nep-eec New Economics Papers
on European Economics
Issue of 2009‒04‒05
twenty-six papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. The Financial Integration of the European Union : Common and Idiosyncratic Drivers By Chris Higson; Sean Holly; Ivan Petrella
  2. European Financial Market Integration : A Closer Look at Government Bonds in Eurozone Countries By Sebastian Weber
  3. Are your firmÕs taxes set in Warsaw? Spatial tax competition in Europe By CrabbŽ, Karen; VANDENBUSSCHE, Hylke
  4. How Does the European Integration Affect the European Stock Markets? By Burcu Erdogan
  5. Has the monetary transmission process in the euro area changed? Evidence vased on VAR estimates By Axel A Weber; Rafael Gerke; Andreas Worms
  6. The Cost of Low Fertility in Europe By David E. Bloom; David Canning; Günther Fink; Jocelyn E. Finlay
  7. Monetary Policy Transmission and House Prices : European Cross Country Evidence By Kai Carstensen; Oliver Hülsewig; Timo Wollmershäuser
  8. The Macroeconomic Effects of European Financial Development : A Heterogenous Panel Analysis By Sean Holly; Mehdi Raissi
  9. Determinants of Private Equity Investment in European Companies By Oleg Badunenko; Nataliya Barasinska; Dorothea Schäfer
  10. Trade, Institutions and Export Specialization By Karen Crabbé; Michel Beine
  11. The location of innovative activity in Europe By Laura Abramovsky; Rachel Griffith; Gareth Macartney; Helen Miller
  12. Bank Ownership, Firm Value and Firm Capital Structure in Europe By Lieven Baert; Rudi Vander Vennet
  13. Does Migration Help Reducing Inequality and social Exclusion? By Marilena Giannetti; Daniela Federici; Michele Raitano
  14. Natural Hazards Insurance in Europe – Tailored Responses to Climate Change Needed By Reimund Schwarze; Gert G. Wagner
  15. Brain Drain and Brain Return: Theory and Application to Eastern-Western Europe By Karin Mayr; Giovanni Peri
  16. Price Convergence in the European Union: Within Firms or Composition of Firms? By Isabelle Mejean; Cyrille Schwellnus
  17. Regional Tax Differences and Multinational Profits in Europe By Murphy, Alan P.
  18. Financial Convergence in the New EU Member States By Kalin Hristov; Rossen Rozenov
  19. Turkey and the European Union: possible incidence of the EU accession on migration flows By Ondřej Glazar; Wadim Strielkowski
  20. Bank Competition and Firm Growth in the Enlarged European Union By Gábor Pellényi; Tamás Borkó
  21. A forewarning indicator system for financial crises: the case of six Central and Eastern European countries By Irène Andreou; Gilles Dufrénot; Alain Sand-Zantman; Aleksandra Zdzienicka-Durand
  22. Interest rate transmission mechanism of the monetary policy in the selected EMU candidate countries (SVAR approach) By Mirdala, Rajmund
  23. Occupational Change in Britain and Germany By Longhi S; Brynin M
  24. Macroeconomic effects of greater competition in the service sector: the case of Italy By Lorenzo Forni; Andrea Gerali; Massimiliano Pisani
  25. Invisible Barriers in International Labour Migration: The Case of the Netherlands By Dalen, H.P. van; Henkens, K.
  26. Determinants of Export Behaviour of German Business Services Companies By Alexander Eickelpasch; Alexander Vogel

  1. By: Chris Higson; Sean Holly; Ivan Petrella
    Abstract: The purpose of this paper is to establish how far the process of financial integration has gone in the European Union. There is growing evidence that the appearance of the Euro has accelerated the integration of a number of financial markets among those countries who have adopted the Euro. We identify the growth in financial integration as the process by which idiosyncratic factors at the national level become less and less important for the behaviour of particular markets. While the Euro plays an important part because it eliminates currency risk, financial integration will still emerge between other European countries as long as the institutional and legal barriers are removed.
    Date: 2009
  2. By: Sebastian Weber
    Abstract: The European Union made a number of steps not least of them the introduction of a common currency to foster the integration of the European financial markets. A number of papers have tried to gauge the degree of integration for various financial markets looking at the convergence of interest rates. A common finding is that government bond markets are quite well integrated. In this paper stochastic Kernel density estimates are used to take a closer look at the dynamics that drive the process of interest rate convergence. The main finding is that countries with large initial deviations from the mean interest rate do indeed converge. Interestingly the candidates least suspected namely the countries initially with interest rates at the mean level show a pattern of slight divergence.
    Keywords: Financial markets integration, euro area government bonds, stochastic Kernel density estimates
    JEL: C23 G15
    Date: 2009
  3. By: CrabbŽ, Karen; VANDENBUSSCHE, Hylke (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))
    Abstract: Tax competition within the EU is Þercer than in the rest of the OECD with tax rates falling rapidly. This paper analyzes tax responses of EU-15 countries to corporate tax changes in the EU-10 new member states as a function of their proximity to these 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, allowing Þrms to locate in one of the new EU-10 with full access to the European Market. Our results indicate that EU-15 countries geographically closer to the new member states respond stronger to corporate tax changes in these new member states. We use a theoretical and a spatial regression framework to test the hypothesis that distance to a low tax region intensiÞes countriesÕ tax reaction functions.
    Keywords: spatial tax competition, corporate taxes, fiscal reaction function.
    JEL: H25 H77 H39
    Date: 2008–12
  4. By: Burcu Erdogan
    Abstract: This paper examines the integration of stock markets in Germany, France, Netherlands, Ireland and UK over the January 1973- August 2008 period at the aggregate market and industry level considering the following industries: basic materials, consumer goods, industrials, consumer services, health care and financials. The analysis is practised by using correlation analysis, $\beta$-convergence and $\sigma$-convergence methods. $\beta$- convergence serves to measure the speed of convergence and $\sigma$-convergence serves to measure the degree of financial integration. We might expect priori that European stock markets have been more integrated during the process of monetary, economic and financial integration in Europe. We find evidence for an increasing degree of integration both at the aggregate level and also at the industry level, although some differences in the speed and degree of convergence exist among stock markets. To our surprise, there is a downward trend in convergence for certain industries in certain countries in 2000s; especially for those industries, which are more prone to regional shocks, such as health care, financials and consumer services. Moreover, the cross sectional dispersion in health care industry has not shown a regular descending trend. Additionally, EU wide factors can better explain the changes in returns than those of US.
    Keywords: Financial integration, EU, stock markets, correlation analysis
    JEL: C22 G15 G12 F36
    Date: 2009
  5. By: Axel A Weber; Rafael Gerke; Andreas Worms
    Abstract: Empirical evidence on whether the euro area monetary transmission process has changed is, at best, mixed. We argue that this inconclusiveness is likely to be due to the fact that existing empirical studies concentrate on the effects of a particular development on a specific transmission channel. Another problem of this literature is that specific changes could have off-setting effects regarding the overall effectiveness of monetary policy, leaving open the question whether the ability of monetary policy to control inflation has been altered. In order to shed light on this issue, we investigate whether there has been a significant change in the overall transmission of monetary policy to inflation and output by estimating a standard VAR for the euro area and by searching for a possible break date. We find a significant break point around 1996 and some evidence for a second one around 1999. We compare impulse responses to a monetary policy shock for these episodes and find that the well-known "stylised facts" of monetary policy transmission remain valid. Therefore, we argue that the general guiding principles of the Eurosystem monetary policy remain adequate. Moreover, it seems that monetary transmission after 1998 is not very different from before 1996, but probably very different in the interim period. This implies that evidence for the euro area could be biased by an "atypical" interim period 1996-1999. This is part of a series of BIS Working Papers (273 to 278) collecting papers presented at the BIS's Seventh Annual Conference on "Whither monetary policy? Monetary policy challenges in the decade ahead" in Luzern, Switzerland, on 26-27 June 2008. The event brought together senior representatives of central banks and academic institutions to exchange views on this topic. BIS Paper 45 contains the opening address of William R White (BIS), the contributions of the policy panel on "Beyond price stability - the challenges ahead" and speeches by Edmund Phelps (Columbia University) and Martin Wolf (Financial Times). The participants in the policy panel discussion chaired by Malcolm D Knight (BIS) were Martin Feldstein (Harvard University), Stanley Fischer (Bank of Israel), Mark Carney (Bank of Canada) and Jean-Pierre Landau (Banque de France). This Working Paper includes comments by Marvin Goodfriend and Armínio Fraga Neto.
    Keywords: Monetary policy transmission, Eurosystem, euro area, globalisation, financial development, VAR
    Date: 2009–03
  6. By: David E. Bloom; David Canning; Günther Fink; Jocelyn E. Finlay
    Abstract: We analyze the effect of fertility on income per capita with a particular focus on the experience of Europe. For European countries with below-replacement fertility, the cost of continued low fertility will only be observed in the long run. We show that in the short run, a fall in the fertility rate will lower the youth dependency ratio and increase the working-age share, thus raising income per capita. In the long run, however, the burden of old-age dependency dominates the youth dependency decline, and continued low fertility will lead to small working-age shares in the absence of large migration inflows. We show that the currently very high working-age shares generated by the recent declines in fertility and migration inflows are not sustainable, and that significant drops in the relative size of the working-age population should be expected. Without substantial adjustments in labor force participation or migration policies, the potential negative repercussions on the European economy are large.
    JEL: J13 J21 O52
    Date: 2009–03
  7. By: Kai Carstensen; Oliver Hülsewig; Timo Wollmershäuser
    Abstract: This paper explores the importance of housing and mortgage market heterogeneity in 13 European countries for the transmission of monetary policy. We use a pooled VAR model which is estimated over the period 1995-2006 to generate impulse responses of key macroeconomic variables to a monetary policy shock. We split our sample of countries into two disjoint groups according to the impact of the monetary policy shock on real house prices. Our results suggest that in countries with a more pronounced reaction of real house prices the propagation of monetary policy shocks to macroeconomic variables is amplified.
    Keywords: Pooled VAR model, house prices, monetary policy transmission, country clusters, sign restrictions
    JEL: C32 C33 E52
    Date: 2009
  8. By: Sean Holly; Mehdi Raissi
    Abstract: This paper investigates the macroeconomic benefits of international financial integration and domestic financial sector development for the European Union. The sample consists of 26 European countries with annual data during the period 1970.2004. We attempt to exploit more fully the temporal dimension in the data by making use of the common correlated effects (CCE) estimator. We also account for the nonstationarity of time series by employing the cross-section augmented panel unit root test of Pesaran (2007) and recently developed panel cointegration techniques. We check the robustness of these results by using the fully modified OLS method of Pedroni (2000). Our empirical results suggest a relationship between domestic financial sector development and labour productivity. We report evidence that real GDP per worker is positively linked to a measure of international financial integration (stock of international financial assets and liabilities expressed as a ratio to GDP). We also try to disentangle the effects on real GDP per worker of di¤erent types of capital flows (FDI, Portfolio equity, Debt) and are able to identify a significant positive effect on GDP per worker of debt inflows which we could attribute to the institutional environment that has been fostered by the European Union.
    Date: 2009
  9. By: Oleg Badunenko; Nataliya Barasinska; Dorothea Schäfer
    Abstract: The paper investigates the motives of Private Equity (PE) investors to engage in European companies. Investment of a PE firm is not viewed unambiguously. First, it is claimed that PE investing is made for the sake of poor redistribution of wealth. Second, PE firm invests because of prior identification of chances to add value to the company. We attempt to resolve these two conflicting conjectures. We use the Bureau van Dijk's Amadeus database of very large, large and medium sized European companies. Our major results can be summarized as follows. A financially constraint or risky company has lower chances to lure a PE firm to invest. On the one hand, the larger the equity of the company the larger the likelihood of receiving investment from a PE firm. On the other hand, larger cash flow is likely to repel PE investor.
    Keywords: Private equity financing, leverage, corporate finance
    JEL: M14 G24 G34
    Date: 2009
  10. By: Karen Crabbé; Michel Beine
    Abstract: This paper studies whether trade integration between the EU15 and Central Europe has led to more export specialization in Central Europe. Moreover, we analyze the impact of institutional reforms in Central Europe on export specialization. The empirical analysis is set up for thirteen Central European countries over the period 1989-2000. Our results indicate that a reduction in tariffs between EU15 and Central Europe led to increased export specialization in Central Europe. In addition to trade integration, we show that institutional reforms and in particular enterprise reforms contributed to export specialization.
    Keywords: trade integration, tariffs, Herfindahl index, exports, institutions
    JEL: F14 F15 R12
    Date: 2009
  11. By: Laura Abramovsky (Institute for Fiscal Studies); Rachel Griffith (Institute for Fiscal Studies and University College London); Gareth Macartney (Institute for Fiscal Studies and University College London); Helen Miller (Institute for Fiscal Studies)
    Abstract: <p>In this paper we use new data to describe how firms from 15 European countries organise their innovative activities. The data matches firm level accounting data with information on the patents that those firms and their subsidiaries have applied for at the European Patents Office. We describe the data in detail. </p>
    Keywords: International investment and multinational firms; technological change and research and development; fiscal policies and behaviour of economic agents
    JEL: F21 F23 O3 H3
    Date: 2008–11
  12. By: Lieven Baert; Rudi Vander Vennet
    Abstract: We investigate whether or not banks play a positive role in the ownership structure of European listed firms. We distinguish between banks and other institutional investors as shareholders and examine empirically the relationship between financial institution ownership and the performance of the firms in which they hold equity. Our main finding is that after controlling for the capital structure decision of the firms and the ownership decision of financial institutions in a simultaneous equations model, we find that there is a negative relationship between financial institution ownership and the market value of firms, measured as the Tobin's Q. This is in contradiction with the monitoring hypothesis.
    Keywords: Financial institution ownership, Firm value, Capital structure
    JEL: G32 G20
    Date: 2009
  13. By: Marilena Giannetti; Daniela Federici; Michele Raitano
    Abstract: The impact of remittance flows on growth and income distribution has attracted a great deal of attention, but the theoretical and empirical literature on the relationship between remittances and economic development is far from clear. Although there is wide consensus that foreign remittances can help receiving households to increase income, consumption and capabilities to face socioeconomic shocks, there has been little quantitative research on impacts of remittances on household welfare and poverty. Our paper seeks to fill some of these gaps and it proposes an empirical analysis of the role of remittances as tool for reducing inequality and covering households against poverty and social exclusion risks. The empirical analysis focuses on four Eastern European Countries: Slovenia, Poland, the Czech Republic and Hungary, and is based on the EU-SILC 2005 data-set, that for each household provides information regarding interhousehold cash transfers received amongst which, regular cash support from households in other countries (i.e. remittances) are included.
    Keywords: Remittances, inequality, poverty.
    JEL: O10 O15 O52
    Date: 2009–02
  14. By: Reimund Schwarze; Gert G. Wagner
    Abstract: This paper provides an overview on the existing systems of natural hazards insurance in Europe, their structural characteristics and peculiarities. It also discusses the difficulties of an adaptation of these systems to climate change and a growing number of natural disasters. Using the case of Germany as an example, the paper demonstrates that the obstacles facing system change are numerous, including failure to recognise the role of state guarantees in enabling private insurance markets, mistaken legal objections against mandatory insurance, distributional conflicts between central and state governments and re-election considerations by politicians. The adjustments to new weather conditions should reflect existing differences in the regional and national insurance systems in the EU. 'Change in diversity’ is seen to offer the best chance to arrive at insurance systems which are prepared for climate change while being adapted to local particularities. Efforts to harmonise national and regional systems as well as top down EU initiatives are rejected in this paper.
    Keywords: Natural Hazards, Insurance, Climate Change, Europe, Germany
    JEL: G22 Q54
    Date: 2009–02
  15. By: Karin Mayr (Johannes Kepler University, Linz); Giovanni Peri (University of California, Davis, CESifo and NBER)
    Abstract: Recent empirical evidence seems to show that temporary migration is a widespread phenomenon, especially among highly skilled workers who return to their countries of origin when these begin to grow. This paper develops a simple, tractable overlapping generations model that provides a rationale for return migration and predicts who will migrate and who returns among agents with heterogeneous abilities. The model also incorporates the interaction between the migration decision and schooling: the possibility of migrating, albeit temporarily, to a country with high returns to skills produces positive schooling incentive effects. We use parameter values from the literature and data on return migration to simulate the model for the Eastern-Western European case. We then quantify the effects that increased openness (to migrants) would have on human capital and wages in Eastern Europe. We find that, for plausible values of the parameters, the possibility of return migration combined with the education incentive channel reverses the brain drain into a significant brain gain for Eastern Europe.
    Date: 2009–04
  16. By: Isabelle Mejean; Cyrille Schwellnus
    Abstract: In this paper we use data on French export prices at the disaggregated firm and product level to evaluate the effect of economic integration on price convergence. We use the European integration ‘experiment’ and firm-level data on export prices to distinguish between two possible margins of adjustment: At the intensive margin economic integration induces different pricing strategies within the firm, whereas at the extensive margin it affects the composition of firms with different pricing strategies. In our sample price convergence is 40 percent faster in the European Union than in an appropriately defined control group. 30 percent of this effect can be attributed to the fact that a higher share of firms with a low propensity to price discriminate serve European markets.
    Keywords: Price convergence; firms heterogeneity; european integration
    JEL: F12 F33 F40
    Date: 2009–03
  17. By: Murphy, Alan P. (Central Bank and Financial Services Authority of Ireland)
    Abstract: This paper tests to what extent are corporate tax differentials motivating the reallocation of reported profits between EU parent multinationals and their European based affiliates. Hines and Rice (1994) report that a 1-percentage point reduction in corporation tax induces a 3% rise in reported profitability of European based affiliates of US parent multinationals. When aggregated firm-level tax data are used and do not directly control for the parent-affiliate pair-wise trading environments, we obtain a semi-elasticity of -2.4 that is similar to previous research. But when we apply firm-level information on the total bundle of tax liabilities and control for the trading environment of each parent-affiliate pair we obtain a semi-elasticity of –0.25. This suggests that while corporation tax differences do affect reported profitability; the magnitude of this effect is lower than previously reported in studies using information from U.S. owned multinationals.
    Date: 2009–03
  18. By: Kalin Hristov; Rossen Rozenov
    Abstract: In this paper we explore the issue of financial convergence in the new EU member states (NMS). For the purposes of our analysis the countries falling into the category NMS are Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia, i.e. all countries that joined the EU in the last decade, except Cyprus and Malta.
    Date: 2009
  19. By: Ondřej Glazar (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Wadim Strielkowski (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic; University of Nottingham)
    Abstract: This paper analyzes possible incidences of Turkish EU accession on the emigration from Turkey to the European Union. Panel data estimators are applied on the emigration data from EU-18 into Germany in order to construct possible future scenarios of Turkish migration to the EU. Eventual migration flows from Turkey into the EU are forecasted based on the estimated results. We find that seemingly unrelated regressor is the most efficient estimator that can be applied in Turkey-EU migration framework. Our results reveal that both the network effect and target country labour market conditions represent the strongest determinants for migration, whilst the effect of per capita income is actually relatively low. In particular, Turkish per capita income does not have nearly any effect on migration, because it enters the model in two variables that work against each other. Furthermore, a very low importance of opening the German labour market for Turkish migrants is found. Estimated coefficients are used to predict migrations to Germany and through appropriate extrapolations to the whole European Union (EU). Three scenarios of migration are created and the sensitivity of estimated coefficients on migration from Turkey into the Germany during next 25 years is further discussed in detail.
    Keywords: Economy of migration, Turkey, EU Enlargement, panel data, seemingly unrelated regression
    JEL: C33 F15 F22 J11 J61
    Date: 2009–04
  20. By: Gábor Pellényi; Tamás Borkó
    Abstract: We examine the impact of bank competition and institutional factors on net firm entry in a sample of European manufacturing industries over the 1995-2006 period. Taking into account industry differences in the need for external finance, we find that bank competition helps firm entry. In addition, better institutions - especially legal structure and property rights - also have a positive impact, particularly through a better functioning financial system.
    Keywords: market structure, banks, market entry, manufacturing, financial development
    JEL: D4 G21 L11 L60 O16
    Date: 2009
  21. By: Irène Andreou (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines); Gilles Dufrénot (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579); Alain Sand-Zantman (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines); Aleksandra Zdzienicka-Durand (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines)
    Abstract: We propose a measure of the probability of crises associated with an aggregate indicator, where the percentage of false alarms and the proportion of missed signals can be combined to give an appreciation of the vulnerability of an economy. In this perspective, the important issue is not only to determine whether a system produces true predictions of a crisis, but also whether there are forewarning signs of a forthcoming crisis prior to its actual occurrence. To this end, we adopt the approach initiated by Kaminsky, Lizondo and Reinhart (1998), analyzing each indicator and calculating each threshold separately. We depart from this approach in that each country is also analyzed separately, permitting the creation of a more “custom-made” early warning system for each one.
    Keywords: Currency Crisis; Early Warning System; Composite Indicator; Eastern Europe
    Date: 2009
  22. By: Mirdala, Rajmund
    Abstract: The stable macroeconomic environment, as one of the primary objectives of the Visegrad countries in the 1990s, was partially supported by the exchange rate policy. Fixed exchange rate systems within gradually widen bands (Czech republic, Slovak republic) and crawling peg system (Hungary, Poland) were replaced by the managed floating in the Czech republic (May 1997), Poland (April 2000), Slovak republic (October 1998) and fixed exchange rate to euro with broad band in Hungary (October 2001). Higher macroeconomic and banking sector stability allowed countries from the Visegrad group to implement the monetary policy strategy based on the interest rate transmission mechanism. Continuous harmonization of the monetary policy framework (with the monetary policy of the ECB) and the increasing sensitivity of the economy agents to the interest rates changes allowed the central banks from the Visegrad countries to implement monetary policy strategy based on the key interest rates determination. In the paper we analyze the impact of the central banks’ monetary policy in the Visegrad countries on the selected macroeconomic variables in the period 1999-2008 implementing SVAR (structural vector autoregression) approach. We expect that the higher sensitivity of the selected macroeconomic indicators of the EMÚ candidate countries to the national monetary policy shocks would indicate the higher exposure of the selected countries to the ECB monetary policy impulses after the euro adoption in the future.
    Keywords: monetary policy; short-term interest rates; structural vector autoregression; variance decomposition; impulse-response function
    JEL: C32 E52
    Date: 2009–02
  23. By: Longhi S (Institute for Social and Economic Research); Brynin M (Institute for Social and Economic Research)
    Abstract: We use British and German panel data to analyse job changes involving a change in occupation. We assess the extent of occupational change, taking into account the possibility of measurement error in occupational codes; whether job changes within the occupation differ from occupation changes in terms of the characteristics of those making such switches; and the effects of the two kinds of moves in terms of wages and job satisfaction. We find that occupation changes differ from other job changes, generally reflecting a less satisfactory employment situation, but also that the move in both cases is positive in respect of change in wages and job satisfaction.
    Date: 2009–03–27
  24. By: Lorenzo Forni (Bank of Italy); Andrea Gerali (Bank of Italy); Massimiliano Pisani (Bank of Italy)
    Abstract: The paper assesses the effects of increasing competition in the service sector in Italy which, based on cross-country comparisons, is the OECD country with the highest markups in non-manufacturing industries. We propose a two-region (Italy and the rest of the euro area) dynamic general equilibrium model allowing for monopolistic competition in the labor, manufacturing and service markets. We then use the model to simulate the macroeconomic and spillover effects of increasing the degree of competition in the Italian services sector. Our results indicate that reducing the service sector markups to the levels of the rest of the euro area increases in the long run Italian GDP by 11 percent and welfare (measured in terms of steady state consumption equivalents) by about 3.5 percent. Half of the GDP increase would be realized in the first three years. The spillover effects to the rest of the euro area are limited.
    Keywords: competition, general equilibrium models, markups, monetary policy
    JEL: C51 E31 E52
    Date: 2009–03
  25. By: Dalen, H.P. van; Henkens, K. (Tilburg University, Center for Economic Research)
    Abstract: Why is labour mobility in the European Union so low? To shed light on this issue we focus and examine international labour migration intentions of the Dutch potential labour force. A key characteristic of intended labour migration of the Dutch is that its low level and the fact that it is strongly age related. The low expected rate of migration can be traced to expectations about finding work abroad and the perception that foreign experience is not perceived to be valued by Dutch employers. In addition to this it appears that partners within a household carry a large weight in deciding to move. If one of the partners is against moving, emigration will not take place.
    Keywords: labour mobility;migration;identity
    JEL: J61 F22 D84
    Date: 2009
  26. By: Alexander Eickelpasch (Deutsches Institut für Wirtschaftsforschung, Department of Innovation, Manufacturing, Service); Alexander Vogel (Institute of Economics, University of Lüneburg)
    Abstract: The determinants of export behaviour at firm level have been widely investigated for manufacturing companies. By contrast, what has remained largely neglected is a detailed investigation in the service sector. As aggregate statistics show, international trade in services has grown significantly over the last few years. However, it is unclear why some companies export and others do not. This paper presents some initial results about the German business services sector at firm level. Using a unique panel dataset of enterprises from the business services sector (transport, storage and communication, real estate, renting and business activities) for the years 2003 to 2005, we analysed the impact of several firm-specific characteristics such as size, productivity, human capital, experience on the national market in Germany, etc. on the firms’ export performance. Further, we used the pooled fractional probit estimator, recently introduced by Papke & Wooldridge, an approach that considers both the special nature of the export intensity variable and in addition unobserved time-invariant characteristics. When there is no control for fixed enterprise effects the overall results are in line with previous studies. When there is a control for unobserved heterogeneity, the positive effects of productivity and human capital disappear, indicating that these variables are not per se positively related to export performance, but rather to time-constant characteristics that are unobserved. Size and product diversification still have a positive and significant effect.
    Keywords: Business services sector, export behaviour, firm performance
    JEL: F14 F23 L80
    Date: 2009–03

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