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on European Economics |
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Issue of 2024‒01‒08
79 papers chosen by Simon Sosvilla-Rivero, Instituto Complutense de Análisis Económico |
| By: | Darracq Pariès, Matthieu; Dées, Stéphane; Parisi, Laura; Sun, Yiqiao; De Gaye, Annabelle |
| Abstract: | In this paper we analyse the sensitivity of the macroeconomic outcomes under the Network for Greening the Financial System’s (NGFS’s) Phase III net-zero and delayed transition scenarios to different monetary and fiscal policy settings. In doing so, we provide a rare application of the NGFS climate scenarios to economic assessment through the lens of the macroeconomic modelling frameworks underlying the scenario construction (e.g. NiGEM). Using the model to disentangle the main drivers of the scenarios, we show that gross domestic product (GDP) growth is shaped by physical and transition shocks jointly, whereas transition shocks account for most of the inflationary pressure. As regards alternative policy settings within the model, it turns out that Fiscal recycling options become more discriminant in terms of GDP impact in the medium term. Full recycling through government investment yields the strongest output multiplier, whereas recycling through household transfers or reduced income taxes yields the lowest multiplier. During the transition, euro area macroeconomic variables respond very similarly if two-pillar or price level-targeting monetary policy rules are followed. The Taylor- rule, reacting to inflation and output gap, yields higher and more persistent inflation as well as stronger short-term interest rate increases. These findings are certainly model-specific but do reflect the policy sensitivity embedded of the NGFS scenarios, within the confines of the very model used to build them up. JEL Classification: Q54, E3, E6, D6 |
| Keywords: | climate scenarios, fiscal policy, modelling strategy, monetary policy |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:2023336&r=eec |
| By: | Leonor Coutinho; Mirko Licchett |
| Abstract: | Inflation differentials in the euro area widened in 2022 to historically high levels in the context of a surge in energy and other commodity prices. On the one hand, some degree of inflation differentials within the euro area may be seen as a natural part of an adjustment process, rather than a problem per se for economic policy. On the other hand, persistent inflation differentials can adversely affect competitiveness in higher inflation countries. This paper uses principal component and panel regression models to investigate the drivers of inflation differentials. Our empirical estimates suggest that the asymmetric impact of a common shock – mostly related to the increase in energy and food prices – can explain around half of the increase in headline inflation in 2022 in the euro area. The estimated responses to the common factor increase with energy intensity, reflecting the important role of energy prices in driving global shocks to inflation, and decline with the share of services in Gross Value Added (GVA), suggesting that countries with a larger manufacturing sector have been more sensitive to common factors. The common factor is also found more prominent in 2020-22 than in previous periods. The remainder of inflation developments can be explained by inflation persistence, along with more local and crisis related factors. This persistence might be associated with a relatively long pass-through for the energy shock, related to the staggered nature of supply contracts and price setting in the euro area. Indeed, when estimated without the lagged dependent variable, controlling for residual autocorrelation, our results suggest that common factors can account for up to two thirds of the increase in inflation in 2022 while the contribution of local drivers remains more limited. |
| JEL: | E31 F45 Q43 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:euf:dispap:197&r=eec |
| By: | Christian Bayer; Alexander Kriwoluzky; Gernot J. Müller; Fabian Seyrich |
| Abstract: | The distributional and disruptive effects of energy supply shocks are potentially large. We study the effectiveness of alternative fiscal responses in a two-country HANK model that we calibrate to the euro area. Energy subsidies can stabilize the domestic economy, but are fiscally costly and generate adverse spillovers to the rest of the monetary union: What the subsidizing country gains, the other countries lose. Transfers based on historical energy consumption in the form of a Hicks/Slutsky compensation are less effective domestically as subsidies but do not harm economic activity abroad. In addition, transfers increase welfare at Home while subsidies reduce welfare. |
| Keywords: | Energy crisis, subsidies, transfers, HANK2, monetary union, spillovers, heterogeneity, inequality, households |
| JEL: | D31 E64 F45 Q41 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp2056&r=eec |
| By: | Christina Anderl; Guglielmo Maria Caporale |
| Abstract: | The recent Covid-19 pandemic has disrupted global supply chains and led to large increases in shipping costs. This paper first provides shipping cost mean and uncertainty measures by using the endogenous regime switching model with dynamic feedback and interactions developed by Chang et al. (2023). The uncertainty indicator measures overall risk in the shipping market and is shown to represent a useful addition to the existing set of economic and financial uncertainty indices. Both the shipping cost mean and uncertainty measures are then included in structural VAR models for the US, the UK and the euro area to examine the pass-through to headline CPI, core CPI, PPI and import price inflation vis-à-vis other global and domestic shocks. The results suggest that shipping cost uncertainty shocks have sizeable effects on all inflation measures and are characterised by a stronger pass-through than that of other domestic or global shocks. Unlike the latter, they also affect significantly core CPI inflation. These findings imply that shipping cost mean and uncertainty should also be considered by policymakers when assessing the global drivers of inflation. |
| Keywords: | shipping cost uncertainty, inflation pass-through, endogenous regime switching |
| JEL: | C13 E31 E37 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10798&r=eec |
| By: | Justus Inhoffen; Iman van Lelyveld |
| Abstract: | We construct the first measure of collateral re-use at the bank and bond level for the European repo market using a regulatory transaction dataset. We show that banks materially increase the rate of re-use in response to tightened asset scarcity induced by the Eurosystem’s asset purchase program. We find that dealers accommodate clients’ demand for safe assets rather than liquidity and profit from the repo rate spread. Yet, dealers also re-use collateral to source liquidity which exposes them to collateral runs. Our results contribute to the policy debate on trade-offs between shock absorption and financial stability risks of collateral re-use. |
| Keywords: | Collateral reuse, rehypothecation, safe assets, scarcity, repo market |
| JEL: | E4 E5 G1 G2 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp2050&r=eec |
| By: | Lionel Fontagné; Philippe Martin; Gianluca Orefice |
| Abstract: | Based on firm level data in the French manufacturing sector, we find that firms adapt quickly, strongly and through multiple channels to energy shocks, even though electricity and gas bills represent a small share of their total costs. Over the period 1996-2019, faced with an idiosyncratic energy price increase, firms reduce their energy demand, improve their energy efficiency, increase intermediate inputs imports and optimize energy use across plants. Firms are also able to pass-through the cost shock fully into their export prices. Their production, exports and employment fall. A consequence of these multiple adjustment mechanisms is that the fall in profits is either non-significant, small or specific to only the most energy intensive firms. We also find that the impact of electricity shocks has weakened over time, suggesting that only firms able to adapt their production process to energy cost shocks have survived. Importantly, when faced with large electricity and gas price increases, firms are less able to reduce their consumption. These results shed light on the mechanisms of resilience of the European manufacturing sector in the context of the present energy crisis. |
| Keywords: | Energy Crisis, Employment, Production, Competitiveness, Electricity, Gas |
| JEL: | L6 Q41 Q43 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:929&r=eec |
| By: | Pierfederico Asdrubali |
| Abstract: | A well-functioning and efficient Venture Capital (VC) market is one of the key pillars to enhance European medium- and long-term economic growth, through the creation of new businesses and sustainable employment, the improvement of managerial practices and increased capital investments, which boost innovation, productivity and competitiveness. These conditions are enhanced in the presence of an integrated VC market, which improves capital allocation, generates economies of scale and spurs competition and diversification of financing sources.This paper analyses cross-border VC flows in Europe in the 2007-2020 period, highlighting the deep fragmentation of the European market, with each country featuring its own peculiarities and evident disparities, and Northern European countries, the UK, and Ireland witnessing significantly higher cross-border volumes than Eastern-European and Mediterranean countries. Overall, the analysis of cross-border investments in the industry confirms that they are still rather infrequent, mainly due to local bias, with the domestic component accounting on average for 64.0% of the total VC activity and cross-border investments within Europe accounting on average for only 23.1%. Using a Grubel-Lloyd index, we find that the highest values of two-way flows of venture capital are concentrated in the major financial centres, with a prominent role of the United Kingdom. Furthermore, theory-grounded gravity equations investigate the determinants of cross-border VC flows, exploring, inter alia, the role of different financial structures across countries. Besides GDP (or market capitalisation) and distance, the quality of institutions and especially the degree of global financial integration do play a role in shaping cross-border VC flows. The uneven development of the financial market within Europe ‒ with a market-based country cluster distinct from a bank-based country cluster ‒ appears to matter little for cross-border VC flows. |
| JEL: | C58 F36 G24 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:euf:dispap:195&r=eec |
| By: | Antonio Afonso (ISEG - School of Economics and Management, Universidade de Lisboa; REM - Research in Economics and Mathematics; UECE - Research Unit on Complexity and Economics; CESifo); Josee Alves (ISEG - School of Economics and Management, Universidade de Lisboa; REM - Research in Economics and Mathematics; UECE - Research Unit on Complexity and Economics; CESifo); Olegs Matvejevs (Latvijas Banka); Olegs Tkacevs (Latvijas Banka) |
| Abstract: | We examine the relationship between inflation and fiscal sustainability with a two-step approach.In the first step, we estimate to estimate a country-specific time-varying measure of fiscal sustainability using the fiscal reaction function. This function captures the response of the primary balance to changes in the public debt ratio. In the second step, we examine how various measures of inflation such as headline inflation, core inflation, energy inflation, and food inflation affect the estimate of fiscal sustainability found previously. Our findings indicate that higher inflation rates contribute positively to the measure of fiscal sustainability, specifically through core inflation causing an improvement in fiscal sustainability, while the effect of energy inflation is conversely found to be negligible or even negative. These results imply that the initial burst of inflation caused by the energy price shock in 2021 probably did not help improve fiscal sustainability, whereas the subsequent high core inflation had a positive effect. |
| Keywords: | fiscal sustainability, fiscal reaction function, time-varying coefficients, euro area, inflation, core inflation, panel data |
| JEL: | C23 E31 E62 H50 H62 |
| Date: | 2023–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:ltv:wpaper:202308&r=eec |
| By: | Helmers, Viola; Frondel, Manuel; Sommer, Stephan |
| JEL: | R48 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc23:277706&r=eec |
| By: | Paulo Bastos (World Bank); Lisandra Flach (LMU Munich, ifo Institue); Klaus Keller (LMU Munich, Max-Planck Institute for Competition and Innovation) |
| Abstract: | We investigate the impact of product market competition on firms’ automation investments. We use a rich combination of micro-data on Portuguese exporters and exploit a novel source of variation in the degree of competition they face – a tariff liberalization between the European Union and Central and Eastern European countries in the 1990s. We find that firms facing greater competition in export markets tend to reduce investments in automation technologies. These average negative effects are driven by the least productive firms, while the most efficient exporters in industries that are more prone to automation tend to robotize in order to compete. These findings suggest that an increase in the degree of product market competition widens disparities between firms. |
| Keywords: | automation; product market competition; firm heterogeneity; trade liberalization; workers; multi-product firms; |
| JEL: | D22 F16 J23 L25 O33 |
| Date: | 2023–11–28 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:467&r=eec |
| By: | Aleksandr Arsenev (The Vienna Institute for International Economic Studies, wiiw); Philipp Heimberger (The Vienna Institute for International Economic Studies, wiiw); Bernhard Schütz (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | Spending elasticities measure the reaction of different government spending components to the business cycle. They are important inputs for fiscal forecasts, and they are particularly relevant in the context of European Union (EU) fiscal rules, as elasticity estimates enter the estimation of fiscal space. This paper analyses the sensitivity of the estimation method used by the Organisation for Economic Co-operation and Development (OECD) and the European Commission to obtain government spending elasticities by focusing on 11 EU countries in the 1995-2020 period. Our results suggest that spending elasticities are sensitive to small variations in data and model specification. For most EU countries, we reject the assumption that only unemployment spending responds to cyclical variations. While unemployment spending is indeed a major driver of counter-cyclical social spending, other categories of social spending also show signs of responding to the business cycle. |
| Keywords: | Government debt; fiscal deficit; fiscal rules; budget elasticity; government spending; social spending |
| JEL: | E62 H62 E32 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:wii:wpaper:238&r=eec |
| By: | Guglielmo Maria Caporale; Cristiana Donati; Nicola Spagnolo |
| Abstract: | This paper investigates how access to finance and skilled workforce endowments affect the propensity of European small and medium sized enterprises (SMEs) to adopt different types of resource efficiency measures (REMs), possibly simultaneously. For this purpose, a Multinomial Logit model is estimated using data from the 2017 Flash Eurobarometer survey covering a large sample of European firms. The analysis is carried out first for the whole sample and then for clusters based on two contextual factors measured by the Ease of Access to Loans Index (EAL) and the European Skill Index (ESI). The findings suggest that the two firm characteristics considered lead to the adoption of more than one REM simultaneously. Moreover, the propensity to implement them is stronger in the case of firms located in countries with easier access to financial resources, whilst the workforce skill-set appears to be a less important factor in this context. |
| Keywords: | resource efficiency measures, financing, SMEs, workforce skills |
| JEL: | G32 O16 Q40 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10799&r=eec |
| By: | Herghelegiu, Cristina (European Commission, Directorate-General for Internal Market, Industry, Entrepreneurship and SME, Chief Economist Unit); Martin, Fernando (LICOS - Centre for Institutions and Economic Performance, KU Leuven) |
| Abstract: | We examine whether the European Union (EU) is providing a model for other countries for product requirements aimed at protecting health, safety, and the environment. The analysis draws upon information on detailed categories of sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBTs) introduced on specific products by 86 countries across the world over the 2009-2019 period. First, we examine whether the existence of requirements within a given product- level SPS/TBT category in other countries is associated with the prior existence of requirements within the same product-level SPS/TBT category in the EU, and document a positive and significant correlation. Second, we delve into potential mechanisms likely to explain the subsequent adoption of requirements by other countries within the same product-level SPS/TBT categories as the EU. The results indicate the presence of both market-driven forces, such as the importance of the EU as an export market for other countries, and treaty-driven forces, such as the existence of trade agreements between the EU and other countries. Finally, we show that the EU’s role in providing a regulatory model for other countries for product requirements aimed at protecting health, safety, and the environment is (1) predominant when compared to the United States or China, and (2) reinforced in the area of environmental protection. |
| Keywords: | European Union, Product Requirements, Health, Safety, Environment, International Trade |
| JEL: | F13 F14 I18 K32 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:bda:wpsmep:wp2023/15&r=eec |
| By: | Patrick Gruning (Latvijas Banka); Zeynep Kantur (Baskent University) |
| Abstract: | The most effective approach to tackling climate change is by decarbonising produc- tion processes. However, decarbonisation might render assets stranded, impacting not only the relevant sector but also causing a ripple effect across all sectors, thereby potentially destabilising macroeconomic stability. We develop a multi-sector New Keynesian model with two physical capital types (brown and green) and input- output linkages to examine the economic impact of sector-specific capital stranding. Stranded brown capital in the brown sector yields a relocation of economic ac- tivities to the green sector and thus environmental benefits with small aggregate consequences, while brown capital stranding in both sectors implies larger economic costs and smaller environmental benefits. Brown consumption taxes and green pro- ductivity shocks facilitate the green transition, while brown investment taxes or green investment subsidies turn out to be less favourable policies in this respect. However, a combination of these two investment policies yields favourable economic and environmental outcomes. Doubling the carbon tax in the brown sector yields significant relocation activities at relatively small economic costs. If the central bank responds strongly to short-run inflationary pressures of carbon tax increases, this leads to larger output losses in the short run and higher output gains in the long run. |
| Keywords: | capital utilization, stranded assets, production network, climate change, fiscal policy, monetary policy |
| JEL: | E22 E32 E52 E61 L14 |
| Date: | 2023–12–05 |
| URL: | http://d.repec.org/n?u=RePEc:ltv:wpaper:202306&r=eec |
| By: | Greppmair, Stefan; Jank, Stephan |
| Abstract: | We utilize the Eurosystem securities lending facilities as a laboratory to investigate the impact of collateral scarcity on market functioning. The reduction of securities lending fees, implemented in November 2020, provides a natural experiment for our analyses. This policy change results in a surge in the utilization of securities lending facilities, particularly for bonds with limited supply elasticity in the repo market. We find no evidence of substitution effects; instead, the overall activity in the repo market expands through the collateral multiplier. The improved pricing conditions alleviate collateral scarcity and enhance market quality in both the repo and cash markets. |
| Keywords: | safe assets, collateral scarcity, monetary policy, quantitative easing, securities lending facilities, repo, market functioning |
| JEL: | G10 G21 E50 E58 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdps:280417&r=eec |
| By: | Bavaro, Michele; Carranza, Rafael; Nolan, Brian |
| Abstract: | While the influence of poverty in childhood on adulthood outcomes has been extensively studied, little is known about how the strength of intergenerational persistence in poverty itself varies across countries. Here we examine the intergenerational persistence of poverty in a comparative analysis of 30 European countries using data from the 2019 ad hoc module of the EU-SILC dataset. We construct proxy measures of poverty in the parental household employing information on inability to meet basic needs and financial hardship when growing up, together with parental education and occupational social class. The strength of the association between current poverty based on the indicators at the core of the EU’s social inclusion process and these measures of parental poverty is assessed and compared across countries. The cross-country variation in poverty persistence is probed including with respect to its relationship with the current and past extent of poverty: persistence tends to be stronger where current or parental poverty are higher, analogous to the Great Gatsby Curve relating intergenerational income mobility to income inequality at country level. Mediation analysis highlights the role of own education as well as occupation in underpinning the observed relationship between current and parental poverty. (Stone Center on Socio-Economic Inequality Working Paper) |
| Date: | 2023–12–05 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:phrq2&r=eec |
| By: | Uroš Herman (Aix-Marseille Univ., CNRS, AMSE, Marseille, France); Matija Lozej (Central Bank of Ireland, Macroeconomic Modelling) |
| Abstract: | This paper first provides empirical evidence that labour market outcomes for the less educated workers, who also tend to be poorer, are substantially more volatile than those for the well-educated, who tend to be richer. We estimate job finding rates and separation rates by educational attainment for several European countries and find that job finding rates are smaller and separation rates larger at lower educational attainment levels. At cyclical frequencies, fluctuations of the job finding rate explain up to 80% of unemployment fluctuations for the less educated. We then construct a stylised HANK model augmented with search and matching and ex-ante heterogeneity in terms of educational attainment. We show that monetary policy has stronger effects when the job market for the less educated and, hence, poorer workers is more volatile. The reason is that these workers have the most procyclical income coupled with the highest marginal propensity to consume. An expansionary monetary policy shock that increases labour demand disproportionally affects the labour market segment for the less educated, causing a strong increase in consumption. This further amplifies labour demand and increases the labour income of the poor even more, amplifying the initial effect. The same mechanism carries over to forward guidance. |
| Keywords: | heterogeneous agents, Search and matching, monetary policy, business cycles, Employment |
| JEL: | E40 E52 J64 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:2334&r=eec |
| By: | LE BOENNEC, Rémy; SALLADARRE, Frédéric |
| Abstract: | Micromobility modes such as scooters, e-scooters, skateboards, or hoverboards has recently emerged as part of the urban landscape. In this paper, we analyze the use of modes of micromobility for commuting. We distinguish between monomodality (commuters using one mode of micromobility only) and multimodality (commuters using micromobility as a complement or substitute to other modes of transport). We apply non-parametric ordered methods to a survey that was conducted in 2018 on mobility users in four European countries. The survey gathered 4, 873 observations from commuters in France, Germany, Spain, and the United Kingdom (UK). Micromobility commuting is marginal in all four European countries. The sociodemographic characteristics of micromobility commuters are homogeneous and concern mainly male, young, and urban commuters. We find that travel habits account for a large share of the variability explained by the model. Germany has a low level of multimodality, whereas the UK practices complementarity-oriented multimodal commuting. Overall, our results bring new insights showing that micromobility is used as a (partial) substitute to urban transit systems for short distances and as a complement for longer commuting trips made by train. These emerging patterns of commuting require better modal integration between micromobility and public transport, and a more sophisticated design of transport infrastructures. |
| Keywords: | micromobility; commuting; multimodality; privately-owned; mode choice; travel habit. |
| JEL: | C14 C21 R41 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:119202&r=eec |
| By: | Coulibaly Niénéyéri Mamadou (UJloG - Université Jean Lorougnon Guédé) |
| Abstract: | The aim of this study is to analyse trade between the member countries of the West African Economic and Monetary Union (WAEMU) and those of the European Union (EU) pre-Brexit over the period 2014-2019. It estimates a gravity model based on panel data. Three econometric estimation techniques are used : the WITHIN method, the Generalised Least Squares (GLS) method and the Hausman and Taylor (HT) method. These different estimation techniques are then compared to determine which is the most appropriate. The data used are secondary data from several sources : the International Monetary Fund (World Economic Outlook), the World Bank (World Development Indicators), the United Nations (UN Comtrade) and the ephemeride website. The results show that trade between these two groups of countries is positively and significantly influenced by income in WAEMU countries, infrastructure in WAEMU countries and population in EU countries. They also show that when an EU country is landlocked, its trade flows with WAEMU countries are reduced, while at the same time, the landlocked status of a WAEMU country does not affect its trade with EU countries. Variables such as the bilateral real exchange rate, distance, language and colonial links were found to be insignificant. |
| Keywords: | Trade, Trade flows, Gravity model, EU, WAEMU and Brexit |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04316401&r=eec |
| By: | Pyka, Vinzenz (University of Erlangen-Nuremberg); Schnabel, Claus (University of Erlangen-Nuremberg) |
| Abstract: | We shed light on an understudied group: retirees in unions. Using representative individual-level data of 19 European countries, we find that the share of retirees in unions and the union density of retirees increased between 2008 and 2020. Econometric analyses indicate that on average retired workers' probability of union membership is 17 percentage points lower than that of active workers. This finding is consistent with social custom models and cost-benefit considerations. We further find that some determinants of union membership differ between active and retired workers and that standard membership models better explain the unionization of active than retired workers. |
| Keywords: | trade union, retirement, union membership, Europe |
| JEL: | J26 J51 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16604&r=eec |
| By: | Andrea Bellucci (Universita' degli Studi dell'Insubria and Mo.Fi.R.); Gianluca Gucciardi (Universita' degli Studi di Milano-Bicocca) |
| Abstract: | This study investigates the impact of the COVID-19 pandemic on the European banking system, focusing on lending activities and risk-taking behavior. We use a difference-in-differences (DID) approach to compare the performance of banks highly impacted by the pandemic with those operating in less affected countries. Our results indicate a negative impact on lending activities, as banks reduced their exposure to both individuals and businesses. Nonetheless, the impact on banks' risk-taking was heterogeneous, as certain banks increased their risks taking by relaxing their lending standards in order to support their borrowers, while others adopted stricter lending criteria. The reduction in total lending observed for the entire banking system is primarily drive by less capitalized banks and those with limited access to public guarantees schemes. Different characteristics, such as size, profitability, and listing status, led to varied lending behaviors during the COVID-19 pandemic, with smaller and more profitable banks exhibiting greater resilience. In summary, our findings suggest that the COVID-19 pandemic has significantly impacted the European banking system, resulting in decreased lending activities and a varied effect on risk. |
| Keywords: | Banks; Finance; Risks; Lending activities; Financial Crisis; Pandemic |
| JEL: | G21 G22 G23 G24 F3 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wmofir:183&r=eec |
| By: | Justine Guillochon; Julien Le Roux |
| Abstract: | The Global Financial Crisis highlighted the need for policymakers to consider the stage of the financial cycle to better evaluate the cyclical position of the economy when designing monetary policy decisions. If financial variables are omitted from the estimations of the output gap, a common and unobserved indicator of the business cycle, important financial or external imbalances that may lead to future recessions may not be captured. This paper presents a suite of estimates of output gaps incorporating financial variables. The estimates are based both on small unobserved components models and a large unobserved components model that follows a production function approach. The results show that exploiting the information content of financial variables, which co-move strongly with the output cycle, can sometimes improve the real-time estimates of the output gap. However, these improvements are of a limited magnitude and very sensitive to the choice of the chosen financial variables. |
| Keywords: | Output Gap, Potential Output, Financial Cycle, Monetary Policy, Unobserved Components Model. |
| JEL: | C32 E32 E44 E47 E52 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:926&r=eec |
| By: | BENCZUR Peter (European Commission - JRC); CARIBONI Jessica (European Commission - JRC); JOOSSENS Elisabeth (European Commission - JRC); LE BLANC Julia (European Commission - JRC); MENYHERT Balint (European Commission - JRC); PIRIU Andreea (European Commission - JRC) |
| Abstract: | This report analyses the dashboards and the latest set of synthetic resilience indices for the EU and each Member State, highlighting resilience vulnerabilities and capacities across the four dimensions and fourteen underlying areas (based on the edition of the dashboards published in April 2023, using data as of 2021). The report contains the first in-depth empirical analysis of resilience patterns in the EU. This analysis reveals that the EU’s current resilience capacities are considerably higher relative to the previous decade on average, while its resilience vulnerabilities have remained broadly similar. The cross-country heterogeneity in resilience performance and resilience profiles is substantial, which underlines the need to monitor resilience in a systematic way across the Member States. The country fiches respond to this need by zooming into Member States’ resilience capacities and vulnerabilities. Building on the resilience assessments in the 2023 European Semester Country Reports, the Member State fiches in the current report are accompanied by a description of changes in resilience relative to the 2022 edition of the resilience dashboards (hence comparing data up to 2021 to data up to 2020). They also show for the first time the overall vulnerability and capacity indices by country. Monitoring resilience over time can ultimately help inform the future direction of policies to reduce vulnerabilities and strengthen resilience capacities. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc135043&r=eec |
| By: | BERTOLOZZI-CAREDIO Daniele; SEVERINI Simone; PIERRE Guillaume; ZINNANTI Cinzia; RUSTOM Ralph; SANTONI Eleonora; BUBBICO Antonio |
| Abstract: | This study investigates the risks and vulnerabilities affecting food supply and food security in the EU, including differences across Member States, sectors and stages of the EU food supply chain. The study uses data from a systematic literature review, semi-structured interviews and an online survey of key stakeholders, and employs qualitative and quantitative methods to analyse risks and vulnerabilities. It finds that the EU food supply chain faces a broad range of risks and sheds light on the factors that make it vulnerable to these risks. The analysis identifies key characteristics of risks, such as origin, time horizon, likelihood of occurrence, potential impact and exposure. Key risks to food supply and food security are highlighted, as are the main risks threatening different Member States (including the outermost regions) and the different sectors and stages of the EU food supply chain. Emerging risks that warrant further attention are also identified. The study provides a basis for strategic decision-making by highlighting the sources of risks and potential areas of intervention to reduce the vulnerabilities of the food supply chain. Its findings will support EU policymakers, particularly within the European Food Security Crisis Preparedness and Response Mechanism, in improving the preparedness of the EU food supply chain for future crises. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc135290&r=eec |
| By: | Daniel Herrero (Instituto Complutense de Estudios Internacionales (ICEI), Universidad Complutense de Madrid.); Laura Pérez Ortíz (Instituto Complutense de Estudios Internacionales (ICEI), Universidad Complutense de Madrid.) |
| Abstract: | This paper empirically explores the occupational change in Europe after the 2008-crisis (the Great Recession). During this period, which has remained relatively unexplored by the literature so far, many European economies have implemented profound institutional changes in their labor markets and transformed their growth models. Using individual-level data from 18 economies, we build three indicators of job quality -the average educational attainment, the median earnings, and an index of job instability based on the contractual characteristics of the job- and analyze the relative employment growth of jobs. Our findings suggest that there is not a unique pattern of occupational change in Europe, in opposition to the mainstream view of pervasive polarization. On the contrary, we detect a variety of occupational change profiles, which even differ within the same country depending on the indicator employed. |
| Keywords: | Occupational change; Structural change; Europe; Labor markets. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ucm:wpaper:2301&r=eec |
| By: | Kateryna Savolchuk (National Bank of Ukraine); Tetiana Yukhymenko (National Bank of Ukraine) |
| Abstract: | This study investigates the influence of central bank credibility in forming inflation expectations, using data obtained from business surveys conducted by the National Bank of Ukraine. We employ a two-stage treatment model to mitigate the potential bias of the endogeneity of firms' answers. The results confirm the vital role of credibility in shaping inflation expectations. Notably, credibility reduces sensitivity to past inflation deviations. Robustness checks, which are based on bootstrapping, reinforce the reliability of the findings. Our study underscores the importance of central bank credibility in anchoring inflation expectations. |
| Keywords: | credibility, inflation expectations, endogeneity, surveys |
| JEL: | C51 E58 E70 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:ukb:wpaper:04/2023&r=eec |
| By: | Saul Estrin (Department of Management, London School of Economics and Political Science, London, UK); Jan Hanousek (Department of Economics, Faculty of Business and Economics, Mendel University in Brno, Zemedelska 1, 613 00 Brno, Czech Republic; CEPR, London, UK); Anastasiya Shamshur (King's Business School, King's College London, London, UK) |
| Abstract: | We explore how the type of owner affects private enterprise investment decisions in Europe. In contrast to the literature, we analyze firms with concentrated (more than 95%) ownership stakes to reduce the potential that agency problems contaminate our results. We consider four types of supermajority owners – family, institutional, corporate, and state and use detailed ownership and financial information from a large sample of private firms from 24 European countries from 2001 to 2018. We find that family-owned firms exhibit higher gross investment rates and substantially higher sensitivity to investment opportunities, profitability, cash flow, and value-added growth compared to corporate and institutional owners. At the same time, and more consistent with the literature, family-owned firms invest significantly less in intangible assets than other ownership types. To demonstrate the robustness of our results, we employ matching samples complemented by analysis of owner-type transitions from family owners to corporate and institutional owners. |
| Keywords: | private firms, panel data, Europe, ownership types, investments, cash flow sensitivity, profitability, business opportunities |
| JEL: | G31 G32 D22 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:men:wpaper:91_2023&r=eec |
| By: | Castro-Pires, Henrique (University of Surrey); Mello, Marco (University of Aberdeen); Moscelli, Giuseppe (University of Surrey) |
| Abstract: | We exploit the 2016 Brexit referendum as a migration shock to evaluate the impact of reduced labour supply on the provision of hospital care. After the referendum, a sharp drop in the number of early-career new joiners from Europe resulted in a considerable decrease in the share of EU nurses in the English NHS. Using an enclave instrumental variable empirical strategy, we find that emergency readmission rates increased, and more so in hospital organizations more exposed to the missing inflow of new joiners. A theoretical model shows that this is consistent with a decrease in the quality of new hires. |
| Keywords: | labour supply, workers' mobility, immigration, patient care, hospital quality, Brexit |
| JEL: | J45 J61 J68 I11 C26 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16616&r=eec |
| By: | Bajo-Rubio, Oscar; Ramos-Herrera, María del Carmen |
| Abstract: | In this paper, we analyse the relationship between international trade and economic growth in an unbalanced panel of 20 European countries in a long-term perspective, since the mid-19th century to present days, differentiating between the periods before and after the start of the Second World War. To this end, we perform Granger-causality tests between exports and GDP, and between imports and GDP, following the novel methodology of Juodis et al. (2021) for panel data models with large cross-sectional and time series dimensions. Our results support the existence of a bi-directional relationship between both trade variables and GDP, for the whole period and across subperiods. |
| Keywords: | International trade, Economic growth, Europe, Granger-causality |
| JEL: | F41 F43 N10 O47 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:1358&r=eec |
| By: | Jules Linden; Cathal O’Donoghue; Denisa M. Sologon |
| Abstract: | This paper decomposes and compares the distributional impact of uniform national carbon taxes across six EU countries. We quantify the contribution of the key determinants of the carbon tax burden to its impact on inequality and regressivity indicators. We identify large cross-country differences in carbon tax burdens, their composition, and the drivers of the within-country distributional impact. A carbon tax is regressive in all countries, but carbon tax burdens and their impact on income inequality are larger in poorer countries of our sample. Cross-country differences in the primary driver of carbon tax regressivity suggest that the most effective policy lever to mitigate carbon tax regressivity differs across countries. Differences in the composition of the consumption basket play an important role in most countries, but not all. Differences in savings rates play the most important role in the wealthier countries of our sample. The carbon intensity of consumption plays a larger role in the poorer countries of our sample. Overall, this article suggests that differences in the structure of carbon tax incidence and the drivers of its distributional impact across countries pose a challenge to cross-country policy learning, and highlights the need for in-depth country-level and comparative analysis. |
| Keywords: | Distributional effect; Carbon pricing; Energy; Decomposition; Income inequality; Carbon Intensity |
| JEL: | D12 D31 H22 H23 Q48 Q50 Q52 Q58 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2023-10&r=eec |
| By: | António Afonso; Valérie Mignon; Jamel Saadaoui |
| Abstract: | We assess the impact of China’s bilateral political relations with three main trading partners—the US, Germany, and the UK—on current account balances and exchange rates, over the 1960Q1-2022Q4 period. Relying on the lag-augmented VAR approach with time-varying Granger causality tests, we find that political relationships with China strongly matter in explaining the dynamics of current accounts and exchange rates. Such relationships cause the evolution of the exchange rate (except in the UK) and the current account; these causal links being time-varying for the US and the UK and robust over the entire period for Germany. These findings suggest that policymakers should account for bilateral political relationships to understand the global macroeconomic consequences of political tensions. |
| Keywords: | Political relations; time-varying causality; lag-augmented vector autoregression; China. |
| JEL: | C22 F51 Q41 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:ise:remwps:wp03012023&r=eec |
| By: | Hirvonen, Johannes; Kässi, Otto; Ropponen, Olli |
| Abstract: | Abstract This paper examines the labour market impacts of Finland’s initial COVID-19 subsidy program, designed to mitigate the economic fallout of the pandemic. Utilising a novel and comprehensive dataset and a judge-leniency instrumental variables design, we analyse the effects of these subsidies at both the firm and worker levels. Our findings reveal nuanced effects: the program increased the wage sum in the treated firms and decreased the risk of unemployment. On the other hand, the subsidies reduced labour productivity in treated firms, potentially hindering creative destruction. At the worker level, subsidised employees fared better in subsequent years than their non-subsidised counterparts, with slight increases in annual salaries and a higher likelihood of being employed. However, these workers were more likely to be employed in lower-productivity firms. This paper contributes to our understanding of the implications of fiscal interventions during crises and provides critical insights for shaping future economic policies in similar contexts. |
| Keywords: | Business Finland subsidy program, Crisis subsidies, COVID-19, Fiscal policy, Productivity, Unemployment |
| JEL: | H25 H32 E24 |
| Date: | 2023–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:rif:wpaper:111&r=eec |
| By: | Rafael Berriel; Eugenia Gonzalez-Aguado; Patrick J. Kehoe; Elena Pastorino |
| Abstract: | We apply ideas from fiscal federalism to reassess how fiscal authority should be delegated within a monetary union. In a real-economy model with fiscal externalities, in which local fiscal authorities have an informational advantage about the preferences of their citizens for public spending relative to a fiscal union, a decentralized regime is optimal for small federations of countries, whereas a centralized regime is optimal for large ones. We then consider a monetary-economy model, in which governments finance their expenditures with nominal debt, and inflation has a negative impact on aggregate productivity. When the monetary authority lacks commitment, the resulting time inconsistency problem generates an indirect endogenous fiscal externality. When a country-level fiscal authority chooses a higher level of nominal debt, it induces the monetary authority to inflate more to reduce the level of distortionary taxes needed to finance the higher debt. The resulting fiscal externality naturally becomes more severe as the number of countries in the monetary union increases. Here also a decentralized fiscal regime is optimal for small monetary unions, whereas a fiscal union is optimal for sufficiently large ones. Our key result is that as the size of a monetary union increases, it becomes relatively more desirable to centralize fiscal authority. |
| JEL: | E61 E63 F34 F42 F45 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31953&r=eec |
| By: | Karina Doorley; Jan Gromadzki; Piotr Lewandowski; Dora Tuda; Philippe Van Kerm |
| Abstract: | We study the effects of robot penetration on household income inequality in 14 European countries between 2006–2018, a period marked by the rapid adoption of industrial robots. Automation reduced relative hourly wages and employment of more exposed demographic groups, similarly to the results for the United States. Using robot-driven wage and employment shocks as input to the EUROMOD microsimulation model, we find that automation had minor effects on income inequality. Household labour income diversification and tax and welfare policies largely absorbed labour market shocks caused by automation. Transfers played a key role in cushioning the transmission of these shocks to household incomes. |
| Keywords: | robots; automation; tasks; income inequality; wage inequality; microsimulation |
| JEL: | J23 J24 O33 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2023-11&r=eec |
| By: | Sara Calligaris; Gabriele Ciminelli; Hélia Costa; Chiara Criscuolo; Lilas Demmou; Isabelle Desnoyers-James; Guido Franco; Rudy Verlhac |
| Abstract: | This paper analyses employment dynamics across firms during the COVID-19 pandemic and the role of job retention schemes (JRS) in shaping these dynamics. It relies on a novel collection of high-frequency harmonised micro-aggregated statistics, computed using administrative data on employment and wages from electronic payroll records across 12 countries linked to monthly information on policy support during COVID-19, as well as on a new indicator of JRS de-jure generosity. The analysis highlights four key findings: i) the employment adjustment margins varied over time, adjusting mainly through the intensive margin in 2020, while both the intensive and the extensive margins contributed to employment changes in 2021; ii) the reallocation process remained productivity enhancing, although to a lower extent on average compared to 2019; iii) JRS were successful in their purpose of cushioning the effect of the crisis on employment growth and firm survival; iv) JRS support did not distort the productivity-enhancing nature of reallocation. |
| Keywords: | COVID-19, Employment dynamics, Job retention schemes, Productivity, Reallocation |
| JEL: | D22 D24 J08 J2 O47 |
| Date: | 2023–12–21 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1788-en&r=eec |
| By: | Jean-Baptiste Hasse (Aix-Marseille Univ., CNRS, AMSE, Marseille, France and Université Catholique de Louvain, LFIN, Louvain-La-Neuve, Belgium); Christelle Lecourt (Aix-Marseille Univ., CNRS, AMSE, Marseille, France); Souhila Siagh (Aix-Marseille Univ., CERGAM, Marseille, France) |
| Abstract: | In this paper, we examine rebalancing strategies for long-term institutional investors. Specifically, we test the difference in risk-adjusted performances between stock-bond portfolios based on buy-and-hold, periodic and threshold rebalancing strategies. Using the Norwegian Sovereign Wealth Fund (SWF) as a benchmark and an econometric approach based on a bootstrap test of Sharpe ratios difference, we show that the optimal rebalancing differs across economic and financial cycles. Furthermore, we find that the optimal strategy is periodic rebalancing except during recessions and crises when the buy-and-hold approach is best, thus calling into question the hypothesis of the countercyclical behavior of SWFs. Our results are robust to alternative performance measures, asset allocations, investment horizons, rebalancing rule, nonnormal and non-iid returns, transaction costs and time sampling. Finally, our findings promote the consideration of macroprudential rules to improve the Santiago Principles and a specific monitoring framework targeted at SWFs. |
| Keywords: | Portfolio Rebalancing, Financial Stability, Bootstrap Test, Institutional Investors |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:2322&r=eec |
| By: | Chloé Zapha |
| Abstract: | This paper identifies the bank credit restrictions that small firms face after bankruptcy. Using the French credit register, I implement a difference-in-difference strategy that exploits staggered removal of bankruptcy flags in the form of an exogenous change in credit ratings. I focus on small and medium-sized businesses between 2012 and 2019 and show that flag removal leads to an increase in bank credit of 1.7% and a 2 percentage point higher chance of forming new banking relationships. Less well-informed banks increase their credit supply after flag removal, particularly to firms whose credit rating reveals good financial performance. New banks start lending to the most constrained firms. As a result, firms substitute trade credit for bank credit and increase their investment rate. This paper supports the policy choice of shortening the bankruptcy flag. |
| Keywords: | Corporate bankruptcy, Debt Restructuring, Credit Rating, Bank Lending Relationship, SMEs |
| JEL: | G21 G24 G33 G34 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:928&r=eec |
| By: | István János Tóth (HUN-REN Centre for Economic and Regional Studies, SGH Warszawa, CRCB); Miklós Hajdu (CUB) |
| Abstract: | In this study, we investigate the correlation between corruption risk and the level of education in European sub-national regions (NUTS2 level) between 2006 and 2020 in 16 member countries. We use the data of Tenders Electronic Daily (TED) covering the parameters of 6, 766, 274 public procurement contracts in total and NUTS2 level Eurostat data. We found that higher educational attainment is associated with lower corruption risk and a higher level of control of corruption, indicating that better-educated locals may force authorities to limit corruption risk as they have less tolerance for corrupt behavior. In addition, the results point out that the increasing level of education is associated with a decreasing level of corruption risk. Our study contributes to corruption research by using objective indicators characterizing the NUTS2 regions of some European countries. |
| Keywords: | Keywords: regions in Europe, education, corruption risk |
| JEL: | D73 H57 H75 I25 R11 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:2335&r=eec |
| By: | Dalmazzo, Alberto (University of Siena); Leombruni, Roberto (University of Turin); Razzolini, Tiziano (University of Siena) |
| Abstract: | Regulations in host countries often impose heavy limitations on the opportunities of migrant workers. Here, we analyse how (the anticipation of) a change in the legal status of foreign workers may affect their terms of employment. Building on a simple theoretical model, we consider a sample of non-EU immigrants in Italy over the period which led to the accession of Romania and Bulgaria to the European Union in 2007. We find that the expectation of achieving EU citizenship increased Romanians' and Bulgarians' bargaining power over wages and job attributes, relative to other non-EU migrants, and also stimulated business venture. |
| Keywords: | migration, labor market restrictions, EU accession, workplace safety |
| JEL: | J28 J32 J71 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16614&r=eec |
| By: | Sitarz, Joanna; Pahle, Michael; Osorio, Sebastian; Luderer, Gunnar; Pietzcker, Robert |
| Abstract: | Carbon prices in the EU emissions trading system (EU ETS) are a key instrument driving Europe’s decarbonization. Between 2017 and 2021, they surged tenfold, exceeding 80 €/tCO2 and reshaping investment decisions across the electricity and industry sectors. What has driven this increase is an open question. While it coincided with two significant reforms tightening the cap (“MSR reform” and “Fit for 55”), we argue that a reduced supply of allowances alone cannot fully explain the price rise. A further crucial aspect is that actors must have become more farsighted as the reform signaled policymakers’ credible long-term commitment to climate targets. This is consistent with model results that show historic prices can be better explained with myopic actors, while explaining prices after the reforms requires actors to be farsighted. To underline the role of credibility, we test what would happen if a crisis undermines policy credibility such that actors become myopic again, demonstrating that carbon prices could plummet and endanger the energy transition. |
| Keywords: | Carbon prices, EU Emissions Trading System (EU ETS), Myopia, Foresight, Market Stability Reserve (MSR), Policy Credibility, European Green Deal, Electricity Decarbonization |
| JEL: | Q48 Q58 D84 H23 E37 D78 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:280455&r=eec |
| By: | Matthew Gudgeon; Pablo Guzman-Pinto; Johannes Schmieder; Simon Trenkle; Han Ye |
| Abstract: | This paper shows empirically that the non-employment effects of unemployment insurance (UI) for older workers depend in a first-order way on the structure of retirement policies. Using German data, we first present reduced-form evidence of these interactions, documenting large bunching in UI inflows at the age that allows workers to claim their pension following UI expiration. We then estimate a dynamic life-cycle model and use it to directly quantify how the effects of UI vary with retirement policies. Accounting for interactions across UI and retirement institutions also helps explain otherwise difficult-to-explain trends in the unemployment rate of older German workers. |
| Keywords: | Unemployment insurance, moral hazard, retirement, older workers, interactions |
| JEL: | J26 J64 J65 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2023_481&r=eec |
| By: | Nina Biljanovska; Chenxu Fu; Deniz Igan |
| Abstract: | The rapid increase in house prices in the past few years, including during the COVID-19 pandemic, raises concerns about housing affordability. The price-to-income ratio is a widely-used indicator of affordability, but does not take into account important factors such as the cost of financing. The aim of this paper is to construct a measure of housing affordability that takes these factors into account for a large set of countries and long period of time. The resulting dataset covers an unbalanced panel of 40 countries over the period from 1970Q1 to 2021Q4. For each country, the index measures the extent to which a median-income household can qualify for a mortgage loan to purchase an average-priced home. To gauge the performance of the constructed indices, we compare them to other readily-available measures of affordability and examine the evolution of the indices over time to understand the relevant drivers, including in a regression analysis to assess the extent to which government housing programs could contribute to improving affordability. |
| Keywords: | housing affordability, real estate markets |
| JEL: | R3 G51 I31 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:1149&r=eec |
| By: | Konstantins Benkovskis (Latvijas Banka); Dzintars Jaunzems (Latvijas Banka); Olegs Matvejevs (Latvijas Banka) |
| Abstract: | We propose a novel method for modelling energy substitution in CGE models using energy processes defined according to the purposes of energy use. The purpose-based approach is superior for modelling the green transition because it closely mimics firms’ decisions regarding switching energy sources and is more parsimonious, relying on fewer industry-specific elasticities in the production structure. Latvia’s Computable General Equilibrium (CGE) model is an integral part of the joint CGE-EUROMOD modelling system used for policy simulations at Latvijas Banka. We improve this model by 1) incorporating endogenous substitution of energy resources by enterprises through the proposed purpose-based approach, 2) including the accounting of greenhouse gas (GHG) emissions generated by all public and private sector entities, and 3) introducing explicit modelling of expenses related to these emissions both due to state-level levies and participation in the EU Emissions Trading Scheme (EU ETS). To illustrate the advantages of the augmented model, we simulate a scenario in which Latvia follows a linear path to achieve GHG emissions reduction consistent with its European Green Deal objectives by 2030 achieved solely through carbon pricing. The analysis of this scenario suggests that over a three-year horizon ending in 2025, the resulting cumulative welfare losses would exceed 2% in the case of an uncompensated carbon tax (resulting in a budget balance improvement of 2.6% of GDP) or amount to 0.3% if government consumption is increased to keep the budget balance constant. If instead the size of the public sector is maintained and the higher carbon tax is compensated by a VAT rate cut, economic activity expands by 1% but GHG emissions fall by 40% less. |
| Keywords: | CGE model, Latvia, GHG emissions, Emissions Trading Scheme, carbon tax, energy substitution, green transformation, energy transition, European Green Deal, EUROMOD |
| JEL: | C68 Q58 Q48 Q54 Q41 |
| Date: | 2023–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:ltv:wpaper:202307&r=eec |
| By: | Francesco Fasani (University of Milan, CEPR, CReAM, and IZA); Tommaso Frattini (University of Milan, LdA, CEPR, CReAM, and IZA); Maxime Pirot (University of Milan) |
| Abstract: | Is naturalization an effective tool to boost refugees’ labor market integration? We address this novel empirical question by exploring survey data from 21 European countries and leveraging variation in citizenship laws across countries, time, and migrant groups as a source of exogenous variation in the probability of naturalization. We find that obtaining citizen status allows refugees to close their gaps in labor market outcomes relative to non-refugee migrants while having non-significant effects on the latter group. We then further explore the heterogeneity of returns to citizenship in a Marginal Treatment Effect framework, showing that migrants with the lowest propensity to naturalize would benefit the most if they did. This reverse selection on gains can be explained by policy features that make it harder for more vulnerable migrant groups to obtain citizenship, suggesting that a relaxation of eligibility constraints would yield benefits for both migrants and host societies. |
| Keywords: | Forced migration, citizenship, asylum policy |
| JEL: | J15 J61 F22 |
| Date: | 2023–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:489&r=eec |
| By: | Raphael Auer; Ariel Burstein; Sarah Lein; Jonathan Vogel; Raphael A. Auer; Sarah Marit Lein; Jonathan E. Vogel |
| Abstract: | What are the unequal effects of changes in consumer prices on the cost of living? In the context of changes in import prices (driven by, e.g., changes in trade costs or exchange rates), most analyses focus on variation across households in initial expenditure shares on imported goods. However, the unequal welfare effects of non-marginal foreign price changes also depend on differences in how consumers substitute between imported and domestic goods, on which there is scant evidence. Using data from Switzerland surrounding the 2015 appreciation of the Swiss franc, we provide evidence that lower-income households have higher price elasticities. We quantify the contribution of heterogeneous elasticities for the unequal welfare effects of observed price changes between 2014–15 and for counterfactual shocks to the mean and dispersion of import price changes. |
| JEL: | E30 F10 F41 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10810&r=eec |
| By: | NORMAN Ana (European Commission - JRC); TAMBA Marie; WEITZEL Matthias (European Commission - JRC) |
| Abstract: | The transition to a net-zero economy will imply significant investments into low carbon technologies. However, macroeconomic models using capital stock investment treatment from GTAP Input-Output data only assumes a generic representation of investment, where all sectors use the same proportion of inputs to build capital stock (plant, equipment and other assets that help in production). This means that general equilibrium effects on upstream sectors producing investments for low carbon technologies may not be fully captured. In this study, we extend the methodology of Tamba el al (2022) to all EU Member States using Eurostat gross fixed capital formation (GFCF) data to build investment matrices with flexible aggregations for non-power generation sectors. In this report, we present investment matrices for all 23 non-power generation sectors of the JRC-GEM-E3 model. In addition, we build investment matrices for 8 power generation sectors using available cost data in the literature. A comparison of the original generic investment vector in the EU and a disaggregated investment matrix for all individual JRC-GEM-E3 sectors confirms that “one size does not fit all”. While a generic investment matrix puts more emphasis on construction (43%) and market services (25%), most sectors in our disaggregated investment matrix put more emphasis on “other equipment goods”. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc134919&r=eec |
| By: | Julian di Giovanni; Şebnem Kalemli-Özcan; Alvaro Silva; Muhammed A. Yildirim; Muhammed Ali Yildirim |
| Abstract: | We estimate a multi-country multi-sector New Keynesian model to quantify the drivers of domestic inflation during 2020–2023 in several countries, including the United States. The model matches observed inflation together with sector-level prices and wages. We further measure the relative importance of different types of shocks on inflation across countries over time. The key mechanism, the international transmission of demand, supply and energy shocks through global linkages helps us to match the behavior of the USD/Euro exchange rate. The quantification exercise yields four key findings. First, negative supply shocks to factors of production, labor and intermediate inputs, initially sparked inflation in 2020–2021. Global supply chains and complementarities in production played an amplification role in this initial phase. Second, positive aggregate demand shocks, due to stimulative policies, widened demand-supply imbalances, amplifying inflation further during 2021–2022. Third, the reallocation of consumption between goods and service sectors, a relative sector-level demand shock, played a role in transmitting these imbalances across countries through the global trade and production network. Fourth, global energy shocks have differential impacts on the US relative to other countries’ inflation rates. Further, complementarities between energy and other inputs to production play a particularly important role in the quantitative impact of these shocks on inflation. |
| Keywords: | inflation, international spillovers, global production network |
| JEL: | E20 E30 E60 F10 F40 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10789&r=eec |
| By: | Miriam Fritzsche (HU Berlin); Nikolaus Wolf (HU Berlin) |
| Abstract: | Fossil fuels have shaped the European economy since the industrial revolution. We use new long-run panel data to analyse the effect of both, coal and oil on economic growth between 1900 and 2015, exploiting variation at the level of European NUTS2 and NUTS3 regions. We show that the reversal of fortune of coal regions resulted from the second energy transition. Specifically, an “oil invasion” in the early 1960s turned regional coal abundance from a blessing into a curse. Human capital accumulation contributed to this reversal of fortune and fully explains the negative effects until today. Moreover, we find substantial heterogeneity between former coal regions that is in line with Glaeser’s “reinvention hypothesis”: regions with a higher skill-level adjusted much better to the decline of coal. In particular, we show that coal regions with a higher urban density before 1800 were much more resilient than others. |
| Keywords: | coal; oil invasion; second energy transition; education; reinvention; growth; |
| JEL: | O13 O44 Q32 N14 R10 I25 |
| Date: | 2023–11–25 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:465&r=eec |
| By: | Grafström, Jonas (The Ratio Institute) |
| Abstract: | This paper examines the influence of volatile electricity prices on the industrial landscape of Europe. The record-breaking prices experienced in the European wholesale electricity market throughout 2022, along with contributing factors such as the surging gas prices, nuclear power limitations, and reduced hydroelectric output, present complexities and challenges to Europe at the same time as a new wave of green industrialization is forming. Drawing from European Commission- and Eurostat data a new tool, the Green Industrial Location Attractiveness Index (GILAI) is introduced that should be helpful for predicting future green industrial establishments. The top three countries for green industrial establishments in Europe are Sweden, Finland, and Austria. A North/South European split with northern countries achieving higher rankings, while southern countries grapple with several factors. Through this analysis, the aim is to contribute to a better understanding of the evolving industrial landscape in Europe and identify strategies to enhance industry competitiveness and sustainability in the face of fluctuating electricity prices. |
| Keywords: | Electricity; Industry; Europe; Renewable; Transformation |
| JEL: | L94 Q41 Q42 Q54 |
| Date: | 2023–12–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ratioi:0369&r=eec |
| By: | Dahlström, Petter (Indek, Royal Institute of Technology); Lööf, Hans (Indek, Royal Institute of Technology); Sjöholm, Fredrik (Research Institute of Industrial Economics (IFN)); Stephan, Andreas (Linnaeus University) |
| Abstract: | The net-zero agreement on carbon emission from Paris 2015 gives a key role to fossil-free energy technologies with an expected multifold growth rate over the coming decades, when successively replacing oil, coal, and gas. In this paper, we delve into the EU’s competitive advantage in the evolving trade war in clean energy, investigate European strengths and weaknesses in innovation and production, and discuss the impact of the upcoming trade war on the global warming challenge. Our results show that the EU has a strong position in innovation capabilities in the strategic net-zero technologies. However, this is not matched by production capabilities: EU has only a few firms among the leading manufacturers in net-zero technologies. |
| Keywords: | Energy geopolitics; Net-zero technologies; Patents; Innovation Energy geopolitics; Net-zero technologies; Patents; Innovation |
| JEL: | F02 O18 Q50 R10 |
| Date: | 2023–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1483&r=eec |
| By: | Miriam Fritzsche; Nikolaus Wolf |
| Abstract: | Fossil fuels have shaped the European economy since the industrial revolution. We use new long-run panel data to analyse the effect of both, coal and oil on economic growth between 1900 and 2015, exploiting variation at the level of European NUTS2 and NUTS3 regions. We show that the reversal of fortune of coal regions resulted from the second energy transition. Specifically, an “oil invasion” in the early 1960s turned regional coal abundance from a blessing into a curse. Human capital accumulation contributed to this reversal of fortune and fully explains the negative effects until today. Moreover, we find substantial heterogeneity between former coal regions that is in line with Glaeser’s “reinvention hypothesis”: regions with a higher skill-level adjusted much better to the decline of coal. In particular, we show that coal regions with a higher urban density before 1800 were much more resilient than others. |
| Keywords: | coal, oil invasion, second energy transition, education, reinvention, growth |
| JEL: | O13 O44 Q32 N14 R10 I25 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10805&r=eec |
| By: | Giacomo Lo Conte; Andrea Mina; Silvia Rocchetta |
| Abstract: | In this paper we explore the impact of place-based innovation policy in Europe. We focus on the effects of Smart Specialisation strategies on the labour productivity of regional economies. We design an analytical framework that takes into account the entrepreneurial discovery process through which the policy is implemented, and connect the technological relatedness of regions with their specialisation choices. We use an IV estimation approach capable of handling endogeneity problems, and apply it to an extensive dataset of 102 NUTS2 regions extracted from the European Commission Smart Specialisation Portal. The results show that Smart Specialisation strategies increase labour productivity as long as the priorities are set in sectors related to pre-existing technological capabilities, indicating the fundamental importance of path-dependency in diversification choices. The findings deepen our understanding of regional development and innovation strategies, and have relevant implications for the implementation of appropriate policy instruments. |
| Keywords: | Related diversification; Specialization; Regional policy; Innovation policy; Place-based Policies |
| JEL: | O33 R11 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2323&r=eec |
| By: | Marek Hlaváč |
| Abstract: | According to official statistics, Slovakia’s GDP per capita at PPP has been declining compared to the EU-27 average since 2016. This unfavorable evolution is influenced by shortcomings in the input data provided to Eurostat – especially in expenditures on housing rentals and in housing stock data. Using the Eurostat-OECD methodology for calculating purchasing power parities, we estimate alternative scenarios that correct these shortcomings. Our results still suggest that Slovakia’s convergence level has been stagnating since 2016. They are less optimistic than those by other Slovak institutions, and are not very sensitive to changes in assumptions about the prices of rentals. |
| JEL: | E01 E31 O47 |
| Date: | 2023–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:cel:dpaper:67&r=eec |
| By: | Herault, Nicolas; Jenkins, Stephen P. |
| Abstract: | We decompose the redistributive effect of direct taxes into vertical, horizontal, and reranking components applying the methods of Urban and Lambert (Public Finance Review, 2008). In the first such application to the UK, and using yearly data covering 1977–2020, we find that redistributive effect increased over the period. However, there is no clear trend in horizontal inequity and this component forms a very small fraction of total redistributive effect by comparison with reranking and especially vertical components. It is also the vertical component that best tracks trends in redistributive effect. We give specific attention to the choice of the bandwidth used to define ‘close equals’ in terms of pre-tax income. We also show that implausible estimates of the horizontal inequity component arise for some years regardless of bandwidth used. |
| Keywords: | redistributive effect; redistribution; horizontal inequity; reranking; urban-Lambert decomposition; income tax |
| JEL: | D31 H24 H50 I38 |
| Date: | 2023–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:120996&r=eec |
| By: | Massimo Florio (DEMM, Universita' di Milano); Raffaele Articolo (CSIL Centre for Industrial Studies) |
| Abstract: | This working paper investigates the role of CBA in the decision-making process of EU-27 member states. While the role of CBA at the EU decision-making level is well known and analysed, there is a gap in the analysis of the practices of the different member states in the use of this appraisal tool. The study is based on a survey sent to EU-27 country experts from public sector, private sector and academia. It investigates various aspects related to CBA, such as the legal requirements behind it, its preparation stage, the roles and responsibilities of the actors performing the study and its overall impact on the decision-making process. The analysis of the institutional framework governing CBA is fundamental because it influences the way it is conducted, its reliability and potential to improve the decision-making processes. The survey responses show the significant role of CBA within the EU-27. In most countries, there is a legal requirement to conduct CBA, and it is typically conducted at the pre-feasibility stage when project alternatives are still under consideration. All EU-27 countries dispose of guidelines to conduct CBA, and most of the countries’ experts reported an impact of CBA on the efficiency and effectiveness of projects under assessment. The results also reveal that EU-27 countries lack a consistent institutional framework for determining who conducts CBA, posing a risk of varying study quality. Additionally, they reported not regularly conducting ex-post CBA, representing a missed opportunity for policy learning purposes |
| Keywords: | Cost-Benefit Analysis, legal requirements, preparation stage, Social Discount Rate, project appraisal, capital expenditures, decision-making processes |
| JEL: | H43 D61 |
| Date: | 2023–12–13 |
| URL: | http://d.repec.org/n?u=RePEc:mst:wpaper:202301&r=eec |
| By: | Tristan Grupp; Prakash Mishra; Mathias Reynaert; Arthur A. van Benthem |
| Abstract: | The European Union designates 26% of its landmass as a protected area, limiting economic development to favor biodiversity. This paper uses the staggered introduction of protected-area policies between 1985 and 2020 to study the selection of land for protection and the causal effect of protection on vegetation cover and nightlights. Our results reveal protection did not affect the outcomes in any meaningful way across four decades, all countries, protection cohorts, and a wide range of land and climate attributes. We conclude that European conservation efforts lack ambition because policymakers select land for protection not threatened by development. |
| JEL: | Q23 Q24 Q57 R14 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31934&r=eec |
| By: | Jakob Lehr |
| Abstract: | Using the German census of the manufacturing industry, I analyze the impact of import competition on carbon emissions per unit of deflated sales (emission intensity). I combine precise information on firm-level CO2 emissions with sector-level trade flows. Looking at the period 1995 until 2017, I focus on the impact of the rise of Eastern Europe and China while addressing the endogeneity of trade flows with an instrumental variable approach. The baseline results suggest that a 1pp increase in the import penetration ratio caused a reduction of the average firms’ emission intensity by approximately 0.3%. This result implies that the rise of the joint East kept the average firm emission intensity 6% below the level it would have had in the absence of the East’s rise. I do not find strong indication for reallocation of production towards more efficient firms. Finally, I supplement the analysis by examining the effect of export opportunities due to the East’s rise. The results indicate that exporting to the East increased sales and, through that channel, lowered emission intensities. |
| Keywords: | CO2 Emission Intensity, Energy Efficiency, Import Competition, Manufacturing Firms, Environment, Germany |
| JEL: | F18 Q54 L60 D22 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2023_488&r=eec |
| By: | Gabbuti, Giacomo; Morelli, Salvatore |
| Abstract: | Despite its relevance in 19th-century economics, wealth – its accumulation, composition, and distribution – has largely been neglected in Italian economic history. Filling this gap, we show that between the late 19th and mid-20th centuries, Italy presented a historically high value of total private wealth but had relatively small relevance in total bequests flows in proportion to national income. Then, we present novel estimates of wealth concentration between 1863 and 1914, combining national tabulations of inheritance tax records and microdata archives for Milan and Naples. During this period, wealth concentration in Italy was in line with the highest levels ever recorded since the late Middle Ages. Contrary to the evidence of declining income inequality in the period – traditionally considered the industrial ‘take-off’ phase of Italy – we find no clear signs of trends in wealth concentration or structural changes in wealth composition. This picture is confirmed and enriched by novel findings about wealth concentration at provincial and regional levels in the early 20th century. We show a great deal of heterogeneity beyond national aggregates but find no evidence of the classic North-South divide when looking at concentration. Likewise, we find no clear link between concentration levels and asset composition or economic development. Although contemporary inequality is much lower than early 20th-century figures, the ‘real’ wealth of present ‘millionaires’ seems much higher than that of historically rich individuals. Overall, the paper lays the basis for a very long-run view of wealth in Italy and reconsiders the impact of its industrialization at the end of the Liberal period. (Stone Center on Socio-Economic Inequality Working Paper) |
| Date: | 2023–11–27 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:5psha&r=eec |
| By: | Hirvonen, Johannes; Kässi, Otto; Ropponen, Olli |
| Abstract: | Abstract This paper examines the labour market impacts of Finland’s initial COVID-19 subsidy program, designed to mitigate the economic fallout of the pandemic. Utilising a novel and comprehensive dataset and a judge-leniency instrumental variables design, we analyse the effects of these subsidies at both the firm and worker levels. Our findings reveal nuanced effects: the program increased the wage sum in the treated firms and decreased the risk of unemployment. On the other hand, the subsidies reduced labour productivity in treated firms, potentially hindering creative destruction. At the worker level, subsidised employees fared better in subsequent years than their non-subsidised counterparts, with slight increases in annual salaries and a higher likelihood of being employed. However, these workers were more likely to be employed in lower-productivity firms. See also Etla Working Paper No 111 Jobs, Workers, and Firms: Dissecting the Labour Market Effects of Finland’s COVID-19 Subsidy Program. |
| Keywords: | Business Finland COVID-19 business development support, Crisis subsidies, COVID-19, Productivity, Unemployment |
| JEL: | H25 H32 E24 |
| Date: | 2023–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:rif:briefs:131&r=eec |
| By: | Vassil Kirov; Lucia Kováčová; Martin Guzi; Jan Czarzasty; Dragoș Adăscăliței; Martin Kahanec |
| Abstract: | Eleven Central and Eastern European (CEE) countries joined the European Union in 2004, 2007 and 2013. During the COVID-19 pandemic, social partners in CEE have been active in efforts to mitigate the negative consequences of the economic downturn; however, evidence on the scope, scale, and effects of their roles in shaping policy responses to the pandemic remains scant. This paper provides early evidence on the role of social partners in shaping job preservation policies, focusing on three main types: short-time working arrangements; wage subsidies; and flexible work arrangements. It presents the main characteristics of the industrial relations systems and main social partners are five CEE countries: Bulgaria, the Czech Republic, Poland, Romania, and Slovakia. Since the COVID-19 outbreak, social partners in Bulgaria have engaged in an intensive social dialogue leading to national-level agreements and have actively taken part in the formulation of job preservation measures. |
| JEL: | J08 J38 J5 |
| Date: | 2023–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:cel:dpaper:66&r=eec |
| By: | Paul, Saumik (Newcastle University); Raju, Dhushyanth (World Bank) |
| Abstract: | This paper examines the nonlinear propagation of sectoral productivity shocks in a general equilibrium framework with intersectoral linkages characterized by allowing elasticities of substitution in sectoral outputs and sectoral productivities to vary across sector pairs. Evidence based on a sample of 38 countries and 35 sectors shows stronger roles of certain sectors in the aggregate propagation of sectoral productivity shocks with variable elasticities than with constant elasticities. The results of sectoral productivity shocks on cross-country income convergence between 2005 and 2011 are robust across the two types of elasticities in terms of the direction of change, but not the magnitude. |
| Keywords: | nonlinear propagation of productivity shock, Morishima elasticity of substitution, intersectoral linkages |
| JEL: | D24 F15 F43 N10 O47 D57 Q54 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16611&r=eec |
| By: | GARCIA-GUTIERREZ Pelayo (European Commission - JRC); KLENERT David; MARSCHINSKI Robert (European Commission - JRC); TONINI Davide (European Commission - JRC); SAVEYN Hans (European Commission - JRC) |
| Abstract: | The first part of this study applies life cycle analysis and life cycle costing methods to assess the impacts of eight alternative scenarios (pathways) for the management of 1 tonne of waste oil with certain physico-chemical properties, including three regeneration pathways (hydro-treatment, solvent extraction and distillation) and five energy recovery pathways (two types of distillation into fuel oil, direct incineration in cement kilns, direct incineration in hazardous waste incinerators and direct incineration in industrial boilers). Whereas regeneration outperforms all energy recovery pathways from a climate change perspective, the results are more nuanced when considering the societal life cycle costs, i.e. the sum of internal and external costs (monetised environmental emissions). In the second part of this study, we analyse different policies to achieve higher regeneration rates in terms of their environmental and socio-economic impacts. In particular, we quantify the impacts of a 70% and an 85% regeneration target at EU level. Both targets indicate rather minor benefits. The 70% target leads to 0.6 Mt total CO2-equivalent savings and 124 million € net savings in terms of societal costs over the period 2024-2045. For the 85% target, CO2-equivalent savings amount to 1.7 Mt, net savings in terms of societal costs to 330 million € (both over the period 2024-2045) and net employment creation to 329 jobs by 2045. |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc133752&r=eec |
| By: | Sivropoulos-Valero, Anna Valero; Van Reenen, John |
| Keywords: | ES/V009478/1; ES/T014431/1; Wiley deal |
| JEL: | Q50 Q58 |
| Date: | 2023–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:120737&r=eec |
| By: | Lnenicka, Martin; Nikiforova, Anastasija; Luterek, Mariusz; Milic, Petar; Rudmark, Daniel; Neumaier, Sebastian; Santoro, Caterina; Flores, Cesar Casiano; Janssen, Marijn; Rodríguez Bolívar, Manuel Pedro (University of Granada) |
| Abstract: | Open government and open (government) data are seen as tools to create new opportunities, eliminate or at least reduce information inequalities and improve public services. More than a decade of these efforts has provided much experience, practices, and perspectives to learn how to better deal with them. This paper focuses on benchmarking of open data initiatives over the years and attempts to identify patterns observed among European countries that could lead to disparities in the development, growth, and sustainability of open data ecosystems. To do this, we studied benchmarks and indices published over the last years (57 editions of 8 artifacts) and conducted a comparative case study of eight European countries, identifying patterns among them considering different potentially relevant contexts such as e-government, open government data, open data indices and rankings, and others relevant for the country under consideration. Using a Delphi method, we reached a consensus within a panel of experts and validated a final list of 94 patterns, including their frequency of occurrence among studied countries and their effects on the respective countries. Finally, we took a closer look at the developments in identified contexts over the years and defined 21 recommendations for more resilient and sustainable open government data initiatives and ecosystems and future steps in this area. |
| Date: | 2023–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:v7msn&r=eec |
| By: | Pawel Bukowski; Pawel Chrostek; Filip Novokmet; Marek Skawinski |
| Abstract: | This paper combines micro-level tax data, household surveys and national accounts data to provide consistent series of income distribution in Poland over the 2000-2018 period. We find that inequalities in Poland are one of the largest in Europe. In 2018, the share of pre-tax and pre-transfer income accrued to the top 10% is 37.4%, to the next 40% is 41.1%, and to the bottom 50% is 21.5%. The top 1% earns 13.4% of the total income. The increase in income inequality during this period was largely driven by high business incomes in top income shares. The extent of redistribution in Poland is modest. The tax system is regressive at the top of the income distribution due to lower taxation of business income and the low burden of social contributions. Finally, we show that top income groups are dominated by business owners, males, and big city dwellers, and these groups have been the largest beneficiaries of Poland's strong growth since 2000. Gender inequality has been high and stable in Poland, with a steeply decreasing female share with income rank (e.g. the share of females in top 0.1% group was 18% in 2018). |
| Keywords: | inequality, Poland, growth, redistribution, gender gap |
| Date: | 2023–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1966&r=eec |
| By: | Francesco Caloia; David-Jan Jansen; Kees van Ginkel |
| Abstract: | We study whether floods can affect financial stability through a credit risk channel. Our focus is on the Netherlands, a country situated partly below sea level, where insurance policies exclude property damages caused by some types of floods. Using geocoded data for close to EUR 650 billion in real estate exposures, we consider possible implications of such floods for bank capital. For a set of 38 adverse scenarios, we estimate that flood-related property damages lead to capital declines that mostly range between 30 and 50 basis points. We highlight how starting-point loan-to-value ratios are one important driver of capital impacts. Our estimates focus on property damages as the main transmission channel and are also subject to a number of assumptions. If climate change continues, more frequent floods or flood-related macrofinancial disruptions may have stronger implications for financial stability than our estimates so far indicate. |
| Keywords: | floods; financial stability; real estate; credit risk; climate change |
| JEL: | G21 Q54 R30 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:796&r=eec |
| By: | Julja Prodani; Sebastien Gallet; David-Jan Jansen; Ide Kearney; Guido Schotten; Guus Brouwer; Willem-Jan van Zeist (Wageningen University Research); Alexandra Marques (Planbureau voor de Leefomgeving) |
| Abstract: | This study is a first exploration of the potential economic and financial stability impacts of a set of tail-event scenarios that reflect strong measures taken suddenly in response to nature degradation. We consider four transition risk scenarios, for which we find varying degrees of materiality. We do not focus on physical risk scenarios, with the exception of a scenario of pollination decline, due to methodological limitations. This study is a first, methodological contribution to the analysis of the impact of nature degradation on economic developments and financial stability. To draw policy conclusions from this analysis would require further work. |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbocs:2102&r=eec |
| By: | Shteryo Nozharov (UNWE - University of National and World Economy [Sofia]) |
| Abstract: | Two fundamental issues are incorporated in the present monograph: the issue related to the quantification of the social costs and the issue, related to the defining of the circular economy concept as a theoretical model. The analysis is based on the methodology of the new institutional economics, which fact distinguishes it from the many other circular economy analysis based on the neo-classical methodological apparatus. |
| Keywords: | circular economy |
| Date: | 2023–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04307150&r=eec |
| By: | Luisa Alamá-Sabater (Department of Economics and IIDL, Universitat Jaume I, Castellón, Spain); Yolanda de Llanos (Department of Economics, Universidad de Extremadura, Spain); Miguel Ángel Márquez (Department of Economics, Universidad de Extremadura, Spain); Emili Tortosa-Ausina (IVIE, Valencia and IIDL and Department of Economics, Universitat Jaume I, Castellón, Spain) |
| Abstract: | Considerable research has been conducted on the trade-off between reducing regional inequality and promoting regional growth. However, no empirical research has explored the relationship between this trade-off and the spatial mismatch between the distribution of the regional population and the spatial distribution of regional factor endowments, such as labour and capital. The location of labour and capital is crucial in determining regional economic growth and inequalities. Therefore, we aim to assess the impact of spatial mismatches between factors of production (employment and physical capital stock) and population on regional growth and regional inequality. The study first calculates the Spatial Mismatch Indices for capital stock and employment with respect to the distribution of population across regions. Then, we use a VAR approach to detect the dynamic interactions in the short run among the location of the European regional population with respect to regional labour and physical capital, economic growth, and inequality growth. The research does not find a direct trade-off between regional European economic growth and inequality growth. Instead, the results support the view that the best strategy to mitigate economic inequality is to generate spatial mismatches between the spatial distribution of population and employment and between population and physical capital. When addressing regional disparities, the distribution of employment and physical capital should not be based solely on population criteria. Instead, spatial mismatches should be increased. However, the typical approach to implementing regional policies to allocate resources based on population-related criteria does not reduce economic inequality. |
| Keywords: | European regions, population, regional economic growth, regional inequality, regional factors production |
| JEL: | O18 O21 R1 R23 R3 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2023/06&r=eec |
| By: | Maria Fernanda Guajardo Ortega; Heike Link |
| Abstract: | This study analyses the behavioural response of travellers on a temporal reduction of public transport prices in Germany through the so-called 9 Euro Ticket during summer 2022. The focus is on the inertia effect, e.g. the resistance to change behaviour, on people's travel mode decisions for commuter trips. We estimate mixed logit models for nearly 7, 000 commuter trips, based on GPS-tracking data collected as a panel dataset before and after the price intervention. We find significant inertia effects for all travel modes except walking, with negative effects for car and positive effects for public transport and cycling, indicating that car users are less willing to change travel mode while cyclists and public transport users tend to be less resistant. Cross-elasticities of car with respect to public transport attributes are higher than the cross-elasticities of public transport with respect to car attributes such as in-vehicle time and cost. This effect is even higher in the inertia model. Our modelling results suggest that car travel is inelastic and characterised by negative inertia, with a relationship between both effects. Future policy interventions such as the 49-Euro ticket should therefore not focus on price reductions alone, but need additionally to improve other attributes of public transport such as frequency, reliability, safety and comfort in order to incentivise motorists to shift from car to public transport. |
| Keywords: | Inertia, price elasticities, revealed preference, GPS panel data, mode choice |
| JEL: | C23 C25 R41 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp2052&r=eec |
| By: | Gabriel M. Ahlfeldt; Felipe Carozzi; Lukas Makovsky |
| Abstract: | We generate a mix-adjusted house price index for England and Wales from 2010 to 2020 at the level of lower-layer super output areas. To this end, we blend parametric and non-parametric estimation techniques and leverage on a matched Land Registry-Energy Performance Certificate data set. The key advantage of our index is that it combines full spatial coverage with high spatial detail. Explore how property value has evolved in the past decade using our interactive dashboard. See Related (right-hand side) for the link. |
| Keywords: | index, real estate, price, property |
| Date: | 2023–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepops:61&r=eec |
| By: | Michael Fritsch (Friedrich Schiller University Jena, Germany); Maria Greve (Utrecht University, The Netherlands, and Friedrich Schiller University Jena, Germany); Michael Wyrwich (University of Groningen, The Netherlands, and Friedrich Schiller University Jena, Germany) |
| Abstract: | We describe and analyze the long-term development of self-employment in German regions between 1895 and 2019. Based on rankings ("league tables") for the two years we identify those regions where the relative level of self-employment significantly increased ('leapfroggers'), and those where the level of self-employment as compared to other regions deteriorated ('plungers'). Germany is a particularly interesting case due to the turbulent history of the country over the 20th century that includes two lost World Wars, occupation by foreign armies, forty years of division into a capitalist and a socialist state, as well as reunification and shock transformation of the eastern part to a market economy. While there is some persistence of regional self-employment despite all the disruptive changes, we also find and discuss considerable changes of regional levels of entrepreneurial activity. |
| Keywords: | Entrepreneurship, self-employment, regional dynamics |
| JEL: | L26 R11 O52 |
| Date: | 2024–01–02 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2024-001&r=eec |
| By: | Stephan, Gesine (Institute for Employment Research (IAB), Nuremberg, Germany ; FAU); Hetschko, Clemens (University of Leeds); Schmidtke, Julia (Institute for Employment Research (IAB), Nuremberg, Germany); Lawes, Mario (FU Berlin); Eid, Michael (FU Berlin); Schöb, Ronnie (FU Berlin) |
| Abstract: | "A large number of studies analyze the effects of unemployment on well-being (for an overview, see e.g. Suppa 2021). However, these are usually not based on high-frequency data and mostly only collect data on selected dimensions of well-being. As part of a DFG-funded project, the "German Job Search Panel" (GJSP) invited registered jobseekers to take part in a monthly survey about their well-being from 2017 to 2021. The survey was conducted using an innovative smartphone app. Participants were also invited to send in hair samples to measure the cortisol concentration in their hair, which is an established biomarker for the stress levels. On this basis, it is possible to examine in a very differentiated way how critical life events - as unemployment entry - affect well-being. The target group for the survey comprised of people who initially registered as job seekers. A central goal of the project was to investigate the effects of entering unemployment on the various facets of well-being. Only a portion of individuals who register as job seekers actually become unemployed. This provides a natural comparison group for individuals who become unemployed. It is especially true for individuals who have been affected by mass layoffs and plant closures, as the likelihood of job loss depends primarily on external factors and less strongly on characteristics of these individuals. In total, almost 1, 900 people initially took part in a first cohort and almost 1, 000 people in a second cohort of the GJSP. Two method reports describe the data collection procedures in detail (Hetschko et al. 2022, Schmidtke et al. 2023). Among other things, the GJSP makes it possible to examine the immediate effects of entering unemployment among individuals previously registered as looking for work. As the findings of a first subproject (Lawes et al. 2023) show, unemployment had immediate negative effects on satisfaction with household income. For individuals who registered as job seekers due to mass layoffs, life satisfaction also declined immediately when entering unemployment. In contrast, when individuals became unemployed for other reasons, satisfaction with leisure increased upon entry into unemployment, and life satisfaction declined only as time progressed. In contrast, other dimensions of well-being did not significantly change with the onset of unemployment. By repeatedly measuring hair cortisol, another subproject (Lawes et al. 2022) examined for the first time how job search affects a biomarker of chronic stress. Cortisol levels were highest shortly after job search notification - a time of high uncertainty about the future employment career. Subsequently, hair cortisol decreased - regardless of whether individuals actually became unemployed. In addition, individuals who had already been unemployed for a longer period of time had higher hair cortisol concentrations when they assessed their chances of re-employment as poor instead of good. Thus, physical stress is triggered by unemployment only when people assume that their reemployment opportunities are low. Finally, Schmidtke et al. (2023) showed in another subproject that the Covid19 pandemic had only mild and transitory effects on overall life satisfaction. In contrast, respondents' mental health was more severely affected. In particular, this is evident for people in short-time work. However, certain adaptation effects were evident: the second wave had a smaller impact on life satisfaction and mental health than the first wave." (Author's abstract, IAB-Doku) ((en)) |
| Keywords: | IAB-Open-Access-Publikation ; IAB-Datensatz German Job Search Panel |
| Date: | 2023–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabfob:202319&r=eec |
| By: | LASARTE LOPEZ Jesus (European Commission - JRC); GONZÁLEZ HERMOSO Hugo; ROSSI CERVI Walter; VAN LEEUWEN Myrna; M'BAREK Robert (European Commission - JRC) |
| Abstract: | The analysis of the regional dimension of the bioeconomy is important due to its policy implications. The EU’s Bioeconomy Strategy recognizes the potential contribution of the bioeconomy for the development of rural and remote areas. More recently, an increasing number of EU regions are launching their own bioeconomy strategies, and a number of EU initiatives seek to promote the deployment of the bioeconomy to boost rural areas and create jobs and growth opportunities (e.g. the Council of the European Union's Conclusions on the opportunities of the bioeconomy, approved on April 25, 2023, or the Regional Innovation Valleys for the Bioeconomy and the Food system). Despite the political momentum, data availability on the socioeconomic contributions of the bioeconomy is still very limited, making it challenging to evaluate the outcomes of the aforementioned policies. This document presents the BioRegEU pilot dataset, which aims to fill this data gap by providing estimates of employment and value added in the bioeconomy sectors at the NUTS2 level. Although the analysis of the data offers insights into the territorial distribution of bio-based activities in the EU, it is still preliminary and requires further refinement. In this sense, the authors of this report invite users and interested parties to provide feedback on the accuracy of the overview drawn by the estimates, identification of significant deviations from reality according to expert knowledge, as well as on additional refinements and data sources. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc135346&r=eec |
| By: | LELLA Ludovica; OSÉS-ERASO Nuria |
| Abstract: | The Final Report analyses the results of the participation of 10 European Regions in the pilot project "REGIONS2030: monitoring the SDGs in the EU regions - filling the data gaps" (published by the JRC of the European Commission on September 1, 2022, with the support of the European Parliament) and their proposals to develop and improve the framework of indicators for the regional monitoring of the Sustainable Development Goals (SDGs) of the 2030 Agenda. The Report illustrates the methodological approach and the data analysis for developing the indicator set, useful in the European framework for all European regions. Based on the analysis of the indicators proposed by the JRC about the SDG Targets, the 10 Regions (North Aegean, Western Macedonia, Navarra, Andalucia, Piemonte, Puglia, Pomorskie, Centro, Nord-Vest, and Manisa, Afyonkarahisar, Kutahya, Usak – T33) selected a set of available, functional, and additional indicators, in coherence with regional needs and priorities, also concerning the regional (and national) monitoring system. Thanks to the valuable work carried out by the regions in collaboration with the JRC and the regions' suggestions, the Report presents the final set of indicators proposed to monitor the achievement of the SDGs at the regional level in Europe. The availability of a coherent and comprehensive monitoring framework with a related set of indicators like the SDGs is critical to designing better place-based policies to foster sustainable development. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc135594&r=eec |
| By: | Bertin Martens |
| Abstract: | Technical restrictions on access to and re-use of data may result in failures in data markets and data-driven services markets. |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:bre:wpaper:node_9614&r=eec |
| By: | Maihold, Günther; Zilla, Claudia |
| Abstract: | Mit dem Gipfel am 17. und 18. Juli in Brüssel endet nach acht Jahren eine lange Unterbrechung der biregionalen Treffen zwischen der EU und der Gemeinschaft der Lateinamerikanischen und Karibischen Staaten (CELAC). Zwischen 1999 und 2015 fanden alle zwei bzw. drei Jahre Konferenzen statt. Seit der letzten Konferenz haben sich sowohl das internationale Umfeld als auch der regionale Kontext auf beiden Seiten des Atlantiks stark verändert. Mit der Rückkehr Brasiliens in die CELAC und den Bemühungen der neuen Regierung Lula um eine Reaktivierung der Union Südamerikanischer Nationen (UNASUR) hat die Region neue Impulse erhalten, die sich bei den jeweiligen Gipfeltreffen der beiden Organisationen im Januar in Buenos Aires und im Mai in Brasília manifestierten. Im Juni hat die Europäische Kommission eine neue Agenda für die Beziehungen der EU mit Lateinamerika und der Karibik (LAC) vorgelegt, aus der deutlich wird, dass Europa die biregionale Zusammenarbeit intensivieren will. Dies hat dann Aussicht auf Erfolg, wenn die Gipfeldiplomatie nicht im Sinne einer Wiederbelebung, sondern im Geiste einer Erneuerung aufgenommen und mit substantieller thematischer Kooperation und vitalen bilateralen Beziehungen verbunden wird. |
| Keywords: | EU, Gemeinschaft der Lateinamerikanischen und Karibischen Staaten (CELAC), Union Südamerikanischer Nationen (UNASUR) |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:swpakt:279917&r=eec |
| By: | Artem Kochnev (The Vienna Institute for International Economic Studies, wiiw); Bernhard Moshammer; Jan Muś; Waltraut Urban (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | Chart of the Month Estimated reconstruction needs in Ukraine by Artem Kochnev Opinion Corner EU enlargement reality check – integration rather than membership by Jan Muś Despite the optimistic declarations by many EU leaders, the ambitions of Ukraine and Moldova regarding membership of the EU are likely to be put on ice indefinitely. This is strongly suggested by the case of the Western Balkans, where there has been far more integration (in terms of the economy and remittances) than actual institutional inclusion in EU structures. This often gives rise to the criticism that the EU’s policy on its eastern periphery reflects the expansionary process of a capitalist economy, rather than its much-vaunted democratic values. This may undermine its soft power in the regions concerned. ‘China plus X’ how might it work? by Waltraut Urban With a share of around 20%, China is by far the largest source of imports to the EU. This raises concerns over one-sided dependence and potential vulnerabilities and has given rise to calls for diversification the so-called ‘China plus X’ strategy. However, empirical studies show that only about 14% of Chinese imports can be considered to be of strategic importance. For some of those – such as rare earth minerals, active pharmaceutical ingredients, Li-ion batteries and solar products – the potential for diversification is particularly low. This calls for supportive government measures. EU-Caucasus trade and political relations in the wake of the Ukraine war by Bernhard Moshammer Although, as the largest export destination and the second-biggest source of imports, the EU is a key trading partner for the Caucasus region, EU-Caucasian political relations continue to be dominated by issues that extend beyond the sphere of trade. The war in Ukraine has shifted the dynamics of power in the region, fostered the debate on Georgia’s potential EU membership and brought the EU into the role of mediator in the Nagorno-Karabakh conflict – a consequence of Russia losing its leverage in the region, due to its own war in Ukraine. Monthly and quarterly statistics for Central, East and Southeast Europe |
| Keywords: | Russia-Ukraine war, reconstruction needs, EU enlargement, Common Foreign and Security Policy, economic integration, ‘China plus X’, critical dependence, import diversification, trade relations, European Neighbourhood Policy, Nagorno-Karabakh conflict |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:wii:mpaper:mr:2023-06&r=eec |
| By: | Carl Grekou (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); Emmanuel Hache (IFPEN - IFP Energies nouvelles - IFPEN - IFP Energies nouvelles, EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique, IRIS - Institut de Relations Internationales et Stratégiques); Frédéric Lantz (IFPEN - IFP Energies nouvelles - IFPEN - IFP Energies nouvelles, IFP School); Olivier Massol (IFPEN - IFP Energies nouvelles - IFPEN - IFP Energies nouvelles, IFP School, LGI - Laboratoire Génie Industriel - CentraleSupélec - Université Paris-Saclay, CentraleSupélec); Valérie Mignon (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Lionel Ragot (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique) |
| Abstract: | The war in Ukraine is shaking up the European energy scene and its dependence on Russia. This article analyzes the stakes and challenges for Europe of the Russian-Ukrainian conflict on the gas market. It first highlights the evolution and extent of the dependence of European economies on Russian gas and discusses the economic impacts that have been evident since the beginning of the hostilities. It then describes the various responses implemented in Europe to emancipate itself from this dependence. Finally, it discusses some of the blind spots in European decisions and outlines various ways to overcome them. |
| Abstract: | La guerre en Ukraine bouleverse la scène énergétique européenne et sa relation de dépendance à la Russie. Cet article analyse les enjeux et les défis, pour l'Europe, du conflit russo-ukrainien sur le marché gazier. Il met d'abord en évidence l'évolution et l'ampleur de la dépendance des économies européennes au gaz russe et en discute les impacts économiques qui se sont manifestés dès le début des hostilités. Il décrit ensuite les différentes réponses mises en œuvre en Europe pour s'émanciper de cette dépendance. Enfin, il discute quelques angles morts des décisions européennes et esquisse diverses pistes pour les dépasser. |
| Keywords: | Russo-Ukrainian War, Natural Gas Markets, Energy security, Guerre en Ukraine, Dépendance énergétique, Gaz naturel, Europe, Russie |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03955439&r=eec |