nep-eec New Economics Papers
on European Economics
Issue of 2009‒01‒24
thirteen papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. The Impact of Foreign Macroeconomic News on Financial Markets in the Czech Republic, Hungary, and Poland By David Büttner; Bernd Hayo; Matthias Neuenkirch
  2. Capital Market Regimes and Bank Structure in Europe By Ronald E. Shrieves; Drew Dahl; Michael F. Spivey
  3. Wage differentials across sectors in Europe: an east-west comparison By Iga Magda; François Rycx; Ilan Tojerow; Daphné Valsamis
  4. Regional Measures of Human Capital in the European Union By Dreger, Christian; Erber, Georg; Glocker, Daniela
  5. The structural funds management in third-Central and Eastern European By Duduiala-Popescu, Lorena
  6. Global and local sources of risk in Eastern European emerging stock markets By Fedorova , Elena; Vaihekoski, Mika
  7. Worker Directors: A German Product that Didn't Export? By Addison, John T.; Schnabel, Claus
  8. Activation Policies in Ireland By David Grubb; Shruti Singh; Peter Tergeist
  9. Exporter Performance in the German Business Services Sector: First Evidence from the Services Statistics Panel By Alexander Vogel
  10. A comparison of multidimensional deprivation characteristics between natives and immigrants in Luxembourg By Pi Alperin, Maria Noel
  11. Creative Destruction and Regional Productivity Growth: Evidence from the Dutch Manufacturing and Services Industries By Niels Bosma; Erik Stam; Veronique Schutjens
  12. The SocialWelfare Pensions in Ireland: Pensioner Poverty and Gender By Rod Hick
  13. Le secteur financier peut-il rester le principal moteur de la croissance au Luxembourg ? By Arnaud Bourgain; Patrice Pieretti; Jens Høj

  1. By: David Büttner (Faculty of Business Administration and Economics, Philipps Universitaet Marburg); Bernd Hayo (Faculty of Business Administration and Economics, Philipps Universitaet Marburg); Matthias Neuenkirch (Faculty of Business Administration and Economics, Philipps Universitaet Marburg)
    Abstract: In this paper, we study the effects of euro area and US macroeconomic news on financial markets in the Czech Republic, Hungary, and Poland (CEEC-3) from 1999 to 2006. Using a GARCH model, we examine the impact on daily returns of three-month interest rates, stock market indices, exchange rates versus the euro, and the US dollar. First, foreign macroeconomic news has a significant impact on CEEC-3 financial markets. Second, neither US nor European news has a stronger effect over the whole observation period. Third, the process of European integration is accompanied by an increasing importance of euro area news relative to US news. Fourth, there are country-specific differences: the Czech markets become more affected by foreign news after the Copenhagen Summit than the other countries. Finally, testing the persistence of news over a business week confirms our main results.
    Keywords: Financial Markets, Czech Republic, Hungary, Poland, Macroeconomic News, European Monetary Union
    JEL: G12 G15 F30
    Date: 2009
  2. By: Ronald E. Shrieves (University of Tennessee); Drew Dahl (Department of Economics and Finance, Utah State University); Michael F. Spivey (Clemson University)
    Abstract: We hypothesize that features of European capital markets used to distinguish market reliance and investor protection have predictably influenced emerging national differences in bank capitalization, growth, and choice of income-producing activities. We characterize countries' capital regimes as more or less "equity-friendly" or "debt-friendly" based upon their reliance on equity and credit markets and the extent to which their legal frameworks protect shareholders and creditors. Using bank-level data from 13 European countries, 1998 to 2004, we find evidence of positive associations between “equity-friendly” market features and, respectively, bank capitalization, bank asset growth and the relative emphasis on bank lending to its customers. Support is also provided for hypotheses that “credit-friendly” capital regimes convey advantages reflected in higher rates of growth in assets and greater emphasis on lending to customers. Our results suggests that integration of European banking markets is mitigated by other, relatively static, features of the equity and debt markets on which banks rely.
    Keywords: international banking, market integration, shareholder protection
    JEL: F33 F36 G21 G28 G32 G38
    Date: 2009–01–14
  3. By: Iga Magda (The Polish Ministry of Labour and Social Policy); François Rycx (Centre Emile Bernheim, DULBEA, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels and IZA-Bonn.); Ilan Tojerow (DULBEA, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels and NBB and IZA-Bonn.); Daphné Valsamis (DULBEA, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels.)
    Abstract: This study compares the structure and determinants of inter-industry wage differentials in Eastern and Western European countries (namely Belgium, Italy, the Netherlands, Norway, Portugal and Spain compared with Latvia, Lithuania, the Czech Republic, Poland and Slovakia). To do so, we use a unique harmonised, linked employer–employee data set, the 2002 European Structure of Earnings Survey. Findings show substantial differences in earnings across sectors in all countries, even when controlling for a wide range of employee, job and employer characteristics. The hierarchy of sectors in terms of wages appears to be quite similar in Eastern and Western European countries. Among high-wage sectors, we find the energy (coke, petroleum, gas, electricity and nuclear power), chemical, financial and computer industries. In contrast, it is in the traditional sectors (wood and cork industry, textile, clothing and leather industry, hotels and restaurants, and retailing) that wages are lowest. Further results suggest that the dispersion of inter-industry wage differentials fluctuates considerably across countries. It is relatively small in Norway and Belgium, large in the Netherlands, Italy, Spain, Poland and the Czech Republic, and very large in Portugal, Latvia, Lithuania and Slovakia. Our findings support the hypothesis of a negative relationship between the dispersion of inter-industry wage differentials and a country’s degree of corporatism.
    Keywords: Inter-industry wage differentials, Collective bargaining, Europe, Matched employer-employee data.
    JEL: J31 J51
    Date: 2009–01
  4. By: Dreger, Christian (DIW Berlin); Erber, Georg (DIW Berlin); Glocker, Daniela (DIW Berlin)
    Abstract: The accumulation of the human capital stock plays a key role to explain the macroeconomic performance across regions. However, despite the strong theoretical support for this claim, empirical evidence has been not very convincing, probably because of the low quality of the data. This paper provides a robustness analysis of alternative measures of human capital available at the level of EU NUTS1 and NUTS2 regions. In addition to the univariate measures, composite indicators based on different construction principles are proposed. The analysis shows a significant impact of construction techniques on the quality of indicators. While composite indicators and labour income measures point to the same direction of impact, their correlation is not overwhelmingly high. Moreover, popular indicators should be applied with caution. Although schooling and human resources in science and technology explain some part of the regional human capital stock, they cannot explain the bulk of the experience.
    Keywords: human capital indicators, regional growth
    JEL: I20 O30 O40 O52
    Date: 2009–01
  5. By: Duduiala-Popescu, Lorena
    Abstract: Based on reviewing the literature in the field, the article shows the importance accorded to issues of structural funds absorption. The subject is central to assessing how the administrative capacity to absorb EU candidate countries in terms of structural funds. It will describe the methodology on absorption capacity of the countries of central and eastern Europe. This article provides preliminary expressions of capacity to absorb in a given Member State and bring additional information on the capacity of all states in the programming period 2006-2013. Thus, the work is an ex-ante evaluation of administrative capacity to absorb very useful for the next programming period.
    Keywords: structural funds; member states; cohesion policy; coordination
    JEL: F59 F42 F15 G38 G18 F02 F21 H76 G28 I28
    Date: 2009–01–10
  6. By: Fedorova , Elena (BOFIT); Vaihekoski, Mika (BOFIT)
    Abstract: We study a pricing model for global and local sources of risk in six Eastern European emerging stock markets. Utilizing GMM estimation and an unconditional asset-pricing framework with and without time-varying betas, we perform estimations based on monthly data from 1996 to 2007 for Poland, Czech Republic, Hungary, Bulgaria, Slovenia and Russia. Most of these markets display considerable segmentation; the aggregate emerging market risk, as opposed to global market risk, is the significant driver for their stock market returns. It also appears that currency risk is priced into stock prices. The difference between local and global interest rates can be used to model the time-variation in the betas for both sources of risk.
    Keywords: market integration; segmentation; asset pricing; emerging markets; Eastern Europe country risk
    JEL: G12 G15 G32
    Date: 2009–01–13
  7. By: Addison, John T. (University of South Carolina); Schnabel, Claus (University of Erlangen-Nuremberg)
    Abstract: Despite its lack of attractiveness to other countries, the German system of quasi-parity codetermination at company level has held up remarkably well. We recount the theoretical arguments for and against codetermination and survey the empirical evidence on the effects of the institution, tracing the three phases of a still sparse literature. Recent findings hold out the prospect that good corporate governance might include employee representation by virtue of the monitoring function and the reduction in agency costs, while yet cautioning that the optimal level of representation is likely below parity. And although the German system may be better than its reputation among foreigners, it might have to adapt to globalization and the availability of alternative forms of corporate governance in the EU.
    Keywords: codetermination, board-level employee representation, firm performance, Germany
    JEL: J50
    Date: 2009–01
  8. By: David Grubb; Shruti Singh; Peter Tergeist
    Abstract: In Ireland the placement function of the Public Employment Service (PES) is primarily within FÁS, the Training and Employment Authority, which is supervised by the Department of Enterprise, Trade and Employment (DETE). But employment counselling services are also provided by the “Local Employment Service” (which has partly-separate funding and management arrangements); Facilitators within the Department of Social and Family Affairs (who implement an “Activation Programme”, which however lacks participation requirements); and the “Services to the Unemployed” activity within the Local Development Social Inclusion Programme (which is managed through a third Department). The number of staff in FÁS Employment Services and the Local Employment Service, relative to the number of wage and salary earners in the economy, appears to be relatively low, about half the average level of staffing of institutions responsible for the placement function in Australia and Northern and Western Europe (countries which also have high benefit coverage rates for unemployment).
    JEL: H53 H83 I38 J08 J63 J65 J68
    Date: 2009–01–08
  9. By: Alexander Vogel (Institute of Economics, University of Lüneburg)
    Abstract: A wide range of empirical studies has analysed exporter performance, especially the relationship between exports and productivity in the manufacturing sector. By contrast, a detailed investigation of the services sector has remained largely neglected. To close this gap, this paper focuses on the relationship between exports and several performance characteristics in the German business services sector—average wage, productivity, size and turnover profitability—in order to determine whether export premia and self-selection into export markets exist in the business services sector. To ensure the comparability of the results with those from the manufacturing sector, empirical models used to analyse the manufacturing sector are transferred to investigate the business services.
    Keywords: export premia, self-selection into export markets, business services
    JEL: F14 L89
    Date: 2009–01
  10. By: Pi Alperin, Maria Noel (CEPS/INSTEAD (Luxembourg) and LAMETA (Unversité Montpellier I))
    Abstract: This paper applies a multidimensional approach to poverty measurement based on fuzzy set theory, and its decomposition properties, in order to measure the deprivation level in Luxembourg and to identify the different characteristics of poverty between natives and immigrants (knowing that almost 40% of the population in Luxembourg are immigrants). The database used in this study is the 2006 wave of the Panel Socio-Economique Liewen zu Lëtzebuerg (PSELL-3) survey.
    Keywords: Decomposition; Immigrants ; Luxembourg ; Multidimensional Poverty ; Fuzzy Set Theory
    JEL: D31 D63 I32
    Date: 2008–12
  11. By: Niels Bosma (Urban and Regional research Centre Utrecht (URU), Utrecht University, Utrecht, The Netherlands); Erik Stam (Tjalling Koopmans Institute, Utrecht School of Economics, Utrecht University, Utrecht, The Netherlands; Centre for Technology Management, University of Cambridge, Cambridge, United Kingdom; Scientific Council for Government Policy (WRR), The Hague, The Netherlands; Max Planck Institute of Economics - Entrepreneurship, Growth and Public Policy group, Jena, Germany); Veronique Schutjens (Urban and Regional research Centre Utrecht (URU), Utrecht University, Utrecht, The Netherlands)
    Abstract: Do firm entry and exit improve the competitiveness of regions? If so, is this a universal mechanism or is it contingent on the type of industry or region in which creative destruction takes place? This paper analyses the effect of firm entry and exit on the competitiveness of regions, measured by total factor productivity (TFP) growth. Based on a study across 40 regions in the Netherlands over the period 1988-2002, we find that firm entry is related to productivity growth in services, but not in manufacturing. The positive impact found in services does not necessarily imply that new firms are more efficient than incumbent firms; high degrees of creative destruction may also improve the efficiency of incumbent firms. We also find that the impact of firm dynamics on regional productivity in services is higher in regions exhibiting diverse but related economic activities.
    Keywords: firm entry, firm exit, turbulence, regional competitiveness, total factor productivity
    JEL: L10 M13 O18 R11
    Date: 2009–01–12
  12. By: Rod Hick (The Centre for Analysis of Social Exclusion, London School of Economics and Political Science)
    Abstract: This paper examines changes to value of the state pensions and poverty rates for older men and women during the two terms of the Fianna Fáil – Progressive Democrat coalition government in Ireland between 1997 and 2007. It is shown that despite consistent increases in the value of the state pensions relative to earnings, poverty increased during the initial years of the period only to fall dramatically thereafter. While the increase in poverty at the 50 per cent median income rate between 1997 and 2001 was experienced disproportionately by women, there has also been an important gender dimension to the reduction in poverty amongst the over 65s since 2001. Since 2003, women have been no more likely than men to fall below the 50 per cent of median income poverty line or to fall below the 60 per cent line since 2004. However, analysis of data from the 2006 Irish release of the EU Survey of Income and Living Conditions shows that older women remained more likely than men to experience poverty as measured at 70 per cent of median income. A logistic regression model is used to identify underlying differences in poverty rates between men and women after adjusting for other independent variables. The results show that after adjusting for differences in occupation, household composition, geography and health status, the odds of a woman falling below the 70 per cent median income line remained 1.25 times that of a man.
    Date: 2009–01–13
  13. By: Arnaud Bourgain; Patrice Pieretti; Jens Høj
    Abstract: Le secteur financier a été le principal moteur de l'économie au cours des deux dernières décennies. Les avantages comparatifs du Luxembourg en matière d'activités financières résident essentiellement dans le caractère évolutif de son cadre législatif et réglementaire ainsi que dans le faible niveau de sa fiscalité. En conséquence, le Luxembourg est aujourd'hui un des principaux centres internationaux pour les fonds d'investissement. Au-delà des effets directs et indirects de ce secteur d'activité sur l'emploi, sa retombée la plus importante est l'ampleur des recettes fiscales qu'il permet aux pouvoirs publics d'engranger, puisqu'il représente directement plus de 20 % de l'ensemble des rentrées d'impôts. Cela dit, ces recettes fiscales sont très fluctuantes, dans la mesure où ce secteur est extrêmement sensible à l'évolution des marchés de capitaux internationaux. De fait, les contractions intervenues par le passé sur ces marchés ont eu tendance à entraîner un net ralentissement de la croissance de l'économie luxembourgeoise ainsi que des revenus du secteur financier, ce qui laisse à penser que les risques associés aux turbulences financières internationales actuelles sont très substantiels. Au-delà de ces considérations à court terme, le taux de croissance tendanciel du secteur va probablement diminuer à moyen terme. Les principales activités du secteur sont les prestations d'administration financière correspondant aux services de suivi de marché et de postmarché, que les nouvelles technologies de l'information permettront de délocaliser de plus en plus. Par ailleurs, le secteur a des difficultés à attirer des spécialistes hautement qualifiés pour prendre pied dans le domaine plus rémunérateur des activités de service de clientèle. À plus long terme, la concurrence internationale continuera à exercer des pressions qui pourraient finir par remettre en cause la position du Luxembourg. L'ampleur du déclin de la croissance tendancielle du secteur financier dépendra de la capacité du Luxembourg à préserver et renforcer l'attrait qu'il exerce sur les investisseurs et les travailleurs. Pour ce faire, les autorités devront parvenir à adapter leurs politiques dans les domaines de la fiscalité, des infrastructures et du logement pour attirer des étrangers très compétents, tout en révisant la réglementation du secteur financier et en renforçant sa transparence.
    Keywords: croissance économique, finances publiques, avantage comparatif révélé, Luxembourg
    JEL: G15 G18 G21 G24
    Date: 2009–01–15

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