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on European Economics |
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Issue of 2023‒10‒16
ten papers chosen by Giuseppe Marotta, Università degli Studi di Modena e Reggio Emilia |
| By: | Laine, Olli-Matti; Nelimarkka, Jaakko |
| Abstract: | We evaluate the effects of targeted credit injections of the central bank in the euro area. The aggregate policy impacts of credit easing on financial markets, bank lending and key macroeconomic variables are measured with a novel identification approach based on high-frequency web search data. Our results suggest that the targeted longer-term refinancing operations of the European Central Bank between 2014 and 2021 eased credit conditions in financial markets and had economically and statistically significant positive effects on GDP growth, bank lending and firm investment. |
| Keywords: | Monetary policy, High-frequency identification, TLTRO, Bank lending |
| JEL: | C36 E42 E51 E52 E58 G31 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bofrdp:132023&r=eec |
| By: | Philippe Andrade; Filippo Ferroni; Leonardo Melosi |
| Abstract: | We exploit inequality restrictions on higher-order moments of the distribution of structural shocks to sharpen their identification. We show that these constraints can be treated as necessary conditions and used to shrink the set of admissible rotations. We illustrate the usefulness of this approach showing, by simulations, how it can dramatically improve the identification of monetary policy shocks when combined with widely used sign-restriction schemes. We then apply our methodology to two empirical questions: the effects of monetary policy shocks in the U.S. and the effects of sovereign bond spread shocks in the euro area. In both cases, using higher-moment restrictions significantly sharpens identification. After a shock to euro area government bond spreads, monetary policy quickly turns expansionary, corporate borrowing conditions worsen on impact, the real economy and the labor market of the euro area contract appreciably, and returns on German government bonds fall, likely reflecting investors’ flight to quality. |
| Keywords: | shock identification; Skewness; Kurtosis; VAR; Sign restrictions; monetary shocks; Euro area |
| JEL: | C32 E27 E32 |
| Date: | 2023–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:96666&r=eec |
| By: | António Afonso; José Carlos Coelho |
| Abstract: | We assess the drivers of fiscal sustainability in Portugal during the period 1999Q4-2021Q4. We resort to expanding window and Schlicht (2003, 2021)’s time-varying approaches to construct the responses of government revenues to government expenditures and the responses of the primary government balance and the cyclically adjusted primary government balance (CAPB) to the debt-to-GDP ratio. Our results show the prevalence of a Ricardian fiscal regime in Portugal. If the (i-g) differential is positive, the positive response of the primary government balance to the debt-to-GDP ratio is amplified. An improvement in the external accounts, the increase in the European Commission's fiscal rules index and the extension of the debt maturity were beneficial for fiscal sustainability. Sovereign debt rating downgrades implied a posterior fiscal reaction that improves fiscal sustainability. Moreover, fiscal sustainability increased during the implementation of the international financial assistance program to Portugal, between 2011Q2 and 2014Q2. |
| Keywords: | fiscal sustainability; primary government balance; government debt; expanding window; time-varying; Portugal. |
| JEL: | C23 H61 H63 E62 |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:ise:remwps:wp02872023&r=eec |
| By: | Makram El-Shagi (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan); Steven Yamarik (Department of Economics, California State University Long Beach, CA) |
| Abstract: | This paper applies a penalized synthetic control method to estimate the growth effects of European Union (EU) enlargement. A penalized synthetic control estimator introduces a penalty term in the synthetic matching algorithm that penalizes discrepancies between the treated economy and its synthetic counterpart. We use this estimator to construct counterfactuals of the growth rate of GDP per capita for the EU accession countries. Standard synthetic control results show that a country’s accession into the EU generates an almost uniform positive impact on the level of real GDP per capita. However, by applying the penalized synthetic control estimator to the growth rate, we find that most of these positive effects become insignificant and some even become negative. |
| Keywords: | synthetic control matching, treatment effect, European Union, expansion, growth |
| JEL: | C32 F15 O47 |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:fds:dpaper:202304&r=eec |
| By: | Joachim Wagner (Leuphana Universität Lüneburg, Institut für Volkswirtschaftslehre) |
| Abstract: | The use of big data analytics (including data mining and predictive analytics) by firms can be expected to increase productivity and reduce trade costs, which should be positively related to export activities. This paper uses firm level data from the Flash Eurobarometer 486 survey conducted in February – May 2020 to investigate the link between the use of big data analytics and export activities in manufacturing enterprises from the 27 member countries of the European Union. We find that firms which use big data analytics do more often export, do more often export to various destinations all over the world, and do export to more different destinations. The estimated big data analytics premia for exports are statistically highly significant after controlling for firm size, firm age, patents, and country. Furthermore, the size of these premia can be considered to be large. Successful exporters tend to use big data analytics. |
| Keywords: | Big data analytics, exports, firm level data, Flash Eurobarometer 486 |
| JEL: | D22 F14 |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:421&r=eec |
| By: | Advani, Arun (University of Warwick); Burgherr, David (LSE); Summers, Andy (London School of Economics) |
| Abstract: | Using administrative data on the globally connected super-rich in the UK, we study the effect of a large tax reform on migration behaviour. Prior to 2017, offshore investment returns for 'non-doms' – individuals tax-resident in the UK but with connections to other countries – were untaxed. People making use of that tax status are strongly concentrated at the top of the income distribution: 86% are in the UK top 1% and 29% in the top 0.1% once overseas investment income is taken into account. A reform in 2017 brought long-stayers, who had been in the UK for at least 15 of the last 20 years, into the standard tax system, reducing their effective net-of-average-tax rate by 18%. We find that emigration responses were modest: our central estimate is that the emigration rate increases by 0.26 percentage points for a 1% decline in the net-of-tax rate, and we can rule out increases larger than 0.4 percentage points. Dispelling fears that the targeted taxpayers were able to circumvent the tax hike, we find large average increases in income reported and tax paid in the UK of more than 150%. |
| Keywords: | taxation, migration, capital income, inequality, mobility |
| JEL: | F22 H31 J61 |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16432&r=eec |
| By: | Horacio Levy; Jakub Caisl; Luiz Hermida; Bálint Menyhért |
| Abstract: | Inflation indices – such as the national Consumer Price Indices (CPI) and the EU Harmonised Indices of Consumer Prices (HICP) – measure price changes for the overall economy, which may not reflect the inflation experience of an individual household or group of households. This paper contributes to previous studies of the distributive impact of recent high inflation in EU Member States. Producing more granular and recent results, this paper finds a substantial rise in effective inflation dispersion across households and confirms that lower-income households continue to experience higher inflation. This inflation gap remains even after energy prices have eased and when controlling for other household characteristics. Results also show that the distributive impact of inflation on household groups has varied over time, as changes in relative prices across the inflationary period have influenced the extent of the impact of inflation across population groups. Finally, differences in effective inflation rates have cumulated over time, particularly for households with lower-income and headed by people aged 60 years or more and with lower levels of education. |
| Keywords: | cost of living, household consumption, inflation inequality, inflation measurement |
| JEL: | D12 D14 E31 I31 D3 |
| Date: | 2023–10–03 |
| URL: | http://d.repec.org/n?u=RePEc:oec:wiseaa:18-en&r=eec |
| By: | Ioana-Ancuta Iancu; Patrick Hendrick; Dan Doru Micu; Stefan Dragos Cirstea |
| Abstract: | Energy imports and the transition to renewable energy sources are of critical importance in the current geopolitical context, which necessitates concrete actions to tackle the energy crisis at the European Union level. This study aimed to explore the impact of imported non-renewable energy resources on the EU-27 economy. It examined the correlations and causal relationships between the GDP, the GVA, R&D investments, and energy imports from 2000 to 2021. Data normality was assessed using the Shapiro–Wilk test, while Pearson’s test identified correlations between variables. Linear and multiple regression analyses were conducted to determine the effects of changes in independent variables on dependent variables. The study found a strong association between natural gas imports and the GDP, with increases in GDP leading to a more-than-fourfold rise in imports. Furthermore, a multiple regression analysis indicated that a 1% increase in R&D investments results in a 2.21% decrease in fossil fuel imports in 91.7% of cases. This suggests that R&D investments contribute to improved efficiency and the use of renewable energy sources. |
| Date: | 2023–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/362698&r=eec |
| By: | Albertini, Julien; Langot, François; Sopraseuth, Thepthida |
| Abstract: | The US and French job polarization appear similar based on employment shares by task. This study shows that they are different when per capita employment by task is used to identify the sources of these structural changes. We build a multi-sectorial general equilibrium model with search frictions, endogenous layoffs, and occupational choices to estimate the relative impact of TBTC (Task-Biased Technological Change) and LMI changes (Labor Market Institutions) on employment patterns. Our analysis suggests that job polarization is mainly driven by TBTC in the US, whereas LMI changes drive job polarization in France. |
| Keywords: | job polarization, search and matching, labor market institutions, task-biased technological change |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpm:docweb:2307&r=eec |
| By: | Berbée, Paul (ZEW); Stuhler, Jan (Universidad Carlos III de Madrid) |
| Abstract: | Germany has become the second-most important destination for migrants worldwide. Using all waves from the microcensus, we study their labor market integration over the last 50 years and highlight differences to the US case. Although the employment gaps between immigrant and native men decline after arrival, they remain large for most cohorts; the average gap after one decade is 10 pp. Conversely, income gaps tend to widen post-arrival. Compositional differences explain how those gaps vary across groups, and why they worsened over time; after accounting for composition, integration outcomes show no systematic trend. Still, economic conditions do matter, and employment collapsed in some cohorts after structural shocks hit the German labor market in the early 1990s. Lastly, we examine the integration of recent arrivals during the European refugee "crisis" and the Russo-Ukrainian war. |
| Keywords: | immigration, labor market integration, long-run trends |
| JEL: | J11 J61 J68 |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16439&r=eec |