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on European Economics |
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Issue of 2017‒07‒02
23 papers chosen by Giuseppe Marotta Università degli Studi di Modena e Reggio Emilia |
| By: | Kanngiesser, Derrick; Martin, Reiner; Maurin, Laurent; Moccero, Diego |
| Abstract: | We contribute to the empirical literature on the impact of shocks to bank capital in the euro area by estimating a Bayesian VAR model identied with sign restrictions. The variables included in the VAR are those typically used in monetary policy analysis, extended to include aggregate banking sector variables. We estimate two shocks affecting the euro area economy, namely a demand shock and a shock to bank capital. The main findings of the paper are as follows: i) Impulse-response analysis shows that in response to a shock to bank capital, banks boost capital ratios by reducing their relative exposure to riskier assets and by adjusting lending to a larger extent than they increase the level of capital and reserves per se; ii) Historical shock decomposition analysis shows that bank capital shocks have contributed to increasing capital ratios since the crisis, impairing bank lending growth and contributing to widen bank lending spreads; and iii) counterfactual analysis shows that higher capital ratios pre-crisis would have helped dampening the euro area credit and business cycle. This suggests that going forward the use of capital-based macroprudential policy instruments may be helpful to avoid a repetition of the events seen since the start of the global financial crisis. JEL Classification: G21, C32, C11 |
| Keywords: | bank balance sheet adjustment, Bayesian VAR, capital ratio, euro area, macroprudential policy, sign restrictions |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20172077&r=eec |
| By: | Senra, Eva; Espasa Terrades, Antoni |
| Abstract: | The Bulletin of EU & US Inflation and Macroeconomic Analysis (BIAM) is a monthly publication that has been reporting real time analysis and forecasts for inflation and other macroeconomic aggregates for the Euro Area, the US and Spain since 1994. The BIAM inflation forecasting methodology stands on working with useful disaggregation schemes, using leading indicators when possible and applying outliers' correction. The paper relates this methodology to corresponding topics in the literature and discusses the design of disaggregation schemes. It concludes that those schemes would be useful if they were formulated according to economic, institutional and statistical criteria aiming to end up with a set of components with very different statistical properties for which valid single-equation models could be built. The BIAM assessment, which derives from a new observation, is based on (a) an evaluation of the forecasting errors (innovations) at the components' level. It provides information on which sectors they come from and allows, when required, for the appropriate correction in the specific models. (b) In updating the path forecast with its corresponding fan chart. Finally, we show that BIAM real time Euro Area inflation forecasts compare successfully with the consensus from the ECB Survey of Professional Forecasters, one and two years ahead. |
| Keywords: | Outliers; Indirect forecast; Disaggregation |
| JEL: | C13 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:cte:wsrepe:24678&r=eec |
| By: | Oliver Picek; Enno Schröder |
| Abstract: | We run simulations of current account rebalancing scenarios in the Euro Area and the European Union based on a closed multi-country input-output model. The spillover effects of domestic demand booms in the Northern European surplus countries are non-negligible, but not large. While they cannot on their own create a meaningful upswing in the former Southern European deficit countries, they could be an important element thereof. In particular, a Northern expansion can create the necessary policy space for a domestic demand-driven expansion in the European South by relaxing the balance of payments constraint. Then, a coordinated asymmetric expansion in the Euro Area could alleviate the unemployment crisis in the European South. |
| Keywords: | Current Account Imbalances, Current Account Rebalancing, Euro Crisis, Euro Zone, Domestic Demand Expansion, European Union |
| JEL: | F45 F32 F15 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:imk:wpaper:180-2017&r=eec |
| By: | Eckhard Hein (Berlin School of Economics and Law, Berlin (GE)); Petra Dünhaupt; Ayoze Alfageme; Marta Kulesza |
| Abstract: | In this paper we analyse the effects of financialisation on income distribution, before and after the Great Financial Crisis and the Great Recession, for three main Eurozone countries, France, Germany and Spain. We apply a Kaleckian perspective in which the focus will be on functional income distribution and thus on the relationship between financialisation and the wage share or the gross profit share. Financialisation may affect aggregate wage or gross profit shares of the economy as a whole through three channels: first, the sectoral composition of the economy, second the financial overhead costs and profit claims of the rentiers, and third the bargaining power of workers and trade unions. We examine empirical indicators for each of these channels, both before and after the crisis. We find that these countries have shown broad similarities regarding redistribution before the crisis, however, with some differences in the underlying determinants. These differences have carried through to the period after the crisis and have led to different results regarding the development of distribution since then. |
| Keywords: | Financialisation, distribution, financial and economic crisis, Kaleckian theory of distribution. |
| JEL: | D31 D33 D43 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:saq:wpaper:8/17&r=eec |
| By: | Georgiadis, Georgios; Jančoková, Martina |
| Abstract: | Financial globalisation and spillovers have gained immense prominence over the last two decades. Yet, powerful cross-border financial spillover channels have not become a standard element of structural monetary models. Against this background, we hypothesise that New Keynesian DSGE models that do not feature powerful financial spillover channels confound the effects of domestic and foreign disturbances when confronted with the data. We derive predictions from this hypothesis and subject them to data on monetary policy shock estimates for 29 economies obtained from more than 280 monetary models in the literature. Consistent with the predictions from our hypothesis we find: Monetary policy shock estimates obtained from New Keynesian DSGE models that do not account for powerful financial spillover channels are contaminated by a common global component; the contamination is more severe for economies that are more susceptible to financial spillovers in the data; and the shock estimates imply implausibly similar estimates of the global output spillovers from monetary policy in the US and the euro area. None of these findings applies to monetary policy shock estimates obtained from VAR and other statistical models, financial market expectations and the narrative approach. JEL Classification: F42, E52, C50 |
| Keywords: | financial globalisation, monetary policy shocks, New Keynesian DSGE models, spillovers |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20172082&r=eec |
| By: | Eckhard Hein (Berlin School of Economics and Law, Berlin (GE)); Petra Dünhaupt; Ayoze Alfageme; Marta Kulesza |
| Abstract: | In this paper we analyse the effects of financialisation on income distribution, before and after the Great Financial Crisis and the Great Recession, for the two liberal Anglo-Saxon economies, the US and the UK, and for a typical Nordic welfare state economy, Sweden. We apply a Kaleckian perspective in which the focus will be on functional income distribution and thus on the relationship between financialisation and the wage share or the gross profit share. Financialisation may affect aggregate wage or gross profit shares of the economy as a whole through three channels: first, the sectoral composition of the economy, second the financial overhead costs and profit claims of the rentiers, and third the bargaining power of workers and trade unions. We examine empirical indicators for each of these channels, both before and after the crisis. We find that these types of countries have shown broad similarities regarding redistribution before the crisis, however, with major differences in the underlying determinants. These differences have carried through to the period after the crisis and have led to different results regarding the development of distribution since then. |
| Keywords: | Financialisation, distribution, financial and economic crisis, Kaleckian theory of distribution. |
| JEL: | D31 D33 D43 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:saq:wpaper:9/17&r=eec |
| By: | Dániel Baksa (Central European University and Center for Economic and Regional Studies); István Kónya (Center for Economic and Regional Studies and Central European University) |
| Abstract: | This paper views the growth and convergence process of the four Visegrad economies - the Czech Republic, Hungary, Poland and Slovakia - through the lens of the open economy, stochastic neoclassical growth model. We use a unified framework to understand both the long-run convergence path and fluctuations around it. Our empirical exercise highlights both the role of initial conditions such as indebtedness and capital intensity, and random shocks in the growth process. In particular, we explore the importance of the external interest rate premium, and its role in driving investment and the trade balance. |
| Keywords: | stochastic growth, technology shocks, interest premium, small open economy, Bayesian estimation. |
| JEL: | E13 O11 O41 O47 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:nbp:nbpmis:266&r=eec |
| By: | Hein, Eckhard |
| Abstract: | This paper argues that the re-emergence of stagnation tendencies in modern capitalism can be related to financialisation and its macroeconomic failures leading to the recent crises, and in particular to the macroeconomic responses towards the crisis and the respective regime shifts in mature capitalist economies. The focus of the paper is on the latter, and it examines the regime changes for six mature capitalist economies, the two liberal Anglo-Saxon economies of the US and the UK, a representative country from the Nordic welfare states, Sweden, the three important Eurozone countries France, Germany and Spain, as well as the core Eurozone (EA-12) as a whole. The concept of macroeconomic regimes under the conditions of financialisation is recapitulated, applied to the period before the crisis, and finally the regime changes during and after the crisis are examined. It is shown that a dominant tendency towards export-led mercantilism, in particular in the Eurozone and its main member countries, imposes an aggregation problem on the global economy and thus contributes to stagnation and rising global macroeconomic risks. Finally, short- and long-run alternative policies to deal with these problems are suggested. |
| Keywords: | financialisation,stagnation,macroeconomic regimes,policy alternatives |
| JEL: | E02 E60 E61 F62 G38 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ipewps:902017&r=eec |
| By: | Olivier Blanchard (Peterson Institute for International Economics and MIT); Pedro Portugal (Bank of Portugal) |
| Abstract: | Over the past 20 years, Portugal has gone through a boom, a slump, a sudden stop, and now a timid recovery. Unemployment has decreased, but remains high, and output is still far below potential. Competitiveness has improved, but more is needed to keep the current account in check as the economy recovers. Private and public debt are high, both legacies of the boom, the slump and the sudden stop. Productivity growth remains low. Because of high debt and low growth, the recovery remains fragile. We review the history and the main mechanisms at work. We then review a number of policy options, from fiscal consolidation to fiscal expansion, cleaning up of non-performing loans, labor market reforms, product market reforms, and euro exit. We argue that at this point, the main focus of macroeconomic policy should be twofold. The first is the treatment of non-performing loans, which would allow for an increase in demand in the short run and an increase in supply in the medium run. We argue that, to the extent that such treatment requires recapitalization, it may make sense to finance it through an increased fiscal deficit, even in the face of high public debt. The second is product market reforms, and reforms aimed at increasing micro-flexibility in the labor market. Symmetrically, we also argue that at this point, some policies would be un¬desirable, among them faster fiscal consolidation, measures aimed at decreasing nominal wages and prices, and euro exit. |
| Keywords: | Portugal |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:mde:wpaper:0072&r=eec |
| By: | Da Silva, Antonio Dias; Givone, Audrey; Sondermann, David |
| Abstract: | The objective of this paper is to investigate which factors macroeconomic, policy‐related or institutional ‐ foster the implementation of structural reforms. To this objective, we look at episodes of structural reforms over three decades across 40 OECD and EU countries and link them to such factors. Our results suggest that structural reforms implementation is more likely during deep recessions and when unemployment rates are high. Moreover, the further distant from best practices, the more likely a country implements reforms. External pressures, such as being subject to a financial assistance programme, or being part of the EU Single Market facilitated pro‐competitive reforms. If at all, low interest rates tend to promote rather than discourage structural reforms, while there seems no clear link between fiscal policy and reforms. Moreover, reforms in product markets tend to increase the likelihood of labour market reforms following suit. Many robustness checks have been carried out which confirm our main results. JEL Classification: C23, D70, D72, P11, P16 |
| Keywords: | linear probability model, panel data, political economy, structural reforms |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20172078&r=eec |
| By: | Belke, Ansgar; Kronen, Dominik |
| Abstract: | This paper estimates the role of policy and exchange rate uncertainty shocks for EU countries' exports to the world economy. We examine the performance of the four biggest economies, namely Germany, France, Italy and the UK, under policy and exchange rate uncertainty in exports to some of the most important global export destinations (United States, Japan, Brazil, Russia, and China). For this purpose, we apply a non-linear model, 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 exports is estimated based on the period from 1995M1 to 2015M12. Looking at some of the main export destinations of our selected EU member countries, the United States, Japan and some of the BRICs (Brazil, Russia and China), we identify significant hysteretic effects for a large part of the EU member countries' exports. We find that their export activity is characterized by "bands of inaction" with respect to changes in the real exchange. |
| Keywords: | export demand,global economy,hysteresis,policy uncertainty,BRICs,playhysteresis,real exchange rate,switching/spline regression |
| JEL: | F14 C51 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:695&r=eec |
| By: | Jaccard, Ivan; Smets, Frank |
| Abstract: | Almost two decades after the introduction of the common currency differences in institutional frameworks remain a major source of cross-country heterogeneity in the eurozone. We develop a two-country model with incomplete international markets in which the availability of credit depends on the country’s institutional environment. Our main finding is that structural differences in domestic credit environments provide an explanation for the procyclicality of net capital inflows observed in the South of Europe. We show that frictions in domestic credit markets generate asymmetries in the transmission mechanism of shocks that are common to both regions. JEL Classification: F32, F20, G17 |
| Keywords: | cross-border financial markets, eurozone crisis, incomplete international asset markets, structural reforms |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20172076&r=eec |
| By: | Mihnea Constantinescu (Bank of Lithuania); Povilas Lastauskas (Bank of Lithuania and Faculty of Economics, Vilnius University) |
| Abstract: | We employ the recent Jord? et al. (2016) and Knoll et al. (2017) datasets to investigate the long-run relationship between house prices and credit volume, allowing for interest rate, real exchange rate and real gross domestic product (GDP). We refine the analysis using more recent data at the quarterly-level to define relevant co-integrating relationships across a number of European economies. Housing, GDP and credit cross-sectional averages are included in the analysis to detect potential spill-over effects. Empirical results indicate cross-country heterogeneities and an uneven feedback mechanism between credit and housing – the full loop is established only for several countries in the dataset. Important results relate to the statistical properties of the housing time series. Grouping countries for panel-like econometric exercises may lead to spurious regression results, poor inference and misleading policy implications. Short-run dynamics, compared to the long-run may often lead to contradicting policy advice if the order of integration of the house price series is not properly accounted for. Accounting for spatial patterns of house prices which cannot be attributed to global output shocks may provide useful insights into policy making. |
| Keywords: | house prices, credit, exogeneity and long-run relationships, policy, spill-overs |
| JEL: | C21 E51 O18 R31 |
| Date: | 2017–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:lie:wpaper:45&r=eec |
| By: | Mirdala, Rajmund; Kameník, Martin |
| Abstract: | The real output deterioration, high fiscal deficits and increased sovereign debt burden represents key phenomena that affected the maneuverability of fiscal authorities in the early crisis years. Controversy between fiscal sustainability and fiscally driven economic recovery fueled a large number of academic and policy discussions about the appropriate response of governments to the crisis challenges. Empirical literature provides mixed evidence about the effects of fiscal policy adjustments on the macroeconomic performance. Moreover, pro-cyclical patterns in fiscal policies of many countries during the pre-crisis period did not reveal clear lessons learned that would be beneficial for fiscal authorities during the crisis years. In the paper we examine effects of the fiscal policy shocks in CE3 (the Slovak Republic, the Czech Republic and Hungary) within different stages of the business cycle by employing threshold vector autoregression (TVAR) model. We calculate fiscal multipliers and generalized impulse-response functions to assess the responsiveness of the real output to the fiscal policy adjustments. The main objective is to determine whether effects of the fiscal policy shocks differ during expansion and recession. Our results indicate that the size of fiscal multipliers and responsiveness of the real output are generally higher for spending fiscal shocks while effects of revenue fiscal shocks are much less dynamic in all three countries. Moreover, results differs between upper (expansion) and lower (recession) regime as well as for the per-crisis and crisis periods. |
| Keywords: | fiscal policy, threshold VAR, structural shocks, fiscal multipliers, generalized impulse-response function |
| JEL: | C32 E62 H60 |
| Date: | 2017–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:79918&r=eec |
| By: | Belke, Ansgar; Gros, Daniel |
| Abstract: | This paper assesses the economic implications of the United Kingdom leaving the European Union. The basic data on trade in goods and services and investment between the two parties suggest that cost of 'Brexit' could be substantial. Trade between the UK and the EU27 is large and of a similar order of magnitude as transatlantic trade (between the EU and the US). The precise nature of the (hopefully free) trade agreement UK-EU-27 is still being negotiated. But all available studies concur that a significant disruption of trade links will impose economic costs on both sides. However, the EU27 would bear only a disproportionally small share of the total cost - not just because it is about five times larger than the UK in economic terms but also for fundamental reasons such as greater market power of its enterprises. Other studies on different free trade arrangements confirm the general proposition that the smaller party has more to gain from eliminating trade barriers (and to lose from imposing them). This implies that the EU will have the stronger negotiating position. |
| Keywords: | Brexit,European Union,free trade agreements,trade in goods and services,FDI |
| JEL: | F15 C63 C68 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:700&r=eec |
| By: | Marcin Grela (Narodowy Bank Polski); Aleksandra Majchrowska (Narodowy Bank Polski, University of Lodz); Tomasz Michałek (Narodowy Bank Polski); Jakub Mućk (Narodowy Bank Polski); Agnieszka Stążka-Gawrysiak (Narodowy Bank Polski); Grzegorz Tchorek (Narodowy Bank Polski, University of Warsaw); Marcin Wagner (Narodowy Bank Polski) |
| Abstract: | This paper is about the real convergence of six Central and Eastern European economies – Bulgaria, the Czech Republic, Hungary, Poland, Romania, and Slovakia – towards the more advanced EU-15 economies. Our major goal is to analyse empirically which factors have driven growth and convergence in the region in the last two decades. The results of our analysis based on a panel of 26 EU countries in 1997–2014 suggest that the real convergence was driven by both traditional (core) and ‘new growth theory’ growth factors (among other things, by innovation activity and trade). We demonstrate that the post-transition growth model prevailing in the CEE region, based on a large inflow of foreign capital (mainly in the form of FDI) has reached its limits. The CEE countries’ growth and convergence will now be driven mainly by factors affecting structural competitiveness, especially innovation activity, institutional environment and policies (or lack thereof) targeted at diminishing the influence of demographic developments on the labour market outcomes. |
| Keywords: | real convergence, growth, Central and Eastern Europe, EU, panel data analysis |
| JEL: | F43 O47 O43 O11 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:nbp:nbpmis:264&r=eec |
| By: | Izquierdo, Mario; Jimeno, Juan Francisco; Kosma, Theodora; Lamo, Ana; Millard, Stephen; Rõõm, Tairi; Viviano, Eliana |
| Abstract: | Against the backdrop of continuing adjustment in EU labour markets in response to the Great Recession and the sovereign debt crisis, the European System of Central Banks (ESCB) conducted the third wave of the Wage Dynamics Network (WDN) survey in 2014-15 as a follow-up to the two previous WDN waves carried out in 2007 and 2009. The WDN survey collected information on wage-setting practices at the firm level. This third wave sampled about 25,000 firms in 25 European countries with the aim of assessing how firms adjusted wages and employment in response to the various shocks and labour market reforms that took place in the European Union (EU) during the period 2010-13. This paper summarises the main results of WDN3 by identifying some patterns in firms’ adjustments and labour market reforms. It seeks to lay out the main lessons learnt from the survey in terms of both the general response of EU labour markets to the crisis and how these responses varied across the countries that took part in the survey. JEL Classification: E24, J30, J52, J68 |
| Keywords: | labour market adjustment, labour market reforms, survey data, wage dynamics network |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:2017192&r=eec |
| By: | Coenen, Günter; Ehrmann, Michael; Gaballoz, Gaetano; Hoffmann, Peter; Nakov, Anton; Nardelli, Stefano; Persson, Eric; Strasser, Georg |
| Abstract: | Monetary policy communication is particularly important during unconventional times because high uncertainty about the economy, the introduction of new policy tools and possible limits to the central bank’s toolkit could hamper the predictability of policy actions. We study how monetary policy communication should and has worked under such circumstances. Our main results relate to announcements of asset purchase programmes and the use of forward guidance. We show that announcements of asset purchase programmes have lowered market uncertainty, particularly when accompanied by a contextual release of implementation details such as the envisaged size of the programme. We also show that forward guidance reduces uncertainty more effectively when it is state‐contingent or when it provides guidance about a long horizon than when it is open‐ended or covers only a short horizon, and that the credibility of forward guidance is strengthened if the central bank also has embarked on an asset purchase programme. JEL Classification: E43, E52, E58 |
| Keywords: | asset purchase programme, central bank communication, forward guidance, unconventional monetary policy |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20172080&r=eec |
| By: | Muge Adalet McGowan; Dan Andrews; Valentine Millot |
| Abstract: | This paper explores the extent to which “zombie” firms – defined as old firms that have persistent problems meeting their interest payments – are stifling labour productivity performance. The results show that the prevalence of and resources sunk in zombie firms have risen since the mid-2000s and that the increasing survival of these low productivity firms at the margins of exit congests markets and constrains the growth of more productive firms. Controlling for cyclical effects, cross-country analysis shows that within-industries over the period 2003-2013, a higher share of industry capital sunk in zombie firms is associated with lower investment and employment growth of the typical non-zombie firm and less productivity-enhancing capital reallocation. Besides limiting the expansion possibilities of healthy incumbent firms, market congestion generated by zombie firms can also create barriers to entry and constrain the post-entry growth of young firms. Finally, we link the rise of zombie firms to the decline in OECD potential output growth through two key channels: business investment and multi-factor productivity growth Les Morts-Vivants ? : Entreprises Zombies et Productivité dans les Pays de l’OCDE Ce document examine dans quelle mesure les entreprises “zombies” – définies comme les entreprises de plus de dix ans rencontrant des problèmes persistants dans le remboursement de leurs intérêts – nuisent aux performances de la productivité du travail. Les résultats montrent que la prévalence des entreprises zombies et les ressources qui y sont renfermées ont augmenté depuis le milieu des années 2000 et que l’augmentation de la survie de ces entreprises à faible productivité, au bord de la sortie, accroît la congestion du marché et limite la croissance des entreprises plus productives. Une analyse portant sur différents pays sur la période 2003-2013 et contrôlant pour les effets conjoncturels montre qu’au sein d’un secteur, une part plus importante de capital renfermé dans les entreprises zombies est associée à un moindre investissement et une plus faible croissance de l’emploi pour l’entreprise non-zombie typique, et à une réaffectation du capital moins favorable à la productivité. Outre le fait qu’elle limite les possibilités de croissance des entreprises saines en place, la congestion du marché générée par les entreprises zombies peut également créer des barrières à l’entrée et limiter la croissance après l’entrée des jeunes entreprises. Enfin, nous relions l’augmentation des entreprises zombies au ralentissement de la croissance potentielle de l’OCDE à travers deux mécanismes principaux : l’investissement des entreprises et la croissance de la productivité multifactorielle. |
| Keywords: | firm exit, investment, misallocation, productivity, zombie lending |
| JEL: | D24 E22 G32 O16 O40 O47 |
| Date: | 2017–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1372-en&r=eec |
| By: | Swati Dhingra; Gianmarco Ottaviano; Veronica Rappoport; Thomas Sampson; Catherine Thomas |
| Abstract: | Leaving the EU will change the UK's economic relations with the rest of the world. This paper discusses the UK's role in the global economy and the consequences of Brexit for the UK's trade, investment and living standards. We emphasize that international integration encompasses investment and labour services flows as well as trade in goods and services and that there are important interdependencies between the different forms of integration which should be considered when evaluating policy changes. Brexit is likely to make the UK poorer by reducing trade and investment flows, but the size of these effects will depend upon the nature of the UK's post-Brexit economic relations with the EU and the rest of the world. We conclude by considering options for UK-EU relations after Brexit and how the UK should approach future trade negotiations. |
| Keywords: | Brexit, UK trade, UK FDI, negotiations |
| JEL: | F02 F13 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1487&r=eec |
| By: | Oliver Picek; Enno Schröder |
| Abstract: | We calibrate a closed multi-country input-output model with data from the World Input-Output Database to estimate the size of spillover effects of Germany?s final demand on GDP, employment, and the trade balance in Southern European countries. We find that spillover effects are rather small. Germany alone will hardly make a significant contribution to the external adjustment process in the European South. |
| Keywords: | euro area, macroeconomic imbalances, external adjustment, input-output analysis, global value chains, spillover effects |
| JEL: | F14 F32 F42 C67 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:imk:wpaper:181-2017&r=eec |
| By: | Nešporová, Alena |
| Abstract: | This paper analyzes the factors contributing to diversity in labour market performance to help dentify both obstacles for jobless persons to (re-)enter the labour market as well as the direction of policies that could help in this respect and, thus, guide policy makers. The analysis focuses on five Central European countries – Germany, Austria, Czech Republic, Poland and Slovakia – that, despite being similar with regard to their economic structure, industrial traditions and culture, closely linked through trade and production chains and therefore prone to synchronized economic fluctuations, have very different labour market performance, including during and after the recent economic recession. |
| Keywords: | long term unemployment, employment policy, Austria, Czech Republic, Germany, Poland, Slovakia |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:994956892902676&r=eec |
| By: | Eichler, Stefan; Rövekamp, Ingmar |
| Abstract: | In the course of eurozone exit, the underlying stocks of American Depositary Receipts (ADRs) would be redenominated from euros into the new national currency. We exploit ADR investors' exposure to currency redenomination losses to derive a novel measure of eurozone exit risk. We find that while domestic bank stocks are not significantly affected by domestic exit risk, there is a negative exposure to exit risk of other countries that is channeled through bilateral credit risk. For the real sector, exposure to eurozone exit risk is heterogeneous among industries and is less negative for more indebted companies. |
| Keywords: | Eurozone Exit Risk,American Depositary Receipts |
| JEL: | F31 F32 G01 G12 G15 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tudcep:0717&r=eec |