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on European Economics |
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Issue of 2008‒12‒21
thirteen papers chosen by Giuseppe Marotta University of Modena and Reggio Emilia |
| By: | Gabriele Galati; Steven Poelhekke; Chen Zhou |
| Abstract: | Survey evidence indicates that inflation expectations increased after HICP inflation rose markedly in the course of 2007 and the first half of 2008, underpinning a general view that inflation expectations may have become unanchored from the ECB's target. However, until now there has been no formal test of whether this has in fact been the case. We fill this gap by testing the reaction of financial market-based measures of long-term expectations inflation expectations to news about inflation and other macroeconomic variables in the main euro area economies. If long-term inflation expectations are anchored, they should not react to the arrival of news. We find evidence that long-term inflation expectations have started to drift away from the ECB's anchor in the course of 2007.  |
| Keywords: | ECB; euro-area inflation and inflation compensation; anchors for expectations; news announcements.  |
| JEL: | E44 E52 E58 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:191&r=eec |
| By: | Konstantin Kholodilin (DIW Berlin, Germany); Alberto Montagnoli (University of Stirling, Stirling, UK); Oreste Napolitano (Parthenope University of Naples, Napoli, Italy); Boriss Siliverstovs (KOF Swiss Economic Institute, ETH Zurich, Switzerland) |
| Abstract: | This paper analyzes the response of the European stock markets to the monetary policy shocks by the European Central Bank using the heteroskedasticity based approach of Rigobon (2003). We find that monetary policy tightening has a heterogeneous impact on the Euro Area sectors on the day the monetary policy is publicly announced. Furthermore, we provide statistical evidence against the use of the popular event study approach when assessing the impact of monetary policy shocks on the stock market as the maintained assumptions can be rejected for the aggregate stock market and for most of the sectoral stock market indexes. |
| Keywords: | Monetary policy, Stock markets, ECB |
| JEL: | E44 E47 E52 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:kof:wpskof:08-213&r=eec |
| By: | Balázs Égert; Ronald MacDonald |
| Abstract: | This paper surveys recent advances in empirical studies of the monetary transmission mechanism (MTM), with special attention to Central and Eastern Europe (CEE). Our results indicate that the strength of the exchange rate pass-through substantially declined over time mainly due to a fall in inflation rates and to some extent due to the so-called composition effect. The asset price channel is weak and is likely to remain weak because of shallow stock and private bond markets and because of low stock and bond holdings of domestic household. House prices may become an exception with higher levels mortgage lending and with high owner occupancy ratios. While the credit channel could be a powerful channel of monetary transmission - as new funds raised on capital markets are close to zero in CEE - it is actually not, as both commercial banks and non-financial corporations can escape domestic monetary conditions by borrowing from their foreign mother companies. The moderately good news is, however, that those banks and firms are influenced by monetary policy in the euro area because their parent institutions are themselves subjected to the credit channel in the euro area. <P>Canaux de transmission de la politique monétaire dans les PECO: une revue de la littérature <BR>Ce papier vise à synthétiser la littérature empirique portant sur le mécanisme de transmission monétaire, et tout particulièrement dans les pays d’Europe centrale et orientale (PECO). Cette étude montre que l’effet du taux de change sur l’inflation a diminué au cours du temps principalement en raison de la baisse des taux d’inflation, mais aussi dans une certaine mesure suite à un effet dit de composition. Le canal des prix d’actifs est faible et le restera probablement en raison des marchés d’actions et de titres obligataires privés peu développés, mais aussi à cause d’un faible taux de détention d’actifs financiers par les ménages. En revanche, avec l’accroissement du nombre de prêts immobiliers et de ménages propriétaires de leur appartements, les prix immobiliers peuvent jouer un rôle plus important à l’avenir. Même si le canal du crédit devrait être un des canaux de transmission les plus puissants, sachant que le financement externe sur les marchés est quasiment nul dans les PECO, tel n’est pas le cas pour autant. La raison en est que les banques commerciales mais aussi les entreprises peuvent échapper aux conditions monétaires nationales par le biais de financements obtenus auprès de leurs maisons mères implantées à l’étranger. La nouvelle quelque peu encourageante est que les entreprises mères sont elles-mêmes contraintes par la politique monétaire de la zone euro, exportant ainsi les effets du canal du crédit dans les PECO. |
| Keywords: | monetary transmission mechanism, asset prices, Central Europe, interest rate, credit channel, canal du crédit |
| JEL: | E31 E51 E58 F31 O11 P20 |
| Date: | 2008–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:654-en&r=eec |
| By: | Rinaldo Brau; Raffaele Doronzo; Carlo V. Fiorio; Massimo Florio |
| Abstract: | The paper offers an exploratory empirical analysis of the impact on consumers’ welfare of the reforms of the gas industry in EU-15 area. After considering the key features of the natural gas industry and of its reform in selected countries, we study the relationship between regulatory reform indicators and price dynamics by means of panel data techniques. We find that none of the relationships between price dynamics and regulatory reform indicators is robust to different econometric specifications. Our findings suggest that until now there is limited evidence of beneficial effects of a standard package gas industry reforms for the European consumers. Country specific factors and price inertia seem to be more important than the reforms as determinants of consumers’ prices. |
| Keywords: | Natural gas industry, privatization, liberalization, regulatory reform. |
| JEL: | L32 L33 L95 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:200816&r=eec |
| By: | Stavarek, Daniel |
| Abstract: | This paper estimates the exchange market pressure (EMP) in four Central European countries (Czech Republic, Hungary, Poland, Slovakia) over the period 1993-2006. Therefore, it is one of very few studies focused on this region and the very first paper applying concurrently model-dependent as well as model-independent approach to the EMP estimation on these countries. The results obtained suggest that the approaches lead to inconsistent findings. They often differ in identification of the principal development trends as well as magnitude and direction of the pressure. The paper provides evidence that a shift in the exchange rate regime towards the quasi-fixed ERM II should not stimulate EMP to grow. However, it is highly probable that some episodes of the excessive EMP will make the fulfillment of the exchange rate stability criterion more difficult in all countries analyzed. |
| Keywords: | Exchange Market Pressure; Model-dependent Approach; Model-independent Approach; European Union; Euro-candidate Countries |
| JEL: | C32 E42 F31 F36 |
| Date: | 2008–11–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:12079&r=eec |
| By: | Philip Ducaju (National Bank of Belgium, Research Department); Erwan Gautier (Banque de France); Daphné Momferatou (European Central Bank); Mélanie Ward-Warmedinge (European Central Bank) |
| Abstract: | This paper presents information on wage-bargaining institutions, collected for 23 European countries, plus the US and Japan using a standardised questionnaire. Our data provide information from the years 1995 and 2006, for four sectors of activity and the aggregate economy. The main findings include a high degree of regulation in wage-setting in most countries. Although union membership is limited in many of them, union coverage is high and almost all countries also have some form of national minimum wage. Most countries negotiate wages on several levels, the sectoral level still being the most dominant, with an increasingly important role for bargaining at the individual firm level. The average length of collective bargaining agreements is found to lie between one and three years. Most agreements are strongly driven by developments in prices and eleven of the countries surveyed have some form of indexation mechanism which affects wages. Cluster analysis identifies three country groupings of wage-setting institutions |
| Keywords: | wage bargaining, institutions, indexation, coverage, trade union membership, contract length |
| JEL: | J31 J38 J51 J58 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:200812-3&r=eec |
| By: | Yiagadeesen Samy (Department of Economics, Carleton University); Vivek H. Dehejia (Department of Economics, Carleton University & CESifo) |
| Abstract: | Using a gravity model, we examine whether labor standards are important determinants of bilateral export performance for EU-15 countries over the period 1988-2001. We assess the conventional wisdom that countries with low labor standards and less stringent regulations have performed better in terms of trade performance and use a panel data set in a triple-indexed gravity model to conduct our empirical investigation. Our empirical results indicate that labor standards matter, but that the conventional wisdom does not always hold. The standard variables used in gravity equations conform to theoretical expectations and are highly significant. |
| Keywords: | international trade, labor standards, gravity equation |
| JEL: | F13 F14 F15 |
| Date: | 2008–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:car:carecp:08-08&r=eec |
| By: | Christian Schmitt |
| Abstract: | This paper investigates the impact of unemployment on the propensity to start a family. Unemployment is accompanied by bad occupational prospects and impending economic deprivation, placing the well-being of a future family at risk. I analyze unemployment at the intersection of state-dependence and the reduced opportunity costs of parenthood, distinguishing between men and women across a set of welfare states. Using micro-data from the European Community Household Panel (ECHP), I apply event history methods to analyze longitudinal samples of first-birth transitions in France, Finland, Germany, and the UK (1994-2001). The results highlight spurious negative effects of unemployment on family formation among men, which can be attributed to the lack of breadwinner capabilities in the inability to financially support a family. Women, in contrast, show positive effects of unemployment on the propensity to have a first child in all countries except France. These effects prevail even after ontrolling for labour market and income-related factors. The findings are pronounced in Germany and the UK where work-family conflicts are the cause of high opportunity costs of motherhood, and the gender-specific division of labour is still highly traditional. Particularly among women with a moderate and low level of education, unemployment clearly increases the likelihood to have a first child. |
| Keywords: | family formation, fertility, unemployment, cross-national comparison |
| JEL: | J13 J24 J64 C41 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp841&r=eec |
| By: | Francesco Testa (Scuola Superiore Sant'Anna of Pisa); Fabio Iraldo (Scuola Superiore Sant'Anna of Pisa & IEFE – Institute for Environmental and Energy Policy and Economics, Bocconi University; Scuola Superiore Sant'Anna of Pisa & IEFE – Institute for Environmental and Energy Policy and Economics, Bocconi University) |
| Abstract: | The EMAS Regulation (Reg 761/01 EC) is an EU scheme for the implementation of an Environmental Management System (EMS) by any organization, implemented by the European Commission since the year 1993. The EMS has been originally proposed both by the European Commission and by ISO as the frontrunner of a series of policy tools that were conceived to enable companies to simultaneously pursue environmental objectives and competitive targets (in a synergetic way). Based on the unique dataset of the EVER project, this paper investigates whether or not an EMS implemented within the EMAS Regulation has an effect on firm performance both from an environmental and a competitive point of view. The econometric analysis shows a positive impact of well-designed environmental management system on environmental performance and, as a consequence, on technical and organizational innovations. Effects on other competitive variable as market performance, resource productivity and intangible asset are not strongly supported |
| Date: | 2008–12–12 |
| URL: | http://d.repec.org/n?u=RePEc:sse:wpaper:200804&r=eec |
| By: | Damien Broussolle (Laboratoire de Recherche en Gestion et Economie, Institut d'Etudes Politiques, Strasbourg) |
| Abstract: | The paper focuses on the impact of the Full Market Opening in postal services especially on prices. The paper first summons up the specificities of the sector and the deregulation implemented so far. The paper then studies the consequences on separated prices and the survival of the historical operator of market opening. It seems that after a first period of effective competition, with a change in the price structure, the market could reach a new steady equilibrium. |
| Keywords: | Postal services, deregulation. |
| JEL: | L87 R11 L43 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:lar:wpaper:2008-22&r=eec |
| By: | Menzie Chinn (Wisconsin University); Jeffrey Frankel (Harvard University) |
| Abstract: | Evro je izrastao u kredibilnog potencijalnog konkurenta dolaru kao vodećoj međunarodnoj valuti, baš kao što je dolar pretekao britansku funtu pre 70 godina. Ovaj rad koristi ekonometrijski ocenjene determinante udela najvažnijih valuta u deviznim rezervama svetskih banaka širom sveta. Značajni faktori su: veličina zemlje, stopa prinosa, i likvidnost relevantnog domaćeg finansijskog centra (merena obrtom na deviznom tržištu). Postoji prelomni trenutak, ali promene se osećaju tek znatno kasnije (ocena pondera na prošlogodišnji valutni udeo je otprilike 0.9). Van uzorka, naš model je precizno predvideo smanjenje jaza između dolara i evra u periodu od 1999. do 2007. godine. Rad ažurira ove kalkulacije u pogledu budućih scenarija. Isključujemo scenario po kom se Velika Britanija priključuje evrozoni. Međutim, uzimamo u obzir da je London ipak postao de facto finansijski centar evra, više nego Frankfurt. Takođe uzimamo za pretpostavku da dolar nastavlja depresijaciju po trend stopi koju je u proseku pokazao u poslednjih 20 godina. |
| Keywords: | Devizno tržište, Evro, Dolar, Rezervna valuta |
| JEL: | E32 R10 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:voj:wpaper:1&r=eec |
| By: | Ruud Vermeulen |
| Abstract: | This paper examines corporate credit risks in the Netherlands at the industry-level, addressing two key questions. First, to what extent are corporate credit risks driven by idiosyncratic financial factors or systematic macroeconomic factors? Second, did debt financing in the late 1990s indeed push a large number of firms into bankruptcy in the subsequent years? To this end, bankruptcy rates are regressed on a number of industry-specific financial ratio's and macroeconomic variables in a panel-regression framework covering six industries from 1992 to 2005. I find that an industry's bankruptcy rate rises with an increase in leverage and a decrease in profitability and liquidity. Adding macroeconomic variables shows that lower GDP growth, higher interest rates, and an appreciating currency raise credit risks. Applying a model with parameter heterogeneity illustrates that systematic factors primarily account for the overall rise in bankruptcy rates between 2000 and 2003, but that idiosyncratic factors dominate in the worst-affected industries. This includes the IT industry where the build-up of debt was most pronounced and compounded losses. |
| JEL: | E44 E52 E58 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:190&r=eec |
| By: | Martin Andersson (Centre of Excellence for Science and Innovation Studies (CESIS), Royal Institute of Technology and Jönköping International Business School (JIBS)); Florian Noseleit (Friedrich-Schiller-University Jena, School of Economics and Business Administration) |
| Abstract: | We use longitudinal data over a decade on start-ups and employment in Swedish regions and analyze the effect of start-ups on subsequent employment growth. We extend previous analyses by examining the influence of regional start-ups in a sector on regional employment growth in the same sector and on other sectors. We find differences between different types of start-ups. Knowledge-intensive start-ups seem to have larger effects on the regional economy. In particular, start-ups in high-end services have significant negative impacts on employment in other sectors but a positive long-run impact. This is consistent with the idea that start-ups are a vehicle for changes in the composition of regional industry. Moreover, our results illustrate that the known S-shaped pattern can be attributed to different effects that start-ups in a sector have on employment change in the same sector and in others. |
| Keywords: | Entrepreneurship, Employment Growth, Regional Development, Start-ups |
| JEL: | J23 M13 O52 |
| Date: | 2008–12–09 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2008-091&r=eec |