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on European Economics |
| By: | Mirdala, Rajmund |
| Abstract: | European Union member countries are currently exposed to negative implications of the economic and debt crisis. Questions associated with disputable implications of fiscal incentives seem to be contrary to the crucial need of the effective fiscal consolidation that is necessary to reduce excessive fiscal deficits and high sovereign debts. While challenges addressed to the fiscal policy and its anti-cyclical potential rose steadily but not desperately since the beginning of the economic crisis, the call for fiscal consolidation became urgent almost immediately and this need significantly strengthen after the debt crisis contagion flooded Europe. In the paper we provide an overview of main trends in public budgets and sovereign debts in ten European transition economies during last two decades. We identify episodes of successful and unsuccessful (cold showers versus gradual) fiscal (expenditure versus revenue based) consolidations by analyzing effects of improvements in cyclically adjusted primary balance on the sovereign debt ratio reduction. We also estimate VAR model to analyze effects of fiscal shocks (based on one standard deviation in total expenditure, direct and indirect taxes) to real output. It is expected that responses of real output to different types of (consolidating) fiscal shocks may vary and thus provide more precise ideas about a feasibility (i.e. side effects on the macroeconomic performance) of expenditure versus revenue based fiscal consolidation episodes. Economic effects of fiscal consolidating adjustments are evaluated for two periods (pre-crisis and extended) to reveal crisis effects on fiscal consolidation efforts. |
| Keywords: | fiscal policy adjustments, fiscal consolidation, cyclically adjusted primary balance, government expenditures, tax revenues, unrestricted VAR, Cholesky decomposition, SVAR, structural shocks, impulse-response function |
| JEL: | C32 E62 H20 H50 H60 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46792&r=eec |
| By: | Florence Bouvet (United States Naval Academy); Ryan Brady (United States Naval Academy); Sharmila King (University of the Pacific) |
| Abstract: | The European sovereign-debt crisis began in Greece when the government announced in December 2009 that its debt reached 121% of GDP (or 300 billion euros) and its 2009 budget deficit was 12.7% of GDP - four times the level allowed by the Maastricht Treaty. The Greek crisis soon spread to other Economic and Monetary Union (EMU) countries, notably Ireland, Portugal, Spain and Italy. Using quarterly data for the 2000-2011 period, we implement a Panel-Vector Autoregressive (PVAR) model for 11 EMU countries to examine the extent to which a rise in a country’s bond-yield spread or debt–to-GDP ratio affects another EMU countries’ fiscal and macroeconomic outcomes. To distinguish between interdependence and contagion among EMU countries, we compare results obtained for the pre-crisis period (2000-2007) with the crisis period (2008-2011) and control for global risk aversion. |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:usn:usnawp:44&r=eec |
| By: | Pilar Gómez-Fernández-Aguado (Department of Financial Economics and Accounting, Universidad de Jaén); Antonio Partal-Ureña (Department of Financial Economics and Accounting, Universidad de Jaén); Antonio Trujillo-Ponce (Department of Financial Economics and Accounting, Universidad Pablo de Olavide) |
| Abstract: | Using This paper analyzes the effects on the Spanish banking system of the EU proposal for a new Directive on deposit insurance systems based on risk-sensitive premiums. To do this, we examine the risk profile of Spanish banks during the 2007-2011 period according to several indicators reflecting capital adequacy, asset quality, profitability and liquidity. We conclude that most of banks would increase their contributions with the proposed system, evidencing the cyclical character of the new model. Our results also suggest that risk-based schemes could provide an incentive for sound management by reducing the premiums for those banks with better risk profiles. |
| Keywords: | Banking regulation; financial safety net; deposit insurance premiums; deposit insurance system; moral hazard; European banking system |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:pab:fiecac:13.01&r=eec |
| By: | Zsolt Darvas |
| Abstract: | Data from 135 countries covering five decades suggests that creditless recoveries, in which the stock of real credit does not return to the pre-crisis level for three years after the GDP trough, are not rare and are characterised by remarkable real GDP growth rates: 4.7 percent per year in middle-income countries and 3.2 percent per year in high-income countries. However, the implications of these historical episodes for the current European situation are limited, for two main reasons. First, creditless recoveries are much less common in high-income countries, than in low-income countries which are financially undeveloped. European economies heavily depend on bank loans and research suggests that loan supply played a major role in the recent weak credit performance of Europe. There are reasons to believe that, despite various efforts, normal lending has not yet been restored. Limited loan supply could be disruptive for the European economic recovery and there has been only a minor substitution of bank loans with debt securities. Second, creditless recoveries were associated with significant real exchange rate depreciation, which has hardly occurred so far in most of Europe. This stylised fact suggests that it might be difficult to re-establish economic growth in the absence of sizeable real exchange rate depreciation, if credit growth does not return. |
| Keywords: | creditless recoveries, credit growth, financial structure, real exchange rate adjustment |
| JEL: | E32 E44 E51 F31 G21 O40 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:mkg:wpaper:1303&r=eec |
| By: | Fernando Hervas Soriano (JRC-IPTS); Joerg Zimmermann (JRC-IPTS) |
| Abstract: | This report presents the findings of the seventh survey on trends in business R&D investment. These are based on 187 responses of mainly larger companies from the 1000 EU-based companies in the 2011 EU Industrial R&D Investment Scoreboard. These 187 companies are responsible for R&D investment worth almost €56 billion, constituting around 40% of the total R&D investment by the 1000 EU Scoreboard companies. The main result is that these top R&D investing companies expect their global R&D investments to grow by 4% annually from 2012 to 2014. The average share of sales coming from new innovative products and services was 18%, varying from 33% in high R&D intensity sectors to 10% in low R&D intensity ones. The differences between the sectors were not in all cases related to R&D intensity or net sales of the companies but rather seemed to reflect different sectoral innovation cycles. Collaboration agreements are considered a more important form of knowledge sharing activities than licencing (except for high R&D intensity sectors), which could be a sign of the increasing importance of open innovation. For the impact of factors and policies on the company’s innovation activities, national public support had the most positive effect, followed by availability of qualified personnel and EU public support. As in previous surveys, labour costs and conditions of IPR (enforcement, time and costs) continued to be perceived as negative factors for company innovations. This reveals the importance of fostering an efficient IPR regime for companies’ innovation activities. |
| Keywords: | Industrial Economics, Corporate R&D and innovation; productivity; business trends; technological innovation; intangible assets; competitiveness; growth and employment; company growth; Europe 2020 strategy. |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc72991&r=eec |
| By: | Kaier, Klaus; Müller, Christoph |
| Abstract: | A major aim of the recent updates of National Accounting standards (SNA2008 and ESA2010) is to provide a more complete picture of households' wealth. In this course it will become mandatory for European countries to publish annual estimates of unfunded public pension entitlements (UPPE) from 2017 onwards. This study describes the methodological concepts behind this new figure of national accounts. After a review of past studies on the subject of UPPE we provide a large cross-country comparison for 18 EU countries of this new pension wealth figures and discuss a number of possible applications for policy makers and researchers. This includes the use to estimate the offset between UPPE and savings (Feldstein 1974). Finally, we show the distribution of households' wealth across Europe including financial wealth, dwellings and UPPE. Many prosperity differences between countries with Beveridgean and Bismarkian pension systems as well as between western and central eastern European countries are eliminated when considering these three wealth categories. In addition, a direct comparison of UPPE with replacement rates shows that these two proxies for the generosity of pension systems are completely uncorrelated at the cross-country level. -- |
| Keywords: | households' wealth,pension liabilities,pension entitlements,household saving |
| JEL: | E21 H55 H63 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fzgdps:52&r=eec |
| By: | Sabrina Auci (University of Palermo); Laura Castellucci (University of Rome "Tor Vergata"); Manuela Coromaldi (University of Rome “Niccolò Cusano) |
| Abstract: | The successful development of the welfare state that transpired for three decades after WWII in the developed countries, came to a halt around the end of the 1980s. Since then, the number of articles and books dedicated to the crisis of the welfare state has increased. We can now assert that at the turn of the century, almost all industrialized countries had cut at least “some” entitlements in their welfare program along with other expenditure items, and the trend continued in the first decade of this century. To defend the cuts and possibly to justify continuing cuts, several economic reasons, both theoretical and empirical, have been highlighted. From mention of Baumol’s disease to the fiscal crisis, the support for making such decisions by governments gained momentum, with their political inspiration changing during the same period in favor of more conservative, right-wing positions. The low productivity of the public sector and the high level of tax burden were the substantial arguments used to support cuts. The aim of this paper is to provide an empirical investigation into the impact of retrenchment of the public sector on the performance of 15 European countries. In particular, we aim to empirically test the view that “big government” reduces a country's efficiency. We have found that no such empirical support exists. We have also included analysis of the distribution of income through the Gini index and have found the standard trade-off relation between inequality and efficiency. |
| Keywords: | Stochastic frontier production function, public sector productivity, welfare |
| JEL: | H11 H53 O4 D6 |
| Date: | 2013–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:274&r=eec |
| By: | Masciantonio, Sergio |
| Abstract: | This paper develops a methodology to identify systemically important financial institutions building on that developed by the BCBS (2011) and used by the Financial Stability Board in its yearly G-SIFIs identification. This methodology is based on publicly available data, providing fully transparent results with a G-SIFIs list that helps to bridge the gap between market knowledge and supervisory decisions. Moreover the results encompass a complete ranking of the banks considered, according to their systemic importance scores. The methodology has then been applied to EU and Eurozone samples of banks to obtain their systemic importance ranking and SIFIs lists. A statistical analysis and some geographical and historical evidence provide further insight into the notion of systemic importance, its policy implications and the future applications of this methodology. |
| Keywords: | banks, balance sheets, systemic risk, SIFIs, financial stability, regulation |
| JEL: | C81 G01 G10 G18 G20 G21 G28 |
| Date: | 2013–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46788&r=eec |