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on European Economics |
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Issue of 2020‒09‒21
eight papers chosen by Giuseppe Marotta Università degli Studi di Modena e Reggio Emilia |
| By: | Altavilla, Carlo; Barbiero, Francesca; Boucinha, Miguel; Burlon, Lorenzo |
| Abstract: | This study analyses the policy measures taken in the euro area in response to the outbreak and the escalating diffusion of new coronavirus (COVID-19) pandemic. We focus on monetary, microprudential and macroprudential policies designed specifically to support bank lending conditions. For identification, we use proprietary data on participation in central bank liquidity operations, high-frequency reactions to monetary policy announcements, and confidential supervisory information on bank capital requirements. The results show that in the absence of the funding cost relief and capital relief associated with the pandemic response measures, banks’ ability to supply credit would have been severely affected. The results also indicate that the coordinated intervention by monetary and prudential authorities amplified the effects of the individual measures in supporting liquidity conditions and helping to sustain the flow of credit to the private sector. Finally, we investigate the potential real effects of the joint pandemic response measures by estimating the adjustment in labour input variables for firms that in the past have been more exposed to similar policies. We find that, in absence of monetary and prudential policies, the pandemic would lead to a significantly larger decline in firms’ employment. JEL Classification: E51, E52, E58, G01, G21, G28 |
| Keywords: | bank lending, COVID-19 crisis, monetary policy, prudential policy |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20202465&r=all |
| By: | Annika Havlik; Friedrich Heinemann |
| Abstract: | The Eurosystem has become one of the crucial players in the market for euro area government bonds. After first substantive purchases through the Securities Market Programme (SMP) in 2010, the Eurosystem’s involvement has reached a new breadth and magnitude with the establishment of the Public Sector Purchase Programme (PSPP) in 2015. On top of this, the ECB Council has set up the Pandemic Emergency Purchase Programme (PEPP) in March 2020 in order to stabilize the euro area economy in the crisis and to contain the rise of sovereign risk premia.This study analyzes trends in the rules, volumes and country allocations of the two active sovereign purchase programmes, the PSPP and the PEPP. For an economic assessment, it is of importance to which extent the purchase programmes are of an asymmetric nature and whether the Eurosystem increasingly accepts the role of a strategic creditor who has veto power in debt negotiations. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:econpr:_21&r=all |
| By: | Claudius Graebner (Institute for Socio-Economics, University of Duisburg-Essen, Germany; Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria; ZOE. Institue for Future-Fit Economies); Jakob Hafele (ZOE. Institue for Future-Fit Economies; Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria) |
| Abstract: | This paper investigates the emergence of polarisation patterns in the EU during the last 60 years from a structuralist and complexity economics perspective. Based on the results, feasible opportunities for EU policy-making, which aim to counteract a tendency of polarization, are delineated. The study comprises of a historical analysis of the politico-economic events during this time and a complementary quantitative analysis of the European trade network. The results suggest that trade in the Eurozone is unequal at the expense of the peripheries and follows a pattern of “unequal technological exchange†. The paper also assesses the usefulness of country taxonomies such as ‘cores’ and ‘peripheries’ for identifying the roots of polarization patterns. While it generally affirms the relevance of structural dependencies, and confirms the epistemic usefulness of country taxonomies, it also highlights three challenges – the challenges of dynamics, of ambiguity and granularity – that any such taxonomy necessarily faces, and which must be dealt with explicitly in any structuralist analysis using such taxonomies. |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:ico:wpaper:113&r=all |
| By: | Anthony Edo; Yvonne Giesing |
| Abstract: | Alongside a range of already well documented factors such as deindustrialization, technological progress and international trade, a series of recent empirical econometric studies show that immigration has contributed to the rise of extreme right-wing parties in Europe. Our study highlights, however, that there is no mechanical link between the rise of immigration and that of extreme right-wing parties. Exploiting French presidential elections from 1988 to 2017, we show that the positive impact of immigration on votes for extreme right-wing parties is driven by low-skilled immigration and immigration from non-European countries. Our results moreover show that high-skilled immigration from non-European countries has a negative impact on extreme right-wing parties. These findings suggest that the degree of economic and social integration of immigrants plays an important role in the formation of anti-immigrant sentiment. Fostering integration should therefore reduce negative attitudes toward immigrants and preserve national cohesion at a time when the economic consequences of the Covid-19 pandemic could reinforce mistrust and xenophobia. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:econpr:_23&r=all |
| By: | Giorgia Giovannetti; Enrico Marvasi; Filippo Santi |
| Abstract: | We analyze current and potential trade between the UK and Sub Saharan Africa (SSA) and estimate the possible effects of UK’s exit from the European Union (Brexit) on bilateral trade. Our results suggest that, despite the UK’s interest and need for new markets and the recent positive economic performance of many SSA countries, Brexit is unlikely to have major effects on bilateral UK-SSA trade. It is difficult for the existing trade potential between the UK and SSA countries to fully materialize. This holds true even in the best-case scenario of full trade liberalization. On the contrary, trade with important partners as South Africa might decline in the scenario where the UK, which will be out of all the Free Trade Agreements signed as part of EU, fails to sign new agreements in a very short period. We conclude that Brexit will probably imply small changes in the trade patterns, which remain largely determined by structural variables including geographical distance, political stability and sectoral specialization. For SSA, the main gains in terms of trade creation are likely to come from deeper regional integration and from linkages with other major players at the world level, such as China and India. |
| Keywords: | Brexit, Africa, gravity model, trade policy, network analysis |
| JEL: | F13 F14 F16 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2020_14.rdf&r=all |
| By: | Cortes, Matias (York University, Canada); Tschopp, Jeanne (University of Bern) |
| Abstract: | Wage inequality has risen in many countries over recent decades. At the same time, production has become increasingly concentrated in a small number of firms. In this paper, we show that these two phenomena are linked. Theoretically, we show that shocks that increase concentration will also lead to an increase in wage dispersion between firms. Empirically, we use industry-level data from 14 European countries over the period 1999-2016 and show robust evidence of a positive and statis-tically significant correlation between concentration and between-firm wage inequality, driven by increases in market shares and wages in high productivity firms. |
| Keywords: | wage inequality, market power, heterogeneous firms, Europe |
| JEL: | J31 L11 E24 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13557&r=all |
| By: | Jonas Van der Slycken; Brent Bleys (-) |
| Abstract: | Scholars have long had difficulties when dealing with cross-time and cross-boundary issues in the ISEW and GPI. To date there are, for instance, different views on how to account for impacts of climate change that are shifted in time and space. This paper addresses the complexity involved by calculating two types of welfare measures with distinct time and boundary views for Belgium. Experiential welfare looks at what is currently experienced within domestic borders, whereas the benefits and costs of present activities also include the impacts that are shifted in time and space. The former only registers present ecological costs within borders and does not include capital changes, while the latter includes capital changes and ecological cost-shifting. Both welfare indicators improved from 1995 to 2018. Yet, social costs and ecological cost-shifting increased while aggregate welfare improved. Therefore, we suggest to account for ecological cost-shifting, but also to look beyond the aggregate welfare level and adopt a disaggregated and dashboard-like approach to evaluate economic performance in detail and to successfully debunk GDP and its growth. In future studies, a careful reflection on welfare measures’ design and use is needed in order to stimulate their policy-guiding and transformative potential. |
| Keywords: | Index of Sustainable Economic Welfare (ISEW), Genuine Progress Indicator (GPI), cost-shifting, Fisherian income, Hicksian income, beyond GDP |
| JEL: | J64 J08 J23 J24 J68 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:20/1003&r=all |
| By: | Victor Ginsburgh; Sergio Perelman; Pierre Pestieau |
| Abstract: | The objective of this paper is to explain populist attitudes that are prevailing in a number of European democracies. Populist attitudes expectedly lead to social protests and populist votes. We capture the populist wave by relying not on voting behavior but rather on values that are traditionally viewed as populist values, such as distrust of institutions and neighbors, rejection of migrations and strong preferences for law and order. Our study covers the period 2004 to 2018 and 25 European countries for which we match aggregated indicators of populist values and social polarization computed from ESS and SILC survey micro-data, respectively. We find that social polarization, along with other factors, can explain populist attitudes. We also observe that both populist attitudes and polarization vary across countries much more than over time, with the exception of authoritarian values which appear positively correlated with social polarization, particularly among baby-boomers and younger cohorts. |
| Keywords: | populism, polarization, social divide |
| JEL: | D63 I30 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8458&r=all |