border Effect”. The former measures how much a country within a currency union trades more with its partners than with non-member countries, the latter measures the integration of a country with its trade partners. This study of the Euro’s influence by means of the Border Effect is a novelty in the literature, it reveals that the Euro’s influence upon trade is not so clear as papers focused only on the Rose Effect claim. This casts doubts about the consequences of the Euro introduction for the European Single Market. Both indicators are estimated by means of a gravity model for bilateral trade flows using a panel of manufacture exports among twenty-four OECD countries. JEL Classification: F10, F14, F15. |
| Keywords: | Euro, European Integration, Trade, Rose Effect, Border Effect. |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20080941&r=eec |
| By: | Tol, Richard S. J. (Economic and Social Research Institute (ESRI)) |
| Abstract: | The current EU proposal on greenhouse gas emission reduction has 28 targets for 2020: an EU-wide one for carbon dioxide emissions covered by the European Trading System, and one target for non-ETS emission per Member State. Implementation is necessarily more expensive than needed. I consider three alternative proposals to reduce costs. In the Irish proposal, Member States can purchase ETS permits to offset excess non-ETS emissions. In the Polish proposal, Member States can sell excess non-ETS emissions in the ETS. In the Swedish proposal, Member States can trade their non-ETS allocations. I compare these three alternatives to the default policy (no flexibility outside the ETS) and to the cost-effective solution (full flexibility). I calibrate a simple model to the results of the impact assessment of the European Commission. This reveals that European Commission did not fully disclose all details, and that odd assumptions were made. In the case of three Member States, the non-ETS allocation exceeds the projected emissions. The results show that the alternative flexibility mechanisms would be used to only a limited extent, but would help to suppress the costs of meeting the target. The Swedish and Polish proposals come closest to the cost-effective solution as full use is made of the hot air in the non-ETS system. The Irish proposal performs best if there are negative surprises in either the cost of non-ETS emission reduction or non-ETS emission projections. |
| Keywords: | Climate change; Emissions trade; European Union |
| JEL: | Q54 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp256&r=eec |
| By: | Koskela, Erkki (University of Helsinki); Poutvaara, Panu (University of Helsinki) |
| Abstract: | In European Welfare States, unskilled workers are typically unionized, while the wage formation of skilled workers is more competitive. To focus on this aspect, we analyze how flexible international outsourcing and labour taxation affect wage formation, employment and welfare in dual domestic labour markets. Higher productivity of outsourcing, lower cost of outsourcing and lower factor price of outsourcing increase wage dispersion between the skilled and unskilled workers. Increasing wage tax progression of unskilled workers decreases the wage rate and increases the labour demand of unskilled workers. It decreases the welfare of unskilled workers and increases both the welfare of skilled workers and the profit of firms. |
| Keywords: | flexible outsourcing, dual labour market, impacts of labour taxation, welfare state |
| JEL: | E24 H22 J21 J31 J51 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3699&r=eec |
| By: | Oberndorfer, Ulrich |
| Abstract: | This paper constitutes – to our best knowledge – the first econometric analysis on stock market effects of the EU Emission Trading Scheme (EU ETS). Our results suggest that EU Emission Allowance (EUA) price developments matter to the stock performance of electricity firms: EUA price changes and stock returns of the most important European electricity corporations are shown to be positively related. This effect does not work asymmetrically, so that stock markets do not seem to react differently to EUA appreciations in comparison to depreciations. The carbon market effect is shown to be both time- and countryspecific: It is particularly strong for the period of EUA market shock in early 2006, and differs with respect to the countries where the electricity corporations analysed are headquartered. Stock market reactions to EUA volatility could not be shown. Dieses Papier untersucht die Aktienmarkteffekte von Preisentwicklungen auf dem Markt für Emissionszertifikate im Rahmen des Europäischen Emissionshandelssystems (EU ETS). Die Analyse fokussiert dabei auf die Aktienmarktperformance des europäischen Elektrizitätssektors, der gemessen an CO2-Emissionen größten Branche im EU ETS. Nach unseren Ergebnissen spielt der Zertifikatmarkt eine wichtige Rolle für die Aktienentwicklungen der analysierten Elektrizitätsfirmen. Ein Anstieg des Zertifikatpreises sorgt für Kursgewinne bei den Aktien der Elektrizitätsfirmen aus fast allen europäischen Ländern. Hingegen scheint die Volatilität der Emissionsrechte entgegen anderslautender Erwartungen nicht auf die Aktienkursentwicklung der untersuchten Unternehmen zu wirken. |
| Keywords: | EU ETS, electricity stocks, asset pricing |
| JEL: | C13 G12 Q43 Q48 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:7382&r=eec |
| By: | Anneli Kaasa; Maaja Vadi |
| Abstract: | Culture is deemed to be a crucial basis for innovation in various respects. The aim of this paper is to explore the relationships between different cultural dimensions introduced by Hofstede (2001) and the capability of initiating innovation measured by the number of patent applications using the sample of European countries at the regional level. As a novel approach, instead of using Hofstede’s original index scores, the measures for the cultural dimensions are based on the European Social Survey (ESS). We have learned that to be successful in patenting, a region should have power distance, uncertainty avoidance, family-related collectivism (as opposed to friend-related and organisation-related collectivism) and lower than average masculinity. In addition, the negative relationships between these cultural dimensions and patenting are stronger when there is a higher patenting intensity. However, culture alone does not serve as a guarantee for a high level of patenting intensity. |
| Keywords: | innovation, culture, Europe |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:mtk:febawb:63&r=eec |
| By: | Jean-François Giret (IREDU - Institut de recherche sur l'éducation : Sociologie et Economie de l'Education - CNRS : UMR5225 - Université de Bourgogne); Christine Guégnard (IREDU - Institut de recherche sur l'éducation : Sociologie et Economie de l'Education - CNRS : UMR5225 - Université de Bourgogne); Jean-Jacques Paul (IREDU - Institut de recherche sur l'éducation : Sociologie et Economie de l'Education - CNRS : UMR5225 - Université de Bourgogne) |
| Abstract: | Étudier le début de carrière des jeunes diplômés, femmes et hommes, sur les différents marchés du travail européens peut permettre de mieux saisir les évolutions récentes dans chaque pays et des tendances communes au niveau européen. Notre démarche repose sur l’enquête REFLEX (Research into Employment and Professional Flexibility) réalisée auprès de 40 000 jeunes cinq ans après la fin de leurs études, dont 60 % de femmes, diplômé-e-s en 2000 de l’enseignement supérieur, dans 15 pays européens : Allemagne, Autriche, Belgique (Flandres), Espagne, Estonie, Finlande, France, Italie, Norvège, Pays-Bas, Portugal, Royaume-Uni, République tchèque, Suède, Suisse. L’intérêt de cette communication est de comparer l’accès aux emplois des femmes et des hommes dans divers pays d’Europe, au regard des compétences acquises lors de leurs études ou de leurs premières années de vie active. Centrer l’analyse sur leurs situations professionnelles, observées cinq ans après la fin des études, ainsi que leurs perceptions quant à leurs expériences professionnelles, leurs compétences est d’autant plus intéressant qu’une différenciation sexuée des modalités d’accès au marché du travail se développe, plus ou moins accentuée selon le pays. Notre communication se divisera en deux parties. La première synthétisera les principales différences entre les débuts des trajectoires féminines et masculines sur les marchés du travail européens. La seconde partie se focalisera sur une analyse économétrique des disparités de rémunération selon le genre, à partir de méthodes de décomposition des écarts salariaux. |
| Keywords: | Genre ; Valorisation ; Compétence ; Marché du travail ; Europe ; Différenciation sexuelle ; Diplômé de l'enseignement supérieur ; Emploi des diplômés |
| Date: | 2008–06–19 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00324236_v1&r=eec |
| By: | Carlos Thomas (Banco de España); Francesco Zanetti (Bank of England) |
| Abstract: | This paper studies the effect of labor market reform, in the form of reductions in firing costs and unemployment benefits, on inflation volatility. With this purpose, we build a New Keynesian model with search and matching frictions in the labor market, and estimate it using Euro Area data. Qualitatively, changes in labor market policies alter the volatility of inflation in response to shocks, by affecting the volatility of the three components of real marginal costs (hiring costs, firing costs and wage costs). Quantitatively, we find however that neither policy is likely to have an important effect on inflation volatility, due to the small impact of changes in the volatility of the labor market on inflation dynamics. |
| Keywords: | Labor market policies, Search and matching frictions, New Keynesian model |
| JEL: | E31 E32 J64 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:0818&r=eec |
| By: | Nicolas Sirven (IRDES institut for research and information in health economics); Brigitte Santos-Eggimann (IUMSP Institute of Social and Preventive Medicine, University of Lausanne); Jacques Spagnoli (IUMSP Institute of Social and Preventive Medicine, University of Lausanne) |
| Abstract: | The aim of this paper is to measure and to correct for the potential incomparability of responses to the SHARE survey on health care responsiveness. A parametric approach based on the use of anchoring vignettes is applied to cross-sectional data (2006-07) in ten European countries. More than 6,000 respondents aged 50 years old and over were asked to assess the quality of health care responsiveness in three domains: waiting time for medical treatment, quality of the conditions in visited health facilities, and communication and involvement in decisions about the treatment. Chopit models estimates suggest that reporting heterogenity is influenced by both individual (socio-economic, health) and national characteristics. Although correction for differential item functioning does not considerably modify countries ranking after controlling for the usual covariates, about two thirds of the respondents' self-assessments have been re-scaled in each domain. Our results suggest that reporting heterogenity tends to overestimate health care responsiveness for "time to wait for treatment", whereas it seems to underestimate people's self-assessment in the two other domains. |
| Keywords: | Anchoring Vignettes, Cross-Country Comparison, Chopit Model |
| JEL: | I11 C81 C42 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:irh:wpaper:dt15&r=eec |
| By: | Adeline Delavande; Susann Rohwedder |
| Abstract: | Estimates of differential mortality by socioeconomic status play an important role in several domains: in public policy for assessing distributional effects of public programs; in financial markets for the design of life insurance and annuities; and in individual decision making when figuring out how much to save for retirement. Traditionally, reliable estimates of differential mortality require rich panel data with large sample size. This paper proposes a new, less data-intensive approach relying on just a single cross-section of data. Rather than using observations on actual mortality in panel over time, the authors propose relating individuals' subjective probabilities of survival to variables of socioeconomic status in cross-section. They formulate the method in a model of survey response and provide an empirical validation based on data from the Health and Retirement Study comparing the alternative estimates to the traditional estimates of differential mortality for the same sample of baseline respondents. They present two applications. First, they document an increase in differential mortality in the U.S. over time, and second, they produce comparable estimates of differential mortality for 10 European countries and the U.S. based on subjective probabilities of survival. |
| JEL: | J10 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:ran:wpaper:613&r=eec |
| By: | Antonelli Cristiano (University of Turin); Patrucco Pierpaolo (University of Turin); Quatraro Francesco (University of Turin) |
| Abstract: | The paper investigates the effects of agglomeration and specialization of technological activities on regional productivity growth,applying the notion of pecuniary knowledge externalities. The latter are indirect interdependencies between firms mediated by the price system. Pecuniary knowledge externalities enable to appreciate both the positive and negative effects associated with the regional concentration of knowledge generating activities. Our analysis leads to specify the hypothesis of an inverted U-shaped relationship between the agglomeration of innovation activities and productivity growth. The empirical investigation, based upon 138 European regions in the years 1996 through 2003, supports the hypothesis that agglomeration yields diminishing positive net effects beyond a maximum. The homogeneity of knowledge generating activities however reduces absorption costs and hence rises the net benefits at each agglomeration level. |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:uto:labeco:200803&r=eec |
| By: | Juan Carlos Cuestas; Barry Harrison |
| Abstract: | In this paper we provide an insight into the inflation dynamics in a panel of Central and Eastern European countries. These countries are selected because of their increasing importance in the EU and their likely increased future importance in monetary policy decisions inside the euro area. By means of unit root testing and allowing for the possibility of a smooth asymmetric adjustment to equilibrium, we show that inflation rates in more than half of the countries investigated are stationary processes. Our results imply evidence against the persistence hypothesis for them. |
| Keywords: | Inflation persistence, Unit roots, Nonlinearities |
| JEL: | C22 E31 E32 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbs:wpaper:2008/13&r=eec |
| By: | Imre Ferto (Institute of Economics, Hungarian Academy of Sciences); Károly Attila Soos (Institute of Economics, Hungarian Academy of Sciences) |
| Abstract: | The article analyses the duration of exports of individual products of former communist countries to the enlarged European Union (EU25) employing survival analysis. The results show that the duration of trade differs across EU10 and EU15 markets, for the majority of countries the length of trade is higher in EU10 markets than in the EU15 markets. The estimations suggest that differentiated products are traded for more extended periods than homogenous products. In addition, trade relationships starting with large initial sales are more likely to survive the observed five year period than those starting with small values. Finally, the estimations are robust to both markets segments. |
| Keywords: | trade, former communist countries, EU |
| JEL: | F10 F14 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:0816&r=eec |
| By: | Thierry Bracke (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); André Geis (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Maurizio Habib (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Csaba Móré (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Éva Katalin Polgár (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Adalbert Winkler (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Emidio Cocozza (Banca d'Italia, Via Nazionale 91,I-00184 Rome, Italy.); Peter Backé (Oesterreichische Nationalbank (OeNB), Otto-Wagner-Platz 3, PO Box 61, A-1011 Vienna, Austria.) |
| Abstract: | This paper reviews financial stability challenges in the EU candidate countries Croatia, Turkey and the former Yugoslav Republic of Macedonia. It examines the fi nancial sectors in these three economies, which, while at very different stages of development and embedded in quite diverse economic settings, are all in a process of rapid financial deepening. This manifests itself most clearly in the rapid pace of growth in credit to the private sector. This process of financial deepening is largely a natural and welcome catching-up phenomenon, but it has also increased the credit risks borne by the banking sectors in the three economies. These credit risks are compounded by the widespread use of foreign currency-denominated or -indexed loans, leaving unhedged bank customers exposed to potential swings in exchange rates or foreign interest rates. Moreover, these financial risks form part of a broader nexus of vulnerabilities in the economies concerned, in particular the external vulnerabilities arising from increasing private sector external indebtedness. That said, the paper also fi nds that the authorities in the three countries have taken several policy actions to reduce these fi nancial and external vulnerabilities and to strengthen the resilience of the financial sectors. JEL Classification: F32, F41, G21, G28. |
| Keywords: | Europe, banking sector, vulnerability indicators, capital inflows, emerging markets. |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20080095&r=eec |
| By: | Olena Havrylchyk; Emilia Jurzyk |
| Abstract: | Using a combination of propensity score matching and difference-in-difference techniques we investigate the impact of foreign bank ownership on the performance and market power of acquired banks operating in Central and Eastern Europe. This approach allows us to control for selection bias as larger but less profitable banks were more likely to be acquired by foreign investors. We show that during three years after the takeover, banks have become more profitable due to cost minimization and better risk management. They have additionally gained market share, because they passed their lower cost of funds to borrowers in terms of lower lending rates. Previous studies failed to pick up the improvements in performance of takeover banks, because they did not account for the performance of financial institutions before acquisitions. |
| Keywords: | Foreign banks; foreign acquisition; propensity score matching |
| JEL: | G15 G21 G34 F36 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2008-16&r=eec |
| By: | Blanchflower, David G. (Dartmouth College); Lawton, Helen (Bank of England) |
| Abstract: | We examine the impact on the UK of the influx of workers from Eastern Europe. We look at the characteristics of the workers who have come to the UK since 2004. We also use data from a number of Eurobarometers 2004-2007 as well as the 2005 Work Orientation module International Social Survey Programme to look at the attitudes of residents of these countries. East Europeans report that they are unhappy with their lives and the country they live in, are dissatisfied with their jobs and would find difficulties in finding a new job or keeping their existing job. Relatively high proportions express a desire to move abroad. Expectations for the future for both their economy and their personal situations remain low but have improved since 2004. There has been some deterioration in the availability of jobs in the UK economy as the economy moves into recession. The UK is an attractive place to live and work for these workers. We argue that rather than dissipate, flows to the UK could remain strong well into the future. |
| Keywords: | EU expansion, migration, attitudes |
| JEL: | J61 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3695&r=eec |
| By: | Böhlmark, Anders (SOFI, Stockholm University); Lindahl, Mikael (Uppsala University) |
| Abstract: | This paper evaluates general achievement effects of choice and competition between private and public schools at the nine-year school level by assessing a radical voucher reform that was implemented in Sweden in 1992. Starting from a situation where the public schools essentially were monopolists on all local school markets, the degree of privatization has developed very differently across municipalities over time as a result of this reform. We estimate the impact of an increase in private enrolment on short, medium and long-term educational outcomes of all pupils using within-municipality variation over time, and control for differential pre-reform and concurrent municipality trends. We find that an increase in the private school share moderately improves short-term educational outcomes such as 9th-grade GPA and the fraction of students who choose an academic high school track. However, we do not find any impact on medium or long-term educational outcomes such as high school GPA, university attainment or years of schooling. We conclude that the first-order short-term effect is too small to yield lasting positive effects. |
| Keywords: | private schooling, choice, competition, educational achievement |
| JEL: | I22 I28 H40 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3691&r=eec |