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on European Economics |
| By: | Denny Ellerman |
| Abstract: | The European Union's Emission Trading Scheme (EU ETS) is the world's first multinational cap-and-trade system for greenhouse gases. As an agreement between sovereign nations with diverse historical, institutional, and economic circumstances, it can be seen as a prototype for an eventual global climate regime. Interestingly, the problems that are often seen as dooming a global trading system - international financial flows and institutional readiness - haven't appeared in the EU ETS, at least not yet. The more serious problems that emerge from the brief experience of the EU ETS are those of (1) developing a central coordinating organization, (2) devising side benefits to encourage participation, and (3) dealing with the interrelated issues of harmonization, differentiation, and stringency. The pre-existing organizational structure and membership benefits of the European Union provided convenient and almost accidental solutions to the need for a central institution and side benefits, but these solutions will not work on a global scale and there are no obvious substitutes. Furthermore, the EU ETS is only beginning to test the practicality of harmonizing allocations within the trading system, differentiating responsibilities among participants, and increasing the stringency of emissions caps. The trial period of the EU ETS punted on these problems, as was appropriate for a trial period, but they are now being addressed seriously. From a global perspective, the answers that are being worked out in Europe will say a great deal about what will be feasible on a broader, global scale. |
| Keywords: | European Union, emissions trading, climate change policy, global climate architecture, cap-and-trade |
| Date: | 2009–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2009/02&r=eec |
| By: | Anxo, Dominique (Centre for Labour Market Policy Research (CAFO)); Shukur, Ghazi (Centre for Labour Market Policy Research (CAFO)); Hussain, Shakir (University of Birmingham) |
| Abstract: | Part-time work is one of the most well-known <p> « atypical » working time arrangements in Europe, shaping working time regimes across countries and mapping work-life balance patterns. Comparative studies on part-time work across European countries have pointed to large differences in the development, extent and quality of part-time employment. To explain such differences, the focus has been mainly on labor supply consideration and on public policies and/or institutional arrangements pertaining to working-time combined with social practices in relation to gender conventions. In contrast to previous studies focusing on the supply side, the originality of our research is to investigate the demand-side of part-time work and to examine how and why companies use part-time work. The main objective of this paper is to analyze the impact of firms’ characteristics sector specificity and countries’ institutional arrangements on the use and intensity of part-time jobs at the establishment level. Based on a large and unique sample of European firms (more than 21 000 establishments) operating in 21 member states, we use multilevel multinomial modeling in a Bayesian environment. This approach has the advantage to identify and better disentangle the impact of institutional factors (country level), from industry specific factors (sector level) and firm specific factors (establishment level). Our results suggest that the observed variations in the extent of parttime workers at the establishment level is determined more by country-specific features, such as societal and institutional factors, than by industry specific factors. In other words, the institutional set-up or the overall working time regime seems to play a stronger role than organizational or productive constraints. |
| Keywords: | Part-time work; Laobur demand; Working time |
| JEL: | J23 J82 |
| Date: | 2009–02–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:vxcafo:2009_008&r=eec |
| By: | Tanya Molodtsova; Alex Nikolsko-Rzhevskyy; David H. Papell |
| Abstract: | This paper uses real-time data to show that inflation and either the output gap or unemployment, the variables which normally enter central banks’ Taylor rules for interest-rate-setting, can provide evidence of out-of-sample predictability and forecasting ability for the United States Dollar/Euro exchange rate from the inception of the Euro in 1999 to the end of 2007. We also present less formal evidence that, with real-time data, the Taylor rule provides a better description of ECB than of Fed policy during this period. The strongest evidence is found for specifications that neither incorporate interest rate smoothing nor include the real exchange rate in the forecasting regression, and the results are robust to whether or not the coefficients on inflation and the real economic activity measure are constrained to be the same for the U.S. and the Euro Area. The evidence is stronger with inflation forecasts than with inflation rates and with real-time data than with revised data. Bad news about inflation and good news about real economic activity both lead to out-of-sample predictability and forecasting ability through forecasted exchange rate appreciation. |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:emo:wp2003:0903&r=eec |
| By: | Jean-Michel Glachant; Adrien de Hauteclocque |
| Abstract: | Long-term supply contracts often have ambiguous effects on the competitive structure, investment and consumer welfare in the long term. In a context of market building, these effects are likely to be worsened and thus even harder to assess. Since liberalization and especially since the release of the Energy Sector Enquiry in early 2007, the portfolio of long-term supply contracts of the former incumbents have become a priority for review by the European Commission and the national competition authorities. It is widely believed that European Competition authorities take a dogmatic view on these contracts and systemically emphasize the risk of foreclosure over their positive effects on investment and operation. This paper depicts the methodology that has emerged in the recent line of cases and argues that this interpretation is largely misguided. It shows that a multiple-step approach is used to reduce regulation costs and balance anti-competitive effects with potential efficiency gains. However, if an economic approach is now clearly implemented, competition policy is constrained by the procedural aspect of the legal process and the remedies imposed remain open for discussion. |
| Keywords: | Long-term supply contracts, Competition Policy, European Union |
| JEL: | K21 L42 L44 |
| Date: | 2009–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2009/06&r=eec |
| By: | Ugo Colombino (Statistics Norway) |
| Abstract: | We develop and estimate a microeconometric model of household labour supply in five European countries representative of different economies and welfare policy regimes: Denmark, Italy, Norway, Portugal and United Kingdom. We then simulate, under the constraint of constant total net tax revenue, the effects of various hypothetical tax-transfer reforms which include alternative versions of a Basic Income mechanisms. We produce various indexes and criteria according to which the reforms can be ranked. The exercise can be considered as one of empirical optimal taxation, where the optimization problem is solved computationally rather than analytically. |
| Keywords: | Basic Income; Minimum Guaranteed Income; Models of Labour Supply; Tax Reforms; Welfare Evaluation; Optimal Taxation |
| JEL: | C25 H24 H31 I38 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:578&r=eec |
| By: | Iman van Lelyveld; Franka Liedorp; Manuel Kampman |
| Abstract: | We analyse the effect of failing reinsurance cover on the stability of Dutch insurers. As insurers often reinsure themselves with other (re)insurers, losses could spread contagiously through the sector. Using a unique and confidential data set on reinsurance exposures, we perform a scenario analysis to measure contagion risks. Based on current exposures, we find no evidence of systemic risk in the Netherlands, even if multiple reinsurance companies fail simultaneously. Next, we analyse to what extent the financial position of individual primary insurers is affected following a particular shock, considering solvency, capital and profit levels. The life insurance industry is hardly affected by reinsurance failures. The non-life industry, however, is vulnerable to a crisis in the European reinsurance market. We also find that members of smaller insurance groups are particularly exposed. |
| Keywords: | reinsurance; contagion; simulation. |
| JEL: | G20 G22 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:201&r=eec |
| By: | Agustín S. Bénétrix and Philip R. Lane |
| Abstract: | We estimate the impact of shocks to government spending on the real exchange rate for a panel of EMU member countries. Our key finding is that the impact differs across different types of government spending, with shocks to public investment generating a larger and more persistent impact on the real exchange rate than shocks to government consumption. Within the latter category, we also show that the impact of shocks to the wage component of government consumption is larger than for shocks to the non-wage component. |
| Date: | 2009–03–03 |
| URL: | http://d.repec.org/n?u=RePEc:iis:dispap:iiisdp286&r=eec |
| By: | Anos-Casero, Paloma; Udomsaph, Charles |
| Abstract: | This paper presents new evidence on the causal links between changes in the business environment and firm productivity growth. It contributes to the literature in three important aspects. First, it constructs a unique database merging information from two large firm-level databases. The samples of both databases are merged on four criteria-country, sub-national location, firm size, and year-producing a panel of 22,004 firms in eight economies of Eastern Europe and the former Soviet Union: Bulgaria, Croatia, Czech Republic, Estonia,, Poland, Romania, Serbia, and Ukraine. Second, the paper addresses shortcomings of earlier studies, namely reverse causation, multicollinearity, and unreliable productivity estimates. Firm productivity growth is estimated drawing on corporate financial data from manufacturing firms included in the AMADEUS database. Changes in the business environment are estimated from the World Bank Enterprise Surveys conducted in 2002 and 2005. Multicollinearity problems in the full model regression are mitigated by constructing a set of six aggregate indicators of the business environment (using principal component analysis). The paper finds that, over the period 2001 to 2004, an increase of one standard deviation in infrastructure quality, financial development, governance, labor market flexibility, labor quality, and market competition raises the total factor productivity of the average firm by 9.8, 7.8, 3.2, 3.4, 5.8, and 3 percent, respectively. Lastly, the paper decomposes firm productivity growth and ranks the relative impact of changes in these six aspects of the business environment by country, by firm size, and by industry. |
| Keywords: | E-Business,Banks&Banking Reform,Labor Policies,Governance Indicators,Economic Theory&Research |
| Date: | 2009–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4841&r=eec |
| By: | André van Stel; Mickey Folkeringa; Sierdjan Koster |
| Abstract: | We investigate the impact of start-up rates on a measure of competition among incumbent firms called mobility. Interactions between new and incumbent firms play an important role in the process of economic growth. While recent literature suggests that competition among incumbent firms is caused by (lagged) start-up rates, this relation has not yet been tested using a direct measure of competition among incumbent firms. In the present paper we estimate a regression model, at the region-sector level for the Netherlands, where the mobility rate is explained by (lagged) startup rates and control variables. Using data for 40 regions and five sectors over the period 1993-2006 we find that the impact of start-ups on mobility varies by sector. In particular, we find a strong positive relation between start-up rates and mobility rates for industry sectors (manufacturing and construction) but a much smaller effect for services sectors. These results suggest there are differences in the types of entry between sectors and in the roles start-ups play in different sectors. |
| Date: | 2009–03–03 |
| URL: | http://d.repec.org/n?u=RePEc:eim:papers:h200905&r=eec |
| By: | Farchy, Emily |
| Abstract: | Can a brain drain be good for development? Many studies have established the theoretical possibility of such a brain gain. Yet it is only recently that the relaxation of data constraints has allowed for sound empirical assessments. In utilizing the dramatic policy change that accompanied European Union accession as a natural experiment, this paper is able to assuage fears of reverse causality between migration and human capital formation. The results highlight a significant impact of European Union accession on human capital formation indicating that the prospect of migration can indeed fuel skill formation even in the context of middle-income economies. And, if accompanied by policies to promote return migration, as well as a functioning credit market to enable private investment, international labor mobility could represent a powerful tool for growth. |
| Keywords: | Population Policies,Economic Theory&Research,Labor Policies,Tertiary Education,Access to Finance |
| Date: | 2009–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4845&r=eec |
| By: | Blázquez, Maite (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Llorente, Raquel (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Moral Carcedo, Julian (Departamento de Análisis Económico: Teoría e Historia Económica. Universidad Autónoma de Madrid) |
| Abstract: | The existence of a universal minimum wage has been, and continues to be, an intensely debated issue. On the one hand, the controversy surrounding minimum wage appears to be partly justified because the effects of the introduction and increase of minimum wage may differ greatly depending on the labour market structure. On the other, the current academic literature on the subject do not provide clear evidence of which collectives are likely to be more affected in terms of employment by the introduction or increase of minimum wage. Using the data for the period 2000-2008, this study aims to examine the effect of minimum wage on the youth employment in Spain, taking into account both the existing regional differences and the dynamic behaviour of employment. Unlike other previous academic works on this subject, we are also going to consider the effect of seasonality on employment, a particularly wide-spread feature of youth employment in Spain. The results obtained in our analysis do not provide clear evidence about any negative effect of minimum wage on youth employment during the period under study. While this result may point out to the existence of a monopsonistic structure of the labour market, the coexistence of increases both in minimum wage and in youth employment rate during this period could also be explained in the light of a perfect competitive labour market with a high degree of dynamism and a structural change in employment demand. |
| Keywords: | Employment rate; minimum wage; Kaitz index |
| JEL: | J21 J31 J18 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:uam:wpaper:200902&r=eec |