|
on European Economics |
| By: | Filippo Brutti (University of Zurich); Philip Sauré (Swiss National Bank) |
| Abstract: | We assess the role of financial linkages for the transmission of sovereign risk in the Euro Crisis. Building on the narrative approach by Romer and Romer (1989), we use financial news to identify structural shocks in a VAR model of daily sovereign CDS for eleven European countries. To estimate how these shocks transmit across borders, we use data on cross-country bank exposures to sovereign debt. Our results indicate that exposure to Greek sovereign debt and debt of Greek banks constitute important transmission channels. Overall, financial linkages explain up to two thirds of transmission of sovereign debt in the Euro Crisis. |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:szg:worpap:1201&r=eec |
| By: | Benjamin Elsner (Trinity College Dublin, Department of Economics and IIIS) |
| Abstract: | This paper studies the impact of a large emigration wave on real wages in the source country. Following EU enlargement in 2004, a large share of the workforce of the Central and Eastern Europe emigrated to Western Europe. Using data from Lithuania for the calibration of a factor demand model I show that emigration had a significant short-run impact on real wages in the source country. In particular, emigration led to a change in the wage distribution between young and old workers. The wages of young workers increased by 6%, whereas the wages of old workers decreased by around 1%. On the contrary, I find no effect on the wage distribution between workers of different education levels. |
| Keywords: | Emigration, EU Enlargement, European Integration, Wage Distribution |
| JEL: | F22 J31 O15 R23 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2011.76&r=eec |
| By: | Jenny E. Ligthart (CentER and Department of Economics, Tilburg University, P.O. Box 90153, 5000 LE Tilburg, The Netherlands.); Sebastian E. V. Werner (Tilburg University, Warandelaan 2, 5037 AB Tilburg, The Netherlands.) |
| Abstract: | We present a new approach to study empirically the effect of the introduction of the euro on the pattern of currency invoicing. Our approach uses a compositional multinomial logit model, in which currency choice is explained by both currency-specific and country-specific determinants. We use unique quarterly panel data on the invoicing of Norwegian imports from OECD countries for the 1996-2006 period. We find that eurozone countries have substantially increased their share of home currency invoicing after the introduction of the euro, whereas the home currency share of non-eurozone countries fell slightly. In addition, the euro as a vehicle currency has overtaken the role of the US dollar in Norwegian imports. The substantial rise in producer currency invoicing by eurozone countries is primarily caused by a drop in inflation volatility and can only to a small extent be explained by an unobserved euro effect. JEL Classification: F33, F41, F42, E31, C25. |
| Keywords: | Euro, invoicing currency, exchange rate risk, inflation volatility, vehicle currencies, compositional multinomial logit. |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20111414&r=eec |
| By: | Timo Baas (Institute for Employment Research (IAB) and Free University of Berlin); Herbert Brücker (University of Bamberg, Institute for Employment Research (IAB) and IZA) |
| Abstract: | This paper examines the macroeconomic consequences of the diversion of migration flows away from Germany towards the UK in the course of the EU’s Eastern Enlargement. The EU has agreed transitional periods for the free movement of workers with the new member states from Central and Eastern Europe. The selective application of migration restrictions during the transitional periods has resulted in a reversal of the pre-enlargement allocation of migration flows from the new member states across the EU. Based on a forecast of the migration potential under the conditions of free movement and of the transitional arrangements, we employ a CGE model with imperfect labour markets to analyse the macroeconomic effects of this diversion process. We find that EU Eastern enlargement has increased in the GDP per capita in the UK substantially, but that the diversion of migration flows towards the UK has reduced wage gains and the decline in unemployment there. The effects of the EU Eastern enlargement are less favourable for Germany, but the diversion of migration flows has protected workers there against a detrimental impact on wages and unemployment. |
| Keywords: | EU Eastern enlargement, international migration, computable equilibrium model, wage-setting. |
| JEL: | F15 F22 C68 J61 J30 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:nor:wpaper:2012010&r=eec |
| By: | Pierluigi Montalbano (Department of Economics, University of Sussex and Sapienza University); Silvia Nenci (University of Roma Tre) |
| Abstract: | The goal of this paper is to provide an "ex ante" assessment of the long-run "treatment" effect of ENP on EU-MED Free Trade Area. Supplementary objectives are the presentation of new up-to-date "in-sample" estimates of the actual trade potential in the Pan-european Common Market as well as more robust estimates of the trade enhancing impact of EU deep integration policy. The novel aspect of this work is twofold: i) to present nonparametric matching estimators along with gravity estimates; ii) to assume, as a counterfactual (i.e., the hypothetical situation of ENP full implementation), the ex-post long-run average treatment effect of the Europe Agreements, which are the unique experience to date of "full partnership without membership". Our empirical outcomes show a likely strong and robust impact on EU-MED trade integration of the new "deep integration" efforts made by the EU. This is confirmed by both the applied dummy strategy and the non parametric matching technique. This result seems to be linked to other factors than simply trade preferences alone. Our empirical evidence is relevant both to policymaking, since it provides an "ex ante" assessment of the efficacy of deep integration under the EU-MED regional cooperation framework, and to the methodological point of view, since it contributes to improvements in empirical estimates of the "policy impact" of EU preferential agreements. |
| Keywords: | Trade policy, European integration, Gravity Model, Matching econometrics, Southern Mediterranean Countries |
| JEL: | F13 F15 F17 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:sus:susewp:3112&r=eec |
| By: | Mubariz Hasanov (Hacettepe University, Department of Economics); Tolga Omay (Cankaya University, Department of International Trade Management) |
| Abstract: | In this paper, we examine causal relationships among inflation rate, output growth rate, inflation uncertainty and output uncertainty for ten Central and Eastern European transition countries. For this purpose, we estimate a bivariate GARCH model that includes output growth and inflation rates for each country. Then we use conditional standard deviations of inflation and output to proxy nominal and real uncertainty, respectively, and perform Granger-causality tests. Our results suggest that inflation rate induces uncertainty about both inflation rate and output growth rate, which is detrimental for real economic activity. On the other hand, we find that output growth rate reduces macroeconomic uncertainty. In addition, we also examine and discuss causal relationships among remaining variables. |
| Keywords: | Inflation; Output growth; Uncertainty; Granger-Causality Tests; Transition Countries |
| JEL: | C32 C51 C52 E10 E30 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:hac:hacwop:20128&r=eec |
| By: | Noël, P.; Findlater, S.; Chyong, C. K. |
| Abstract: | The Baltic States (Estonia, Latvia and Lithuania) are three amongst the smallest gas markets in Europe. They import all the gas they consume from Russia, with whom they have difficult political relationships. A disruption of their supply from Russia, whatever the cause, would have severe consequences as a large share of their peak winter consumption could not be replaced by alternative gas or other fuels. The three governments want to invest in improving gas supply security and the European Commission pushes in the same direction. But what should they do? We present an assessment of the cost of various national and regional options – dual-fuel for heat plants and CHPs; strategic gas storage; strategic LNG terminals – to increase gas supply security. The cost is calculated over thirty years for different scenarios of supply disruptions. Uncertainty in commodity prices and interest rates is taken into account through Monte Carlo simulations. We draw the policy conclusions, taking into account the regional political context. |
| JEL: | O13 P28 Q48 |
| Date: | 2012–01–23 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1204&r=eec |
| By: | Laenen, Wout; Moons, Cindy (Hogeschool-Universiteit Brussel (HUB), Belgium); Persyn, Damiaan (LICOS and VIVES, KULeuven, Faculty of Business and Economics, Leuven, Belgium) |
| Abstract: | This study examines the evolution of labour costs and taxes in Belgium and neighbouring countries. We try to clarify the common issues in the current debate concerning labour costs and labour demand in Belgium and neighbouring countries and investigate the influence of labour costs on employment by using macroeconomic OECD data. We conclude that the tax wedge in Belgium is one of the highest of all OECD countries. Labour costs in Belgium rose at a moderate tempo, but labour productivity evolved less favourably compared with neighbouring countries. Belgian unit labour costs, considered as an indicator of competitiveness, evolved unfavourably. By using a dynamic error correction model we find a statistically significant but limited negative relation between labour costs and employment. A decrease in labour costs of 10% results in an increase of employment of only 1.3%, which indicates a strongly inelastic labour demand. In contrast to studies based on microeconomic data, which find generally higher wage elasticities, on the basis of this study no decisive elements can be found to question the rationale of the current wage indexation mechanism. |
| Keywords: | economic history; ECSC; European Integration; regional concentration |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:hub:wpecon:201125&r=eec |
| By: | Patrick Criqui (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : FRE3389 - Université Pierre Mendès-France - Grenoble II); Silvana Mima (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : FRE3389 - Université Pierre Mendès-France - Grenoble II) |
| Abstract: | In this research, we provide an overview of the climate-security nexus in the European energy sector, through a model based analysis of scenarios produced with the POLES model. The scenarios describe the consequences of different degrees of GHG emission constraint, at world level, but also for a case where Europe adopts an ambitious climate policy, while the rest of the world sticks to much more modest abatement policies. The analysis shows that under such stringent climate policies, Europe may benefit of a significant double dividend, first in its capacity to develop a new cleaner and climate-friendlier energy model, and second in a lower vulnerability to potential price or supply shocks on the international energy markets. |
| Keywords: | climate policy ; scenarios ; energy security |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00661043&r=eec |
| By: | Lee E. Ohanian; Andrea Raffo |
| Abstract: | We build a dataset of quarterly hours worked for 14 OECD countries. We document that hours are as volatile as output, that a large fraction of labor adjustment takes place along the intensive margin, and that the volatility of hours relative to output has increased over time. We use these data to reassess the Great Recession and prior recessions. The Great Recession in many countries is a puzzle in that labor wedges are small, while those in the U.S. Great Recession - and those in previous European recessions - are much larger. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:1039&r=eec |
| By: | Boissin, Romain |
| Abstract: | Long run returns of IPO firms’ recommendations in Europe reveal possible conflicts of interest and pressures faced by financial analysts over the 1991-2005 period. Nevertheless, recent European legislations about investment research have led to better long run performance of IPO firms’ recommendations issued by affiliated analysts over the 2001-2005 period. Findings reveal that market participants do not fully incorporate the perceived value of recommendations. Indeed, difference between affiliated and unaffiliated analysts’ recommendations is statistically significant over one, three or five year horizon. The timing of recommendations specifies that investors pay more attention to affiliated analysts’ recommendations made later in the aftermarket. This result could suggest that the later is the recommendation made in the IPO aftermarket the weaker is the pressure faced by affiliated analysts. |
| Keywords: | Initial Public Offering; conflicts of interest; financial analysts; long run performance |
| JEL: | G14 G24 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:36057&r=eec |