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on European Economics |
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Issue of 2009‒10‒03
fourteen papers chosen by Giuseppe Marotta University of Modena and Reggio Emilia |
| By: | Fabio Canova (ICREA-UPF); Matteo Ciccarelli (European Central Bank); Eva Ortega (Banco de España) |
| Abstract: | We study the effects that the Maastricht treaty, the creation of the ECB, and the Euro changeover had on the dynamics of European business cycles using a panel VAR and data from ten European countries - seven from the Euro area and three outside of it. There are slow changes in the features of business cycles and in the transmission of shocks. Time variations appear to be unrelated to the three events of interest and instead linked to a process of European convergence and synchronization. |
| Keywords: | Business cycles, European Monetary Union, Panel VAR, Structural changes |
| JEL: | C15 C33 E32 E42 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:0921&r=eec |
| By: | Rotfuß, Waldemar; Conrad, Christian; Rittler, Daniel |
| Abstract: | This paper empirically examines price formation in the European Union Emissions Trading Scheme (EU ETS). Our analysis shows that unexpected allocations of European Union Allowances (EUAs) lead to pronounced price reactions of the expected signs. Moreover, we find evidence that the adjustment of EUA prices to the European Commission's decisions on second National Allocation Plans (NAPs) is not instantaneous, but takes up to six hours after the decision announcement. |
| Keywords: | EU ETS,price formation,European Union Allowance (EUA),European Commission |
| JEL: | G13 G14 G15 G19 Q4 Q5 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:09045&r=eec |
| By: | Meller, Barbara; Nautz, Dieter |
| Abstract: | This paper uses the European Monetary Union (EMU) as a natural experiment to investigate whether more effective monetary policy reduces the persistence of inflation. Taking into account the fractional integration of inflation, we confirm that inflation dynamics differed considerably across Euro area countries before the start of EMU. Since 1999, however, results obtained from panel estimation indicate that the degree of long run inflation persistence has converged. In line with theoretical predictions, we find that the persistence of inflation has significantly decreased in the Euro area probably as a result of the more effective monetary policy of the ECB. |
| Keywords: | Monetary Policy Effectiveness and Inflation Persistence,Panel Test for Fractional Integration,Change in Inflation Persistence |
| JEL: | C22 C23 E31 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fubsbe:20098&r=eec |
| By: | Julien Chevallier; Yannick Le Pen; Benoît Sévi |
| Abstract: | To improve risk management in the European Union Emissions Trading Scheme (EU ETS), the European Climate Exchange (ECX) has introduced option instruments in October 2006 after regulatory authorization. The central question we address is: can we identify a potential destabilizing effect of the introduction of options on the underlying market (EU ETS futures)? Indeed, the literature on commodities futures suggest that the introduction of derivatives may either decrease (due to more market depth) or increase (due to more speculation) volatility. As the identi¯cation of these effects ultimately remains an empirical question, we use daily data from April 2005 to April 2008 to document volatility behavior in the EU ETS. By instrumenting various GARCH models, endogenous break tests, and rolling window estimations, our results overall suggest that the introduction of the option market had no effect on the volatility in the EU ETS. These finding are robust to other likely in°uences linked to energy and commodity markets. |
| Keywords: | EU ETS, Option prices, Volatility, GARCH, Rolling Estimation, Endogenous Structural Break Detection |
| JEL: | Q48 Q57 Q58 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2009-33&r=eec |
| By: | Busch, Ulrike; Nautz, Dieter |
| Abstract: | Controllability of longer-term interest rates requires that the persistence of their deviations from the central bank's policy rate (i.e. the policy spreads) remains sufficiently low. This paper applies fractional integration techniques to assess the persistence of policy spreads of euro area money market rates along the yield curve. Independently from anticipated policy rate changes, there is strong evidence for all maturities that policy spreads exhibit long memory. We show that recent changes in the operational framework and the communication strategy of the European Central Bank have significantly decreased the persistence of euro area policy spreads and, thus, have enhanced the central bank's in influence on longer-term money market rates. |
| Keywords: | Long memory and fractional integration,controllability and persistence of interest rates,new operational framework of the ECB |
| JEL: | C22 E43 E52 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fubsbe:20095&r=eec |
| By: | Giovanni Prarolo (Università di Bologna); Elena Bellini (FEEM); Gianmarco I.P. Ottaviano (University of Bologna, FEEM and CEPR); Dino Pinelli (FEEM) |
| Abstract: | We investigate the relationship between diversity and productivity in Europe using an original dataset covering the NUTS 3 regions of 12 countries of the EU15 (Austria, Belgium, Denmark, France, former Western Germany, Ireland, Italy, the Netherlands, Portugal, Spain, Sweden and the United Kingdom). In so doing, we follow the empirical methodology developed by Ottaviano and Peri (2006a) in the case of US cities. The main idea is that, as cultural diversity may affect both production and consumption through positive or negative externalities, the joint estimation of price and income equations is needed to identify the dominant effect. Based on this methodology, we find that diversity is positively correlated with productivity. Moreover, we find evidence that causation runs from the former to the latter. These results for EU regions are broadly consistent with those found by Ottaviano and Peri for US cities. |
| Keywords: | Cultural Diversity, Economic Performance, Productivity, Europe |
| JEL: | O5 O11 O57 R5 R58 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2009.63&r=eec |
| By: | Köhler, Matthias |
| Abstract: | Ownership structures widely differ across the EU. While large blockholdings dominate in the banking sector in Continental Europe, ownership is widely dispersed in the United Kingdom. These differences have consequences for corporate governance in the EU banking sector. This paper analyzes the efficiency of shareholder control and hostile takeovers as corporate governance mechanisms in the EU banking sector against the background of the regulatory environment and differences in the ownership structure of banks. Particular attention is put on current trends in the ownership structure of banks (e. g. sovereign wealth funds). The paper is based on a new dataset on shareholdings in listed banks in the EU banking sector. The results indicate that EU regulations have not always improved corporate governance in the banking sector. While shareholder control has been improved by a better protection of minority shareholder rights, the efficiency of the takeover market has been reduced in Continental Europe. |
| Keywords: | Banks,blockholdings,corporate governance,hostile takeovers,takeover directive |
| JEL: | G21 G34 G38 K29 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:08110r&r=eec |
| By: | Yann Algan (Sciences Po, OFCE); Christian Dustmann (University College London, CReAM); Albrecht Glitz (Universitat Pompeu Fabra); Alan Manning (Centre for Economic Performance, London School of Economics) |
| Abstract: | A central concern about immigration is the integration into the labour market, not only of the first generation, but also of subsequent generations. Little comparative work exists for Europe’s largest economies. France, Germany and the UK have all become, perhaps unwittingly, countries with large immigrant populations albeit with very different ethnic compositions. Today, the descendants of these immigrants live and work in their parents’ destination countries. This paper presents and discusses comparative evidence on the performance of first- and second-generation immigrants in these countries in terms of education, earnings, and employment. |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:200922&r=eec |
| By: | Hoekman, Bernard; Ozden, Caglar |
| Abstract: | This paper discusses options to facilitate movement of workers between high-income and developing countries within the framework of trade agreements, focusing on the European Union’s partnership agreements with neighboring countries. Existing frameworks for cooperation offer the possibility of expanding temporary rather than longer-term or permanent movement of workers since extant trade agreements provide scope for negotiating specific market access commitments for services, including those delivered through the cross-border movement of natural persons. Even though the potential for such"embodied"trade in services will not be anywhere near what would be associated with substantial liberalization of migration regimes, furthering the services trade dimension in the European Union’s ¬trade agreements offers significant potential Pareto gains. For the partner countries these gains from temporary movement of service providers are both direct - through greater employment in/revenue from providing services in the European Union - and indirect - by helping to increase and sustain higher growth at home. |
| Keywords: | Population Policies,Labor Markets,Public Sector Corruption&Anticorruption Measures,Labor Policies,Housing&Human Habitats |
| Date: | 2009–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5049&r=eec |
| By: | Mohler, Lukas; Seitz, Michael |
| Abstract: | In this paper, we apply the methodology developed by Feenstra (1994) and Broda and Weinstein (2006) to estimate the gains from imported variety for the 27 countries of the European Union using Eurostat data from the period of 1999 to 2008. Our results show that newer and smaller member states exhibit high gains from newly imported varieties. |
| Keywords: | Welfare gains from trade; Trade in variety; European Union |
| JEL: | F12 F14 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17589&r=eec |
| By: | Reister, Timo; Spengel, Christoph; Finke, Katharina; Heckemeyer, Jost H. |
| Abstract: | Current political discussions in Germany and other European countries illustrate the importance accorded to revenue and distribution effects of tax reforms. Whereas widely recognized concepts of effective tax measures can provide important insights into the incentives of taxation they do not allow robust revenue estimations or distribution analyses. Hence there is need to supplement existing quantitative tax models by approaches apt for these issues of policy analysis. Against this background, this paper puts forward a corporate microsimulation model allowing an ex-ante evaluation of tax reforms with regard to distributional consequences and revenue effects. Central feature of the model is the processing of financial statements included in the DAFNE data base of the Bureau van Dijk. The firm-level data is supplemented by survey data on tax accounting practices. The focus of the paper is on the documentation of the model set-up. Its application will be addressed in future publications. |
| Keywords: | Microsimulation Model,Corporate Taxation,Policy Analysis,Firm-Level Data |
| JEL: | C15 D30 H25 H32 K34 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:08117r&r=eec |
| By: | Juan Carlos Martinez Oliva (Banca d'Italia) |
| Abstract: | This paper examines German reunification from its inception. It shows that after the rapid expansion of the early years, former East Germany entered a phase of slow growth that made it impossible to bridge the gap with West Germany. Unemployment remains high, low growth rates appear ingrained, and persistent regional unbalances affect the social and economic prospects of the area. The long-term outlook is threatened by adverse demographic trends and by the need for fiscal consolidation. A comparison between eastern Germany and the Italian Mezzogiorno shows that both rely heavily on government intervention. This dependency is perpetuated by the evident difficulty of setting an autonomous growth process in motion. By contrast, unlike the Mezzogiorno, the eastern German regions enjoy a high level of infrastructural endowment, a legal system that is both efficient and effective, and excellent human capital, partly inherited from the former DDR. |
| Keywords: | Germany, Mezzogiorno, transition, integration, Finanzausgleich, Treuhandanstalt |
| JEL: | H0 O47 O52 P2 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_51_09&r=eec |
| By: | Conefrey, Thomas (ESRI); Fitz Gerald, John (ESRI) |
| Abstract: | With the advent of EMU monetary policy can no longer be used to prevent housing market bubbles in regional economies such as Ireland or Spain. However, fiscal policy can and should be used to achieve the same effect. This paper shows that the advent of EMU relaxed existing financial constraints in Ireland and Spain, allowing a more rapid expansion of the housing stock in those countries to meet their specific demographic circumstances. However, the failure to prevent these booms turning into bubbles did lasting damage to the two economies, damage that could have been avoided by more appropriate fiscal policy action. |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp315&r=eec |
| By: | Steinbuks, J.; Meshreky, A.; Neuhoff, K. |
| Abstract: | This paper analyzes the effect of energy prices on energy efficiency, separately accounting for operational and investment choices in different sectors. For this purpose, capital stock is characterised by vintages with different intensities of energy use, calculated as a function of exogenously-evolving technology availability and energy prices. Our model separately accounts for substitution between inputs to for production (labour, energy and materials), and the potential for more efficient use of these inputs by choosing more efficient technologies at the time of investment. The model is estimated for 23 OECD countries across four sectors, and their respective prices for final energy consumption over the period 1990-2005. Vintage representation of capital stock significantly improves the explanatory value of the model at the sector level. Our results imply that rising energy costs result in substantial decline in energy use in the long-run. |
| Keywords: | energy efficiency, energy prices, investment, vintage capital model |
| JEL: | D24 E22 Q41 Q43 |
| Date: | 2009–09–24 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0933&r=eec |