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on European Economics |
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Issue of 2024‒01‒29
thirteen papers chosen by Simon Sosvilla-Rivero, Instituto Complutense de Análisis Económico |
| By: | Egan, Paul; McQuinn, Kieran |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp767&r=eec |
| By: | Giovanni Carnazza (Department of Economics and Management, University of Pisa); Thomas I. Renström (Department of Economics and Management, Centre for Environmental and Energy Economics, Durham University); Luca Spataro (Department of Economics and Management, University of Pisa) |
| Abstract: | The EU has embarked on multiple initiatives reflecting its commitment to environmental enhancement and sustainable transitions. Notable among these are the European Green Deal and the NextGenerationEU recovery plan, both pivotal in fostering eco-friendly policies and sustainable practices within the region. Conversely, the fiscal rules within the EU, designed to manage budgetary deficits and debt-to-GDP ratios, may pose challenges to the implementation of fiscal measures targeted at achieving environmental quality objectives. These regulatory constraints potentially curtail the fiscal space available for policies aligned with the environmental goals set forth by the EU. To address this issue, using a panel of 27 European member countries observed annually from 1995 to 2021, we investigate the impact of two different indicators on the overall carbon intensity: on the one hand, the implicit tax rate on energy reduces environmental pollution; on the other hand, an increase in the stringency of the European fiscal framework and/or the debt-to-GDP ratio increase carbon intensity. From a policy point of view, our outcomes stress the importance of shaping national and European regulations to foster more sustainable environmental development. |
| Keywords: | Fiscal Rules, European Union, Energy taxes, CO2 emissions, Government debt |
| JEL: | H23 H63 H87 Q53 Q58 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2023.26&r=eec |
| By: | António Afonso; José Alves; Oļegs Matvejevs; Oļegs Tkačevs |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10843&r=eec |
| By: | Agni Poullikka |
| Abstract: | The policy responses to the Eurozone crisis were mainly driven by taxpayer funded bail-outs and austerity packages, with the exception of Cyprus where a bail-out was supplemented with a bank bail-in for the first time in the Eurozone. This paper examines how voters assign blame for the 2013 Cypriot banking crisis. The results of an original public opinion survey that was conducted in Cyprus show that neither the incumbent government at the time of the bail-in nor the previous one are assigned primary responsibility. Instead, blame is dispersed towards two non-elected actors; the national central bank and the banking sector. The findings carry implications for democratic accountability at the domestic and European Union level. |
| Keywords: | European Union, Eurozone crisis, Cyprus, small states, public opinion |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:hel:greese:192&r=eec |
| By: | Guter-Sandu, Andrei; Haas, Armin; Murau, Steffen |
| Abstract: | The Green Transition to net-zero carbon emissions in Europe requires massive financing efforts, with estimates of 620 billion EUR annually, but the headwinds are substantive. Central banks seem overstretched and busy tightening to combat inflation; treasuries are subject to austerity-inducing fiscal rules; and banking systems are afflicted by non-performing loans, fragmentation, and risk aversion. We employ the framework of ‘monetary architecture’ to analyse the EU’s monetary and financial system as a constantly evolving hierarchical web of interlocking balance sheets and study its capacity to find ‘elasticity space’ to meet the financing challenge. To this end, we draw on a four-step scheme for green macro-financial governance along the financial cycle of balance sheet expansion, funding, and final contraction. We find that, first, Europe’s monetary architecture still has ample elasticity space to provide a green initial expansion due to its developed ecosystem of national, subnational, and supranational off-balance-sheet fiscal agencies. Second, as mechanisms lack to consciously organise the distribution of long-term debt instruments across different segments, its capacity to provide long-term funding is limited. Third, institutional transformation in the last two decades have greatly improved the capacity of the European monetary architecture to counteract financial instability by providing emergency elasticity. Fourth, the capacity of the European monetary architecture to manage a final contraction of balance sheets is limited, which is a general quandary in modern credit money systems. Our analysis points to the need for further investigations into techniques for monetary architectures to manage long-term funding and balance sheet contractions. |
| Date: | 2023–12–23 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:4mb2q&r=eec |
| By: | Nina Biljanovska; Mr. Giovanni Dell'Ariccia |
| Abstract: | The pattern of increasing suburban house prices relative to urban centers initiated during the pandemic continues to hold across the top 30 US metropolitan statistical areas (MSAs). In contrast, European countries such as Denmark, France, and the United Kingdom did not experience a similar shift in valuations. We posit and find supporting evidence that these divergent patterns partially due to differences in the characteristics of suburban areas, particularly in terms of household income and property sizes; with European suburbs being relatively poorer and characterized by smaller housing units. We show that, in the US, MSAs with suburban features more akin to those in European cities generally experienced little to no increase in suburban housing prices compared to their urban centers. Finally, our findings indicate that migration patterns of the high-income population might have partially influenced the urban-suburban revaluation in the US. |
| Keywords: | Property prices; House price gradient; City structure; High-income population mobility |
| Date: | 2023–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2023/266&r=eec |
| By: | Hlavac, Marek |
| 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. |
| Keywords: | Slovakia; purchasing power parity; convergence; housing; imputed rent |
| JEL: | E01 E3 E31 O47 |
| Date: | 2023–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:119323&r=eec |
| By: | Fitzenberger, Bernd (Institute for Employment Research (IAB), Nuremberg, Germany ; FAU); Walwei, Ulrich (Institute for Employment Research (IAB), Nuremberg, Germany ; Univ. Regensburg) |
| Abstract: | "During the COVID-19 crisis, the use of short-time work in Germany reached unprecedented levels, as during the financial crisis of 2008/2009, proving its usefulness as key rescue measure for the labour market. Quickly after the start of the crisis, the German government had considerably eased the conditions for firms and employees to receive short-time working benefits, extending the maximum entitlement period during which the benefits could be drawn and granting higher benefit levels after longer benefit receipt. In light of the high level of economic uncertainty, particularly at the beginning of the crisis, this gave firms a greater planning security with regard to their staff. Despite a rapid decline in short-time working as early as summer 2020, use remained at a historically high level up to the year 2022, after a second temporary peak in winter 2020/21. Germany was no exception among OECD countries in its heavy use of job retention schemes. Elsewhere, government measures to safeguard employment were also implemented on an unprecedented scale during the crisis. The German model of short-time work has served as a role model for many countries, since the financial crisis at the latest. The measures used internationally range from classic short-time work to wage subsidies, subsidies for periods of leave and bans on dismissals in times of crisis. However, some countries primarily relied on income transfers to employees. In addition, business aid programs played a major role in stabilizing firms. At the beginning of the COVID-19 crisis, the use of job retention schemes in Germany was rather below average compared with other countries, but it declined much more slowly than in most other countries. This was partly due to the fact that in many countries, force majeure measures were activated on a large scale at the beginning of the crisis, and these measures often expired in 2020 or 2021 at the latest, i.e., at a time when the economic recovery was on its way faster than previously expected. This research report investigates the development of the use of short-time work in Germany and compares it with the use of employment stabilization measures in the US, Australia, France, Italy, and Spain. The stabilizing effect of short-time work was also evident in the European countries considered here, France, Italy, and Spain. These countries made it even easier to use short-time work. It is noteworthy that with the strong use of short-time work Spain, for example, succeeded for the first time in noticeably mitigating the effects of a GDP decline on employment, while a comparable effect of securing employment was not observed in the USA key reason for this is probably that the U.S. short-time work program - not applied in all states - could not be scaled up in the same way as in Europe. In contrast, Australia succeeded in securing employment with an alternative to short-time work, namely a wage subsidy. The use of short-time work in Germany was made easier because it was possible to build on an established instrument and the experience gained with it during the economic and financial crisis. Irrespective of this, the use of short-time work on a massive scale by local standards has reached its administrative limits, particularly concerning the high degree of flexibility in the amount of possible work loss of individual workers compensated for and the multi-stage procedure for applying for and settling short-time work. In contrast to Germany, countries such as France, Italy and Spain referred to force majeure when relaxing their regulations in the context of the COVID-19 crisis. The enormous use of wage subsidies in Australia was the response to the severe consequences of the crisis. There are opportunities and risks associated with declaring such an exceptional situation. If access rules are strongly simplified and benefits made more generous in such a situation, the likelihood of heavy use increases. The goal of stabilizing employment and the economy in the short term can thus be achieved more easily. At the same time, however, the risk of unintended negative incentive effects, such as windfall gains, which have been observed in Italy and France and especially in Australia, increases. The research report also discusses lessons from the international comparison for the debate in Germany. Basically, in times of a severe economic crisis, countries face the difficult trade-off between (desirable) stabilization effects on the one hand and (undesirable) efficiency losses on the other. The main possible disincentive effects are free riding and the risk of maintaining non-viable firms and slowing down reallocation processes to new, promising fields of business activity. As the international comparison shows, there are three approaches to limiting or compensating for disincentives: Appropriate exit scenarios, suitable models of co-financing by firms, and incentives to strengthen the transformation of the economy. To take account of the cost efficiency of short-time work, the OECD favours co-financing by firms, the argument being that a long use of short-term work can slow down economic transformation processes. Whether and to what extent this has actually happened cannot be ascertained for the various countries based on what is known so far. The descriptive evidence for Germany shows that long periods of use were only observed for a very small proportion of firms. In order to reduce disincentives for long use, incentives to end short-time work could be introduced. One possibility is the introduction of an "experience rating" scheme. Firms that use short-time work to a large extent and for a long time during difficult times would have to know in advance that they would then have to make repayments or pay higher contributions in normal times. The revenues could then serve as a reserve for future crises. Similar arrangements exist in Italy and under the short-time work program which is part of the U.S. unemployment insurance system. In order to further counteract an inappropriate preservation of business models through short-time work, the scheme could be used to an even greater extent to support structural change by means of appropriate supplements. Some countries (especially France and Spain) were more successful than Germany in combining short-time work with training. Spain is of particular interest in this context because, in addition to training, incentives were introduced to encourage workers to leave short-time work by fostering mobility at an inter-company level. Finally, especially in times of severe crises, the use of short-time work must take into account distributional issues. As an insurance benefit, short-time work in Germany, like unemployment benefits, is subject to the equivalence principle and is restricted to employees subject to social insurance contributions; mini-jobbers and the self-employed are not covered by it. In the U.S., for example, the existing short-time work program, which was only used to a limited extent, was extended to the self-employed. If in severe and protracted crises special regulations are used that aim to increase wage replacement rates, one could consider, instead of increasing rates over the course of the reference period (as has been done in Germany), focussing on increasing wage replacement rates for workers with low incomes, similar to the case of France. In the absence of insurance coverage, as in the case of the self-employed and mini-jobbers, appropriate income support schemes to compensate for hardship should be considered in the event of a severe crisis, similar to what has been done in the U.S.. In Germany, this was done, for example, through simplified access to basic benefits or, most recently, through subsidies in the context of the energy crisis." (Author's abstract, IAB-Doku) ((en)) |
| Keywords: | Australien ; Bundesrepublik Deutschland ; Frankreich ; Italien ; Spanien ; USA ; Pandemie ; IAB-Open-Access-Publikation ; Beschäftigungseffekte ; Beschäftigungsentwicklung ; Finanzkrise ; Inanspruchnahme ; internationaler Vergleich ; Krisenmanagement ; Kurzarbeit ; Kurzarbeitergeld ; Lohnsubvention ; Rezession ; Wirtschaftskrise ; Arbeitsplatzsicherung ; 2008-2022 |
| Date: | 2023–10–06 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabfob:202305(en)&r=eec |
| By: | Konstantins Benkovskis (Latvijas Banka); Jaanika Merikull (Eesti Pank); Aurelija Proskute (Lietuvos bankas) |
| Abstract: | This paper studies the margins and heterogeneity of adjustments to trade shocks by estimating how Covid-19 restrictions affected imports and exports. We use data from Lithuania, Latvia and Estonia on foreign trade at the level of the firm and the partner country and at monthly frequency from January 2019 to December 2020. The focus is on the short-term adjustment and on the first wave of the pandemic. We find that the adjustment to the restrictions mostly occurs through the intensive margin, meaning trade values are reduced rather than trade in cer- tain markets or products ceasing. It is further observed that quantity played a more important role in the adjustment process than prices and that both upstream and downstream restrictions played an equally important role in the decline of foreign trade. It is shown that differentiated products that are difficult to replace are responsible for this adjustment pattern. |
| Keywords: | transmission of shocks, input-output linkages, global value chains, Covid-19, workplace closing |
| JEL: | F14 F61 D22 |
| Date: | 2024–01–12 |
| URL: | http://d.repec.org/n?u=RePEc:ltv:wpaper:202401&r=eec |
| By: | Margaret Kyle (CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris sciences et lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique); Sinan Corus; Julia Tanndal |
| Abstract: | One goal of the European Commission's proposed reform to existing regulations is to increase patient access to innovative medicines across the European Union. We describe the economic impact of this policy change. Because of the incentives created by other policies, particularly external reference pricing and parallel trade, these reforms may have an adverse impact on competition in the pharmaceutical sector and reduce the attractiveness of Europe as an incubator for pharmaceutical innovation. Changes to bargaining power are likely to favour large, established firms. These reforms also increase the uncertainty of the length of market exclusivity, potentially undermining innovation incentives. |
| Abstract: | L'un des objectifs de la réforme des réglementations existantes proposée par la Commission européenne est d'améliorer l'accès des patients aux médicaments innovants dans toute l'Union européenne. Nous décrivons l'impact économique de ce changement de politique. En raison des incitations créées par d'autres politiques, en particulier celles relatives aux prix de référence externes et au commerce parallèle, ces réformes peuvent avoir un impact négatif sur la concurrence dans le secteur pharmaceutique et réduire l'attrait de l'Europe en tant qu'incubateur de l'innovation pharmaceutique. L'évolution des rapports de force est susceptible de favoriser les grandes entreprises établies. Ces réformes augmentent également l'incertitude quant à la durée de l'exclusivité commerciale, ce qui pourrait nuire aux incitations à l'innovation. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04351643&r=eec |
| By: | L. Vargiu; B. Biagi; M.G. Brandano; P. Postiglione |
| Abstract: | The last decades registered a significant increase in Research Infrastructures (RIs) everywhere and in Europe. The EU supports these projects and their activities by implementing strategies and allocating financial resources for these costly projects. Although RIs main goal is to foster science, they produce relevant effects that go beyond scientific output including economic output, innovation, and social impact. These effects take place simultaneously at different geographic levels - regional, national, and international. RIs' hosting regions absorb a significant part of them. This phenomenon is the object of a stream of literature that analyses the several effects that single RIs have on the economy and society. However, little attention is paid to the aggregate dimension of these effects at the regional level and how it changes in different regional contexts. This work contributes to the main literature on RIs socio-economic effects by disentangling the aggregate economic growth effect driven by RIs in EU NUTS 2 regions for two periods - 2001-2020 and 1981-2020. The empirical analysis is carried out on an original database with information about 667 RIs. A spatial Durbin model estimates both the direct impact and spatial spillovers. The main findings suggest that RIs have a positive impact on regional economic growth over the two periods considered. However, spillover effects to neighbouring regions are not significant. |
| Keywords: | Research Infrastructures;regional economic growth;Socio-economic effects;european regions;spatial analysis |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:202314&r=eec |
| By: | Michele Schiavo (SMART - Structures et Marché Agricoles, Ressources et Territoires - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Rennes Angers - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); Chantal Le Mouël (SMART - Structures et Marché Agricoles, Ressources et Territoires - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Rennes Angers - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); Xavier Poux (ASCA - Partenaires IRSTEA - IRSTEA - Institut national de recherche en sciences et technologies pour l'environnement et l'agriculture, IDDRI - Institut du Développement Durable et des Relations Internationales - Institut d'Études Politiques [IEP] - Paris); Pierre-Marie Aubert (IDDRI - Institut du Développement Durable et des Relations Internationales - Institut d'Études Politiques [IEP] - Paris) |
| Abstract: | The need for an agroecological transition is regularly advocated by many actors and policymakers on the European scene, but many questions arise regarding the potential consequences that this transition may have on the rest of the world. Using a world biomass balance model, in this paper we show that a deep agroecological transition in the EU, if accompanied by a shift of EU food regimes towards more plant-based diets, is not detrimental to global food security. Without increasing its cropland areas, the EU can maintain the same level of exported calories as in a business-as-usual scenario while reducing its import needs. This result holds true also in an alternative scenario in which the other world regions adopt agroecological production methods and healthier diets. In contrast, an agricultural transition taking place in the EU without a change of EU food regimes, would drastically increase EU food dependence on global markets and contribute to the expansion of agricultural land in the rest of the world. |
| Keywords: | Agroecology, Agricultural transition, DIETS, Modelling, Organic agriculture, TYFA |
| Date: | 2023–08–24 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04348979&r=eec |
| By: | Becker, Peter |
| Abstract: | Die Europäische Union hat 2020 mit dem 750 Milliarden Euro schweren Zusatzhaushalt unter dem Namen "Next Generation EU" (NGEU) und mit der europäischen Aufbau- und Resilienzfazilität (ARF) eine eindrucksvolle und innovative Reaktion auf die Covid 19-Pandemie und deren sozioökonomische Folgen beschlossen. NGEU knüpft zwar an die vorhandenen Instrumente und Strukturen der europäischen Strukturfonds an und greift auf Elemente des sogenannten Europäischen Semesters zur wirtschaftspolitischen Koordinierung zurück. Grundsätzlich neu ist aber die Finanzierung des Programms durch die Aufnahme von Krediten, die bis 2058 getilgt sein müssen. Der Beschluss zu dieser gemeinsamen Aufnahme von Schulden und zu deren Tilgung aus dem EU-Haushalt wurde häufig als europäischer Hamilton-Moment bezeichnet, also als erster Schritt auf dem Weg zu einem europäischen Bundesstaat. Jedoch erscheint diese Interpretation der langfristigen integrationspolitischen Wirkung von NGEU und ARF nicht angemessen. Realistisch ist allenfalls die Wiederholung einer gemeinsamen Kreditaufnahme für zweckgebundene, befristete und in ihrem Umfang begrenzte Ausgaben als Antwort auf eine erneute schwere Krise in der Europäischen Union. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:swpstu:280978&r=eec |