nep-eec New Economics Papers
on European Economics
Issue of 2021‒04‒12
four papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Domestic Product versus Personal Income Convergence, within EU and Euro Area By OLTEANU, DAN
  2. Dancing Alone or Together: The Dynamic Effects of Independent and Common Monetary Policies By Povilas Lastauskas; Julius Stakenas
  3. Determinants of public debt in southern mediterranean countries and european countries: a tale of two regions By ouhibi, saoussen
  4. Does digitalisation in public services reduce tax evasion? By Strango, Cristina

  1. By: OLTEANU, DAN (National Institute of Economic Research - Romanian Academy)
    Abstract: This study aims to assess the extent to which the economic integration process of the EU and the Eurozone, expressed by the convergence of GDP per capita, is reflected in the convergence of economic well-being of households, revealed by income and consumption, during the last 20 years (2000-2019). We find that, first of all, the convergence process of GDP per capita is strongly correlated with that of household income and consumption, both for the EU and the Eurozone level. This proves that GDP remains a relevant determinant of economic well-being of population. Secondly, our analyzes show that the socio-economic convergence process has been mainly supported by the growth of emerging Eastern European economies. Together with the declining Southern countries, they are converging to a level below the current EU average. On the other side are the developed countries of Central and Northern Europe, which include a core with constant developments well above the EU average and a group of poor performing countries, which tend to approaches the EU average. For the group of initial euro area members, the alternation of convergence/divergence tendencies, together with the coefficient of variation in 2019 located very close to the 2000 one, indicate a lack of convergence during this period, both for GDP and household income
    Keywords: growth convergence, well-being convergence, household income and consumption, EU integration
    JEL: O47 I31 O52
    Date: 2020–12
  2. By: Povilas Lastauskas (Bank of Lithuania, Vilnius University); Julius Stakenas (Vilnius University)
    Abstract: What would have been the hypothetical effect of monetary policy shocks had a country never joined the euro area, in cases where we know that the country in question actually did join the euro area? It is one thing to investigate the impact of joining a monetary union, but quite another to examine two things at once: joining the union and experiencing actual monetary policy shocks. We propose a methodology that combines synthetic control ideas with the impulse response functions to uncover dynamic response paths for treated and untreated units, controlling for common unobserved factors. Focusing on the largest euro area countries, Germany, France, and Italy, we find that an unexpected rise in interest rates depresses inflation and significantly appreciates exchange rate, whereas GDP fluctuations are less successfully controlled when a country belongs to the monetary union than would have been the case under the independent monetary policy. Importantly, Italy turns out to be the overall beneficiary, since all three channels – price, GDP, and exchange rate – deliver the desired results. We also find that stabilizing an economy within a union requires somewhat smaller policy changes than attempting to stabilize it individually, and therefore provides more policy space.
    Keywords: Dynamic causal effects; Monetary union; Price puzzle; Common factors
    JEL: C14 C32 C33 E52
    Date: 2021–03–26
  3. By: ouhibi, saoussen
    Abstract: The objective of this paper is to identify the determinants of public debt in the southern Mediterranean countries and the European countries for the period 1990–2017 by using dynamic panel data model estimated by Generalized Method of Moments (GMM). In fact, empirical evidence indicates a significant positive impact of interest rates and unemployment rate on public debt and significant negative impact of inflation and real exchange rate on public debt. In European countries, inflation and interest rate has a negative and statistically significant effect on public debt, however, the domestic investment, real exchange rate and foreign direct investment has a negative and statistically significant effect on public debt.
    Keywords: Inflation, Domestic investment, exchange rate, southern Mediterranean countries, European countries.
    JEL: F00 F1 H0
    Date: 2021–04–04
  4. By: Strango, Cristina
    Abstract: The aim of paper is to investigate the impact of digitalisation from public services on tax evasion. The analysis targets the European Union 27 (EU-27) member states over the period 2015-2019 by using panel estimators. The findings prove a nonlinear relationship between digitalisation from public services and tax evasion by U-shape. More precisely, the acceleration of digitalisation in public services reduces the level of tax evasion up to a certain point. Once the acceleration reaches that point, the level of tax invasion increases once again.
    Keywords: tax evasion, digitalisation, EU27, panel estimations
    JEL: C23 C89 H26
    Date: 2021–03–28

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