nep-eec New Economics Papers
on European Economics
Issue of 2015‒12‒08
eighteen papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Squaring the cycle: capital flows, financial cycles, and macro-prudential policy in the euro area By Silvia Merler
  2. The growing intergenerational divide in Europe By Pia Hüttl; Karen E. Wilson; Guntram B. Wolff
  3. Banking Union as a Shock Absorber By Ansgar Belke; Daniel Gros
  4. Sovereign Spreads in the Eurozone: Is Market Discipline Working? By Zuccardi Huertas Igor Esteban
  5. The limitations of policy coordination in the euro area under the European Semester By Zsolt Darvas; Alvaro Leandro
  6. Filling the gap: open economy considerations for more reliable potential output estimates By Zsolt Darvas; András Simon
  7. Exchange Rate Bands of Inaction and Play-Hysteresis in Greek exports to the Euro Area, the US and Turkey – Sectoral Evidence By Ansgar Belke; Dominik Kronen
  8. Looking for a success in the euro crisis adjustment programs: the case of Portugal By Ricardo Reis
  9. Firmer foundations for a stronger European Banking Union By Dirk Schoenmaker
  10. The grand divergence: global and European current account surpluses By Zsolt Darvas
  11. House prices: bubbles, exuberance or something else? Evidence from euro area countries By Rita Lourenço; Paulo M.M. Rodrigues
  12. Shoe-leather costs in the euro area and the foreign demand for euro banknotes By Alessandro Calza; Andrea Zaghini
  13. Financial deepening and income distribution inequality in the euro area By Donatella, Baiardi; Claudio, Morana
  14. Regional Bank Efficiency and its Effect on Regional Growth in “Normal” and “Bad” Times By Ansgar Belke; Ulrich Haskamp; Ralph Setzer
  15. On the sources of macroeconomic stability in the euro area. By S. Avouyi-Dovi; J-G. Sahuc
  16. Wages and prices in Italy during the crisis: the firms’ perspective By Francesco D’Amuri; Silvia Fabiani; Roberto Sabbatini; Raffaele Tartaglia Polcini; Fabrizio Venditti; Eliana Viviano; Roberta Zizza
  17. The Welfare State and the demographic dividend: A cross-country comparison By Gemma Abio Roig; Concepció Patxot Cardoner; Miguel Sánchez-Romero; Guadalupe Souto Nieves
  18. Taylor rules for CEE-EU countries: How much heterogeneity? By Sydykova, Meerim; Stadtmann, Georg

  1. By: Silvia Merler
    Abstract: Highlights Before the financial and economic crisis, monetary policy unification and interest rate convergence resulted in the divergence of euro-area countries’ financial cycles. This divergence is deeply rooted in the financial integration spurred by currency union and strongly correlated with intra-euro area capital flows. Macro-prudential policy will need to deal with potentially divergent financial cycles, while catering for potential cross-border spillovers from domestic policies, which domestic authorities have little incentive to internalise. The current framework is unfit to deal effectively with these challenges. The European Central Bank should be responsible for consistent and coherent application of macro-prudential policy, with appropriate divergences catering for national differences in financial conditions. The close link between domestic financial cycles and intra-euro area capital flows raises the question of whether macro-prudential policy in the euro area can be compatible with free flows of capital. Financial cycle divergence had its counterpart in the build-up of macroeconomic imbalances, so effective implementation of the Macroeconomic Imbalance Procedure would support and strengthen macro-prudential policy.
    Date: 2015–11
  2. By: Pia Hüttl; Karen E. Wilson; Guntram B. Wolff
    Abstract: Highlights During the economic and financial crisis, the divide between young and old in the European Union increased in terms of economic well-being and allocation of resources by governments. As youth unemployment and youth poverty rates increased, government spending shifted away from education, families and children towards pensioners. To address the sustainability of pension systems, some countries implemented pension reforms. We analysed changes to benefit ratios, meaning the ratio of the income of pensioners to the income of the active working population, and found that reforms often favoured current over future pensioners, increasing the intergenerational divide. We recommend reforms in three areas to address the intergenerational divide - improving European macroeconomic management, restoring fairness in government spending so the young are not disadvantaged, and pension reforms that share the burden fairly between generations. 1. The emergence of an intergenerational divide During seven years of economic crisis, the intergenerational income and wealth divide has increased in many European Union countries. In the bloc as a whole, young people on average have become significantly poorer, while poverty among pensioners has been reduced (Figure 1). Unemployment among the under-25s has risen notably while older workers (aged 50-64) have been less affected (Figure 2). While this pattern has been particularly pronounced in southern Europe, it can also be observed for the European Union as a whole. In the EU as a whole, unemployment in the 15-24 age group increased by 7.8 percentage points between 2007 and 2013, peaking at 23.7 percent in 2013, while unemployment among older workers in the 50-64 age group increased somewhat less, by 2.4 percentage points to 7.8 percent in 2013. A more precise measure of forced inactivity of young people is the 'not in employment, education or training' (NEET) rate, which varies significantly between countries. In the countries most hit by the crisis (Cyprus, Greece, Ireland, Italy and Spain), the NEET rate increased by more than 7 percentage points between 2007 and 2013, peaking at over 20 percent in Greece and Italy (Figure 2). By contrast, the NEET rate declined in Germany in the same period, from 8.9 to 6.3 percent. Figure 1 - Pre and post-crisis material deprivation rate and unemployment rate in the EU Source - Bruegel based on Eurostat. Note - The material deprivation rate is defined as the enforced inability (rather than the choice not) to pay for at least three of - unexpected expenses; a one-week annual holiday away from home; a meal involving meat, chicken or fish every second day; adequate heating; durable goods such as washing machines, colour televisions, telephones or cars; or being confronted with payment arrears. Figure 2 - 15-24 year olds not in employment, education or training (%) Source - Eurostat. Material deprivation rates are typically higher for young people than for those aged 65 or over (Figure 1). In 2007, 20 percent of young people below the age of 18 were materially deprived, compared to 16 percent of people aged over 65. As with the NEET rates, there are major differences between countries. While less than 10 percent of young people faced poverty in Denmark, Finland and Sweden in 2007 (the proportion is even smaller for older people), more than 20 percent of young and old people were materially deprived in Cyprus, Greece and Portugal. In Latvia, Hungary and Poland about 40 percent of young people were poor. Figure 3 shows the percentage change per country in the material deprivation rate during the crisis (2007-13). The rate increased substantially more for the young compared to the old, especially in the countries hit most by the crisis (except Ireland), meaning that already high levels before the crisis in those countries were exacerbated. Only Italy and to a lesser extent the United Kingdom experienced deteriorating ratios for both the young and old. By contrast, Finland and Sweden, with low levels to start with, saw their respective material deprivation rates decline for both young and old people over the same period. The same is valid for Poland1. Figure 3 - Change in material deprivation rate (2007-13, %) Source - Bruegel based on Eurostat. Overall, a worrying picture emerges. First, poverty indicators have shown the emergence of an intergenerational divide, especially in crisis-hit southern Europe. Second, unemployment has become a major concern, with young people hit hardest during the crisis in the most stressed countries. Surges in youth unemployment and youth poverty are particularly worrying because they have long-lasting effects on productivity and potential growth, marking young people for their lifetimes, reducing their productivity and often excluding them from the labour market for an extended period of time (Bell and Blanchflower, 2010; Arulampalam, 2001; Gregg and Tominey, 2005).
    Date: 2015–11
  3. By: Ansgar Belke; Daniel Gros
    Abstract: This study investigates the shock-absorbing properties of a banking union by providing a detailed comparison between the way regional financial shocks have been absorbed at the federal level in the US, but have led to severe regional (national) financial dislocation and tensions in Europe and particularly in the euro area. The institutions of the banking union, which is now emerging in the euro area, should increase its capacity to deal with future regional boom and bust cycles. Cross-border capital flows in the form of equity appear to be much more stable than those taking the form of credit, especially inter-bank credit. It therefore follows that cross-border banks would be useful to deal with regional shocks. But large banks pose the ‘too big to fail’ problem and they would also propagate regional shocks, especially if they originate in large countries, to the entire area. The extent to which the (incomplete) banking union now put in place for the euro area provides some shock absorption is also discussed.
    Keywords: banking union, currency union, default, shock absorber, two-tier reinsurance system.
    JEL: E42 E50 F3 G21
    Date: 2015–02
  4. By: Zuccardi Huertas Igor Esteban
    Abstract: This paper studies the behavior of sovereign spreads of countries in the European Monetary Union (EMU) and their apparent disconnection with country-specific fundamentals before the 2008-2013 debt crisis. We test three characteristics of spreads: i) a change in the level of spreads, ii) a weak link between spreads and macroeconomic fundamentals, and iii) a reduction in the cross-country variance of spreads. We find that, in comparison to economies from other regions, spreads from EMU members are lower, the relationship of spreads with variables like fiscal balance, public debt, and GDP growth rate is weaker, and their cross-country variance is statistically lower than the cross-country variance of spreads from non-EMU countries between 1999 and 2005. The results are consistent with the existence of creditor moral hazard in the EMU's sovereign bond market before the crisis.
    Keywords: European Monetary Union; Sovereign Debt Risk; Investor (Creditor) Moral Hazard.
    JEL: F33 G12
    Date: 2015–11
  5. By: Zsolt Darvas; Alvaro Leandro
    Abstract: This paper was requested by the European Parliament’s Economic and Monetary Affairs Committee for the Economic Dialogue with the President of the Eurogroup, 10 November 2015. It was originally published under the title "Economic policy coordination in the euro area under the European Semester". This document is also available on Economic and Monetary Affairs Committee homepage. Copyright remains with the European Union. Highlights The European Semester is a yearly process of the European Union to improve economic policy coordination and ensure the implementation of the EU’s economic rules. Each Semester concludes with recommendations for the euro area as a whole and for each EU member state. We show that implementation of recommendations was poor at the beginning of the Semester in 2011, and has deteriorated since. The European Semester is not particularly effective at enforcing even the EU’s fiscal and macroeconomic imbalance rules. We find that euro-area recommendations with tangible economic goals are not well reflected in the recommendations issued to member states. Finally, we review various proposals to improve the efficiency of the European Semester and conclude that while certain steps could be helpful, policy coordination will likely continue to have major limitations. Executive Summary This paper assesses economic policy coordination in the euro area under the European Semester. In sections 2 and 3, we make a positive (and not normative) assessment by taking Council recommendations made in the context of the European Semester as given and evaluating their implementation and consistency, without assessing their desirability. Section 4, which assesses options to improve compliance with the recommendations, is by definition more subjective. The key conclusion of section 2, which analyses the implementation of European Semester recommendations in comparison with OECD Going for Growth recommendations, is that the European Semester is not effective - Implementation of recommendations given under the European Semester was modest (40 percent in the EU according to our indicator) at its inception in 2011. In spite of the efforts made to improve the European Semester in recent years the implementation index steadily fell to 29 percent by 2014. Euro-area countries, for which policy coordination should be stronger in principle, implemented their recommendations only somewhat more than non-euro area countries (31 percent versus 23 percent for the 2014 recommendations), while the implementation rate fell steadily in both country groups from 2011-14. The rate of implementation of recommendations related to the Stability and Growth Pact (SGP) is typically higher (44 percent on average in 2012-14) than the implementation of recommendations related to the Macroeconomic Imbalance Procedure (32 percent in 2012-14) and other recommendations (29 percent in 2012-14). Even though SGP recommendations have the strongest legal basis, the average 44 percent implementation rate cannot be regarded as large, while the EIP implementation rate is even lower, suggesting that the European Semester is not particularly effective in enforcing the EU’s fiscal and macroeconomic imbalance rules. Despite huge efforts by European institutions to coordinate economic policies within the European Semester, the rate of implementation of these recommendations is not higher than the rate of implementation of the OECD’s unilateral recommendations. Overlaps between the European Semester and OECD recommendations only partly explain this similarity. OECD reform responsiveness rates were practically the same in 2013-14 and in 2007-08, suggesting that reform efforts have not increased compared to the pre-crisis period. Countries tend to undertake more reforms when they are under a financial assistance programme, experience market pressure or face high unemployment. Yet even in those countries, reform momentum fades once the situation normalises. Section 3 takes the 2015 recommendations for the euro area as given and assesses their consistency with the country-specific recommendations (CSRs) to the five largest member states. Our general conclusion is that the 2015 euro-area recommendations with tangible economic goals are not well reflected in the recommendations issued to member states (with the exception of reforming services markets) - On the 2015 euro-area recommendations with tangible economic goals, we conclude that - The reference to the euro-area aggregate fiscal stance is not much more than empty rhetoric. How the optimal aggregate fiscal stance should be determined is not defined. The Council recommends that the aggregate fiscal stance should be in line with sustainability risks and cyclical conditions, but it does not even state what this aggregate stance is. There is no top-down approach to determine national fiscal stances that correspond with the optimal aggregate, and it is therefore accidental if the sum of country-specific fiscal stances corresponds with the optimal aggregate fiscal stance.
    Date: 2015–11
  6. By: Zsolt Darvas; András Simon
    Abstract: Highlights   This paper argues that the Phillips curve relationship is not sufficient to trace back the output gap, because the effect of excess demand is not symmetric across tradeable and non-tradeable sectors. In the non-tradeable sector, excess demand creates excess employment and inflation via the Phillips curve, while in the tradeable sector much of the excess demand is absorbed by the trade balance. We set up an unobserved-components model including both a Phillips curve and a current account equation to estimate ‘sustainable output’ for 45 countries. Our estimates for many countries differ substantially from the potential output estimates of the European Commission, IMF and OECD. We assemble a comprehensive real-time dataset to estimate our model on data which was available in each year from 2004-15. Our model was able to identify correctly the sign of pre-crisis output gaps using real time data for countries such as the United States, Spain and Ireland, in contrast to the estimates of the three institutions, which estimated negative output gaps real-time, while their current estimates for the pre-crisis period suggest positive gaps. In the past five years the annual output gap estimate revisions of our model, the European Commission, IMF, OECD and the Hodrick-Prescott filter were broadly similar in the range of 0.5-1.0 percent of GDP for advanced countries. Such large revisions are worrisome, because the European fiscal framework can translate the imprecision in output gap estimates into poorly grounded fiscal policymaking in the EU.
    Date: 2015–10
  7. By: Ansgar Belke; Dominik Kronen
    Abstract: In this paper a non-linear model is applied, where suddenly strong spurts of exports occur when changes of the exchange rate go beyond a zone of inaction, which we call “play” area – analogous to mechanical play. We implement an algorithm describing path-dependent play-hysteresis into a regression framework. The hysteretic impact of real exchange rates on Greek exports is estimated based on the period from 1995Q1 to 2014Q4. Looking at some of the main export partners of Greece, the euro area, Turkey and the US, and some of its most im-portant tradeable sectors we identify significant hysteretic effects for a part of the Greek ex-ports. We find that Greek export activity is characterized by “bands of inaction” with respect to changes in the real exchange rate and calculate the further real depreciation needed to trig-ger a spurt in Greek exports. To check for robustness we (a) estimate Greek export equations for a limited sample excluding the recent financial crisis, (b) use export weight instead of de-flated nominal exports as the dependent variable, (c) employ a political uncertainty variable as a determinant of the width of the area of weak reaction. Overall, we find that those specifica-tions which take uncertainty into account display the best goodness of fit. In other words: the option value of waiting dominates the real exchange rate effect on Greek exports.
    Keywords: real depreciation; Greece; play-hysteresis; modelling techniques; switching/spline regression; export demand
    JEL: F14 C51
    Date: 2015–09
  8. By: Ricardo Reis (Department of Economics School of Arts and Sciences Columbia University; Centre for Macroeconomics (CFM))
    Abstract: Portugal’s adjustment program in 2010-14 under the troika was extensive and aimed at addressing its large debt and anemic growth, so it may serve as a blueprint for reforms in the Eurozone. This paper argues that, conditional on a diagnosis of the underlying problems of the Portuguese economy, the adjustment program failed to deliver in definitely addressing the problems in public finances, but succeeded in leaving promising signs of reform in the structure of the economy. In particular, on the negative side, public debt is still high, primary surpluses improved modestly, and public spending barely fell as the problem of ever-rising pension payments remained unsolved. On the positive side, unemployment fell sharply, exports and the current account balance rose, capital and labor reallocated to more productive and tradable sectors, and the country is growing faster than the EU for the first time in 15 years.
    Date: 2015–11
  9. By: Dirk Schoenmaker
    Abstract: Highlights The move to European Banking Union involving the supervision and resolution of banks at euro-area level was stimulated by the sovereign debt crisis in the euro area in 2012. However, the long-term objective of Banking Union is dealing with intensified cross-border banking. The share of the assets of national banking systems that come from other EU countries was rising before the financial and economic crisis of 2007, but went into decline thereafter in the context of a general retrenchment of international banking. Most recent data, however, suggests the decline has been halted. About 14 percent of the assets of banks in Banking Union come from other EU countries, while about a quarter of the assets of the top 25 banks in the Banking Union are held in other EU countries. While a crisis-prevention framework for the euro area has largely been completed, the crisis-management framework remains incomplete, potentially creating instability. There is no governance mechanism to resolve disputes between different levels of crisis-management agencies, and incentives to promote optimum oversight are lacking. Most importantly, risk-sharing mechanisms do not adequately address the sovereign-bank loop, with a lack of clarity about the divide between bail-in and bail-out. To complete Banking Union, the lender-of-last-resort and deposit insurance functions should move to the euro-area level, breaking the sovereign-bank loop. A fully-fledged single deposit insurance (and resolution) fund should be favoured over a reinsurance scheme for reasons of cost and simplicity.
    Date: 2015–11
  10. By: Zsolt Darvas
    Abstract: Global current account imbalances widened before the 2007/2008 crisis and have narrowed since. While the post-crisis adjustment of European current account deficits was in line with global developments (though more forceful), European current account surpluses defied global trends and increased. We use panel econometric models to analyse the determinants of medium-term current account balances. Our results confirm that higher fiscal balances, higher GDP per capita, more rapidly aging populations, larger net foreign assets, larger oil rents and better legal systems increase the medium-term current account balance, while a larger growth differential and a higher old-age dependency ratio reduce it. European current account surpluses became excessive during the past twelve years according to our estimates, while they were in line with model predictions in the preceding three decades. Generally, the gap between the actual current account and its fitted value in the model has a strong predictive power for future current account changes. Excess deficits adjust more forcefully than excess surpluses. However, in the 2004-07 period, excess imbalances were amplified, which was followed by a forceful correction in 2008-15, with the exception of European surpluses
    Date: 2015–08
  11. By: Rita Lourenço; Paulo M.M. Rodrigues
    Abstract: The real estate market plays a crucial role in a country's economy. Since residential property is the most important component of households' wealth, real estate markets price trends can affect households' consumption and investment decisions via wealth effects. As real estate is often used as collateral for loans, changes in real estate prices affect households' debt and their ability to repay loans, and consequently also impact on the banking sector. As housing covers a basic human need, analyzing fluctuations in residential property prices is also important from a social perspective. Furthermore, since the construction industry is a main employer, investment in construction has a major influence on economic activity. Thus, developments in the real estate market have far-reaching implications on the economy as a whole as well as on financial stability. In this paper we use different methodologies with the objective of providing evidence regarding potential bubble/exuberant behaviour of economic agents in several European countries and the US, over the last four decades.
    JEL: C12 C22
    Date: 2015
  12. By: Alessandro Calza (ECB); Andrea Zaghini (Bank of Italy)
    Abstract: We estimate the shoe leather costs of inflation in the euro area by using monetary data adjusted for holdings of euro banknotes abroad. While we find evidence of marginally negative shoe leather costs for very low nominal interest rates, our estimates suggest that these costs are non-negligible even for relatively moderate levels of anticipated inflation. We conclude that, despite the increased circulation of euro banknotes abroad, inflation tax is still predominantly borne by domestic agents in the euro area, with transfers of resources from abroad remaining small.
    Keywords: money demand, welfare cost of inflation, currency abroad, euro banknotes
    JEL: E41 C22
    Date: 2015–11
  13. By: Donatella, Baiardi; Claudio, Morana
    Abstract: The paper introduces a new specification of the Kuznets curve, where turning point per capita income is conditioned to the level of financial development. Within the proposed framework, it then provides new evidence on real income convergence for the euro area (EA) since the mid-1980s, with a special focus on the subprime and sovereign debt financial crises. We find strong empirical evidence in favor of an EA-wide steady-state financial Kuznets curve and of ongoing convergence across EA members toward a common per capita income turning point level. By means of a counterfactual analysis, we then detect a worsening in income inequality for all the EA countries during the financial crises, and not only for the peripheral countries, which were most strongly hit. From a policy perspective, our findings highlight the role of financial stability in fostering not only economic growth, but also to achieve a more even distribution of income.
    Keywords: Euro area, financial development, financial stability, income distribution inequality, Kuznets curve, real convergence, subprime mortgage and sovereign debt crisis
    JEL: G20 G28 O11 O15 O16
    Date: 2015–12–04
  14. By: Ansgar Belke; Ulrich Haskamp; Ralph Setzer
    Abstract: The financial crisis affected regions in Europe in a different magnitude. This is why we examine whether regions which incorporate banks with a higher intermediation quality grow faster in “normal” times and are more resilient in “bad” ones. For this purpose, we measure the intermediation quality of a bank by estimating its profit and cost efficiency while taking the changing banking environment after the financial crisis into account. Next, we aggregate the efficiencies of all banks within a NUTS 2 region to obtain a regional proxy for financial quality in twelve European countries. Our results show that relatively more profit efficient banks foster growth in their region. The link between financial quality and growth is valid in “normal” and in “bad” times. These results provide evidence to the importance of swiftly restoring bank pro_tability in euro area crisis countries through addressing high nonperforming loans ratios and decisive actions on bank recapitalization.
    Keywords: bank efficiency, financial development, regional growth, Europe
    JEL: G21 O47 O52
    Date: 2015–07
  15. By: S. Avouyi-Dovi; J-G. Sahuc
    Abstract: In the mid-1990s the euro area experienced a change in macroeconomic volatility. Around the same time, at business cycle frequencies the correlation between inflation and money growth changed markedly, turning from positive to negative. Distinguishing the periods pre- and post-1994, we estimate a dynamic stochastic general equilibrium model with money for the euro area. The model accounts for the salient facts. We then perform several counterfactual exercises to assess the drivers of these phenomena. The moderation of real variables was essentially due to relatively smaller shocks to investment, wage markups and preferences. The apparent lack of evidence for the quantity theory of money in the short run and the changes in the volatility of nominal variables resulted primarily from a more anti-inflationary and gradual monetary policy.
    Keywords: Macroeconomic volatility, quantity theory of money, monetary policy, DSGE model, euro area.
    JEL: E32 E51 E52
    Date: 2015
  16. By: Francesco D’Amuri (Bank of Italy); Silvia Fabiani (Bank of Italy); Roberto Sabbatini (Bank of Italy); Raffaele Tartaglia Polcini (Bank of Italy); Fabrizio Venditti (Bank of Italy); Eliana Viviano (Bank of Italy); Roberta Zizza (Bank of Italy)
    Abstract: Following the two surveys carried out in 2007 and 2009 on firms’ price and wage setting practices, in June 2013 the ESCB’s Wage Dynamics Network (WDN) conducted a third survey aimed at assessing, through a harmonised questionnaire, the most important transformations under way in the national labour markets. This paper documents the results of the survey carried out in Italy. The sovereign debt crisis severely hit the Italian economy, causing a collapse in demand, increased uncertainty and difficulties in accessing external finance. Firms responded by decreasing labour input (adjusting both the intensive and the extensive margins) more often than wages. However, wage-setting practices were also affected by the new economic landscape: the percentage of workers employed in firms enacting wage freezes or cuts has steadily increased since 2010, reaching 17% of the total workforce in the sectors considered in 2013. Furthermore, a large share of companies have adapted their pricing strategy to the new economic environment; the frequency of price adjustments has increased, mainly as a reaction to stronger competition.
    Keywords: labour cost adjustment, pricing strategies
    JEL: E31 J23 J30 J31
    Date: 2015–09
  17. By: Gemma Abio Roig (Universitat de Barcelona); Concepció Patxot Cardoner (Universitat de Barcelona); Miguel Sánchez-Romero (Wittgenstein Centre (IIASA, VID/OAW and WU)); Guadalupe Souto Nieves (Universitat Autònoma de Barcelona)
    Abstract: The sustainability of the welfare state is in doubt in many developed countries due to drastic population ageing. The extent of the problem and the margin for reforms depend - among other factors - on the size of the ageing process and the size of the public transfer system. The latter has a crucial impact on the extent to which the first demographic dividend previous to the ageing process turns into a second demographic dividend. The contribution of the different factors driving the demographic dividend is, ultimately, an empirical question. In this paper we contribute to the debate, exploding the cross-country comparison potentialities of the National Transfer Accounts (NTA) database. In particular, we introduce different configurations of the welfare state transfers – Sweden, United States and Spain - into a realistic demography Overlapping Generations (OLG) model and simulate its effects on the second demographic dividend.
    Keywords: Ageing, demographic dividend, intergenerational transfers, national transfer accounts, overlapping generations model, welfare state.
    JEL: J11 J18 E21 H53
    Date: 2015
  18. By: Sydykova, Meerim; Stadtmann, Georg
    Abstract: We derive Taylor rates for those CEE-EU countries which are not part of the Eurozone. The degree of heterogeneity decreased tremendously over time (2005 - 2015). Nevertheless, the business cycles are still not fully synchronized. As a consequence, joining the Eurozone seems to be premature and should not be an option right now.
    Keywords: CEE,monetary policy,currency union,convergence,Taylor rule
    JEL: E52 E58 F15
    Date: 2015

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