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on European Economics |
| By: | Silvia Gabrieli (Faculty of Economics, University of Rome "Tor Vergata") |
| Abstract: | This paper analyses the functioning of the overnight unsecured euro money market during the ongoing crisis in terms of i) operational efficiency of monetary policy implementation, ii) efficient reallocation of banking system’s reserves, iii) developments in the pricing of interbank loans. The results suggest that monetary policy implementation has been hampered by the crisis, particularly after the end of September 2008. A heightened awareness of counterparty credit risk seems to be one key factor behind the downward pressure on unsecured rates, as well as behind the notable increase in their cross-section dispersion. Starting from September 2008, and even more in October 2008, banks perceived as relatively “riskier” pre-turmoil paid significantly higher interest rates to borrow overnight funds. In November, a non-uniform softening of the strains occurred: only the most active (roughly the largest) borrowers experienced a notable price improvement. This is possibly a reflection of the bailouts of “too-big-to-fail” institutions. Heterogeneous developments in banks’ funding costs also suggest a move against the integration of the euro interbank market. |
| Keywords: | Interbank market; Financial crisis; Monetary policy operational efficiency; Moral hazard; European financial integration |
| JEL: | E58 G21 |
| Date: | 2010–05–28 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:158&r=eec |
| By: | Benjamin (Institute for International Integration Studies, Trinity College Dublin); |
| Abstract: | The eastern enlargement of the European Union in 2004 triggered a large flow of migrant workers from the new member states to the UK and Ireland. This paper analyzes the impact of this migration wave on the real wages in the source countries. I consider the case of Lithuania, which had the highest share of emigrants relative to its workforce among all ten new member states. Using data from the Lithuanian Household Budget Survey and the Irish Census, I find that emigration had a significant positive effect on the wages of men who stayed in the country, but no such effect is visible for women. A percentage point increase in the emigration rate increases the real wage of men on average by 1\%. Several robustness checks confirm this result. |
| Keywords: | Emigration, EU Enlargement, Labor Mobility |
| JEL: | F22 J61 R23 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:iis:dispap:iiisdp326&r=eec |
| By: | Karsten Staehr |
| Abstract: | This paper seeks to identify factors driving consumer price inflation in the new EU member countries from Central and Eastern Europe. Different theories are discussed, including some of particular importance to economies experiencing high economic growth and rapid structural change. The explanatory power of the theories is tested using panel data estimations based on annual data from 1997 to 2007. Convergence- related factors, including the Balassa-Samuelson and the Bhagwati capital-deepening effects, are important drivers of inflation. Import inflation and, by implication, exchange rate developments have an important impact, while the exchange rate regime is unimportant. Higher government debt and larger revenues are associated with higher inflation. The cyclical position as measured by unemployment, employment changes or the current account balance is found to affect inflation. Food price shocks have large but short-lived effects, while energy price shocks have longer-lasting effects on the inflation rate. Multicollinearity across the explanatory variables makes it difficult to identify the effect of each individual factor |
| Keywords: | inflation, inflation theories, real and nominal convergence, inflation determinants |
| JEL: | E31 E42 E63 P24 |
| Date: | 2010–05–26 |
| URL: | http://d.repec.org/n?u=RePEc:eea:boewps:wp2010-06&r=eec |
| By: | Giuseppe Bertola; Aurelijus Dabušinskas; Marco Hoeberichts; Mario Izquierdo; Claudia Kwapil; Jérémi Montornès; Daniel Radowski |
| Abstract: | This paper analyses information from survey data collected in the framework of the Eurosystem\'s Wage Dynamics Network (WDN) on patterns of firm-level adjustment to shocks. We document that the relative intensity and the character of price vs. cost and wage vs. employment adjustments in response to cost-push shocks depend - in theoretically sensible ways - on the intensity of competition in firms\' product markets, on the importance of collective wage bargaining and on other structural and institutional features of firms and of their environment. Focusing on the pass-through of cost shocks to prices, our results suggest that the pass-through is lower in highly competitive firms. Furthermore, a high degree of employment protection and collective wage agreements tend to make this pass-through stronger |
| Keywords: | wage bargaining, labour-market institutions, survey data, European Union |
| JEL: | J31 J38 P50 |
| Date: | 2010–05–26 |
| URL: | http://d.repec.org/n?u=RePEc:eea:boewps:wp2010-07&r=eec |
| By: | Andrés Rodríguez-Pose (IMDEA Ciencias Sociales); Roberto Ezcurra (Universidad Pública de Navarra) |
| Abstract: | The global drive towards decentralization has been increasingly justified on the basis that greater transfers of resources to subnational governments are expected to deliver greater efficiency in the provision of public goods and services and greater economic growth. This paper examines whether this is the case, by analysing the relationship between decentralization and economic growth in 21 OECD countries during the period between 1990 and 2005 and controlling not only for fiscal decentralization, but also for political and administrative decentralization. The results point towards a negative and significant association between fiscal decentralization and economic growth in the sample countries, a relationship which is robust to the inclusion of a series of control variables and to differences in expenditure preferences by subnational governments. The impact of political and administrative decentralization on economic growth is weaker and sensitive to the definition and measurement of political decentralization. |
| Keywords: | fiscal decentralization;political decentralization;administrative decentralization;economic growth;OECD |
| JEL: | H71 H72 H77 |
| Date: | 2010–05–24 |
| URL: | http://d.repec.org/n?u=RePEc:imd:wpaper:wp2010-09&r=eec |
| By: | Janine Aron; John V. Duca; John Muellbauer; Keido Murata; Anthony Murphy |
| Abstract: | The consumption behaviour of UK, US and Japanese households is examined and compared using a modern Ando-Modigliani style consumption function. The models incorporate income growth expectations, income uncertainty, housing collateral and other credit effects. These models therefore capture important parts of the financial accelerator. The evidence is that credit availability for UK and US but not Japanese households has undergone large shifts since 1980. The average consumption-to-income ratio shifted up in the UK and US as mortgage down-payment constraints eased and as the collateral role of housing wealth was enhanced by financial innovations, such as home equity loans. The estimated housing collateral effect is roughly similar in the US and UK, while land prices in Japan still have a negative effect on consumer spending. Together with evidence for negative real interest rate effects in the UK and US and positive ones in Japan, this suggests important differences in the transmission of monetary and credit shocks between Japan and the US, UK and other credit-liberalized economies. |
| Keywords: | Consumption, Credit conditions, Housing collateral and housing wealth |
| JEL: | E21 E32 E44 E51 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:487&r=eec |
| By: | Pahnke, Luise; Honekamp, Ivonne |
| Abstract: | Financial literacy or “what consumers know about finance” has become part of the scientific discussion in recent years. In Germany, as in many other countries, the structure of social security benefits has changed substantially. Using the German SAVE study conducted by the Mannheim Institute for the Economics of Aging, in this paper financial literacy in Germany is measured and its effect on private retirement provisions is examined. Therefore, the SAVE data is empirically analysed whether financial literacy has an impact on the retirement savings decision in Germany. With our analysis we were able to prove that financial literacy encourages individual retirement planning for households with an above-average income. |
| Keywords: | Financial literacy; Retirement savings; Private pensions; Germany; SAVE |
| JEL: | D14 |
| Date: | 2010–05–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:22900&r=eec |
| By: | Vistesen, Claus |
| Abstract: | This paper quantifies and discusses the concept of current account imbalances in the Eurozone. Using panel data estimations, the analysis shows how the external positions of the Eurozone economies can be modelled as a function of divergences in unit labour costs. Specifically, the results indicate that the formation of EMU has exacerbated the extent to which even relatively small divergences in unit labour costs may materialize in large current account imbalances. These results are framed in the context of the idea of a debt snowball effect and why the idea of an internal devaluation as a tool to correct external imbalances is inconsistent with the current setup of the Eurozone. |
| Keywords: | The Eurozone; Debt snowball; Current Account Imbalances; EMU; |
| JEL: | F02 J3 H63 |
| Date: | 2010–05–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:22943&r=eec |