nep-eec New Economics Papers
on European Economics
Issue of 2009‒11‒07
eight papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Enhancing Trade Through Migration. A Gravity Model of the Network Effect. By Laura Casi.
  2. Market Opportunities and the Owner Identity. Are Family Firms different? By Marco Cucculelli; Francesco Marchionne
  3. A comparative study of business incubators and technoparks in the EU By Irene Daskalopoulou; Panagiotis Liargovas; Anastasia Petrou
  4. VAT and the EC Internal Market: The Shortcomings of Harmonisation By Rita de la Feria
  5. Interest Rate Transmission Mechanism of Monetary Policy in the Selected EMU Candidate Countries By Rajmund Mirdala
  6. Hierarchical contracting in grant decisions: ex-ante and ex-post evaluation in the context of the EURegional Policy By Michela Cella; Massimo Florio
  7. Financial health, exports and firm survival: A comparison of British and French firms By Holger Görg; Marina-Eliza Spaliara
  8. What is Economics? – Attitudes and views of German economists By Bruno S. Frey; Silke Humbert; Friedrich Schneider

  1. By: Laura Casi.
    Abstract: While trade liberalization has always been the core of common policies, only in very recent years Europe has started to address the challenge of migration in a comprehensive way. Conventional wisdom considers potential gains from liberalizing trade much higher for European countries than the benefits deriving from liberalization of migration. This paper gives evidence of the benefits European host countries had from immigration, identifying trade channel as the key driver of these benefits. It focuses on 17 European Union member states and 10 extra-European partners with the highest immigration flows towards the EU-27. The period considered is the decade 1997-2006. Controlling for endogeneity, the results I obtain suggest that migration have a statistically significant and robust enhancing effect on European countries exports, this effect being particularly important when considering differentiated commodities rather than homogeneous goods. This confirms the importance of the “network effect” of migration for European countries. Evidence on imports, instead, is puzzled. To my knowledge this is the first attempt in the literature to test the trade enhancing effect of migration using a panel, including a consistent number of European Countries and extra-European partner quite different in terms of geographical location, socio-economics and cultural characteristics and inspecting such recent years. This further extends existing evidence on the network effect and allows considering the results valid in a cross-country analysis over time.
    Keywords: International Migration, Economic Integration, Networks, Europe.
    JEL: F15 F22
    Date: 2009–10
  2. By: Marco Cucculelli (Universit… Politecnica delle Marche, Faculty of Economics "Giorgio Fu…"); Francesco Marchionne (Universit… Politecnica delle Marche, Faculty of Economics "Giorgio Fu…")
    Abstract: We test the hypothesis that the identity of the owner affects firm ability to seize market opportunities differently according to the firm's actual vs. "optimal" size (size gap). By grouping firms in size clusters having a similar probability of adopting a size-adjusting strategy (growth or downsizing), we measure how the sensitivity of firm sales to demand shocks changes in response to the difference in owner identity and the firm size gap. We use data from a panel of 7,459 continental western European firms over the period 1995-2004 and Eurostat 3-digit sectoral data on firm size distribution in Europe. Our findings show that family business sales are less sensitive to market demand than other firms, particularly when the actual firm size is larger than optimal size.
    Keywords: family firms, optimal size class, owner identity, performance
    JEL: D21 G32 L11 L25 L26
    Date: 2009–10
  3. By: Irene Daskalopoulou; Panagiotis Liargovas; Anastasia Petrou
    Abstract: The present study undertakes a comparative analysis of the development of business incubators and technoparks in the EU member countries. We estimate three intensity indicators for business incubators and technoparks activity and use both a uniform and a weighted rank order of the EU member countries to illustrate regional differences in the intensity of incubation activity within the EU. Exploratory analysis reveals that a region’s endowments base differentiates its ability to benefit from additive effects generated by the presence and operation of business incubators.
    Keywords: technology transfer, business incubators, technoparks, EU.
    Date: 2009
  4. By: Rita de la Feria (Oxford University Centre for Business Taxation)
    Abstract: From the outset, turnover taxes have played a fundamental role in the European integration process. Harmonisation of these taxes was perceived an integral part of achieving a common market, and for this reason it was given priority. Over forty years since the introduction of a common VAT system, VAT is usually regarded as a broadly harmonised tax. Paradoxically, however, it is precisely this high level of harmonisation which seems to have allowed the preservation of some aspects of VAT law which constitute an obstacle to the establishment of the EC internal market. The aim of this paper is to highlight the shortcomings of harmonisation within the VAT area, and namely how harmonisation has prevented the European Court of Justice (ECJ) from applying the EC Treaty provisions to the field of VAT, resulting in the maintenance of laws which could arguably be regarded as contrary to the EC internal market and as restrictions to the fundamental freedoms.
    Date: 2009
  5. By: Rajmund Mirdala (Faculty of Economics, Technical University of Košice, Slovakia)
    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 in Hungary (January 2000) with broad band (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 higher sensitivity of domestic variables to interest rates shocks can be interpreted as a convergence of monetary policies in candidate countries towards the ECB’s monetary policy.
    Keywords: Monetary policy, Short-term interest rates, Structural vector autoregression, Variance decomposition, Impulse-response function
    JEL: C32 E52
    Date: 2009–03
  6. By: Michela Cella; Massimo Florio
    Abstract: This paper applies incentive theory to the context of the European Union (EU) Regional Policy. The core instruments of the policy are the Structural Funds, capital grants that ?ow from the European Commission (EC) to Mem- ber States and regional authorities to promote investment and growth at local level. The EU grants need a co-payment by the regional government and do not cover in full the investment cost. We model this situation, similar to several other supra- national or federal contexts, as a simple principal-supervisor-agent model of the investment game between a supranational player (the principal), such as the EC, a non (fully) benevolent regional government (the supervisor), and a private ?rm (the executing agency). We show how the role of providers of additional information, the region (ex-ante) and an evaluator (ex-post) is crucial to reducing the optimal value of the grant and to improving the inef- ?ciencies caused by asymmetric information at the grant decision stage in a federal hierarchy
    Keywords: Hierarchical contracting, project evaluation, EU Regional Policy
    JEL: D82 H77 R58
    Date: 2009–06
  7. By: Holger Görg; Marina-Eliza Spaliara
    Abstract: We examine the differential effects of financial status and exporting activity on the likelihood of survival for firms in the UK and France - two countries with different financial systems. We aim to answer two main questions: What is the direct impact of financial characteristics and different facets of exporting activity on the likelihood of survival? Do the sensitivities of survival incidence to financial variables vary with the exporting status of firms? We find strong evidence that continuous exporters face a higher probability of survival compared to starters, continuous non-exporters and firms exiting the exporting market. Further, important sensitivities of survival prospects to financial indicators are observed for the UK firms which might be explained by the "market based" economy. Finally, a within and across countries comparison reveals that the survival of exporting groups varies substantially depending on firms' financial status, the financial system and the prolonged participation in the export market
    Keywords: exports, financial health, firm survival
    JEL: F1 L2 G3
    Date: 2009–10
  8. By: Bruno S. Frey; Silke Humbert; Friedrich Schneider
    Abstract: Which schools of thought are favored by German economists? What makes a good economist and which economists have been most influential? These questions were addressed in a survey, conducted in the summer of 2006 among the members of the ‘Verein für Socialpolitik’, the association of German speaking economists. An econometric analysis is used to identify to what extent ideological preferences or personal factors determine the respondents’ answers. Our results suggest that German economists favor Neoclassics as a school of thought and appreciate the contributions of their Anglo-Saxon colleagues much more than their fellow compatriots’ contributions. Furthermore, a ‘good’ economist should have expertise in a certain field, as well as a broader knowledge of general economics. Some of the results can be compared to Colander (2008). The results indicate that graduate programs noted for their American style greatly influence a student’s opinion as to what attributes a good economist must have.
    Keywords: Economics, economists, school of thought, neoclassics, homo oeconomicus
    Date: 2009–10

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