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on European Economics |
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Issue of 2025–02–10
twenty-six papers chosen by Simon Sosvilla-Rivero, Instituto Complutense de Análisis Económico |
| By: | Stefania Albanesi (Department of Economics, University of Miami) |
| Abstract: | We examine the link between labour market developments and new technologies such as artificial intelligence (AI) and software in 16 European countries over the period 2011- 2019. Using data for occupations at the 3-digit level in Europe, we find that on average employment shares have increased in occupations more exposed to AI. This is particularly the case for occupations with a relatively higher proportion of younger and skilled workers. This evidence is in line with the Skill Biased Technological Change theory. While there exists heterogeneity across countries, only very few countries show a decline in employment shares of occupations more exposed to AI-enabled automation. Country heterogeneity for this result seems to be linked to the pace of technology diffusion and education, but also to the level of product market regulation (competition) and employment protection laws. In contrast to the findings for employment, we find little evidence for a relationship between wages and potential exposures to new technologies. |
| Keywords: | artificial intelligence, employment, skills, occupations |
| JEL: | J23 O33 |
| Date: | 2023–06–15 |
| URL: | https://d.repec.org/n?u=RePEc:mia:wpaper:wp2023-01 |
| By: | Ursel Baumann; Annalisa Ferrando; Dmitris Georgarakos; Yuriy Gorodnichenko; Timo Reinelt |
| Abstract: | Does a successful disinflation contribute to the anchoring of inflation expectations? We provide novel survey evidence on the dynamics of euro area firms’ inflation expectations during the disinflation episode since 2022. We show that firms’ short-term inflation expectations declined steadily towards the inflation target as the disinflation progressed. However, we also document a thick tail in longer-term inflation expectations, substantial disagreement about the inflation outlook, and an increased sensitivity of longer-term inflation expectations to short-term inflation expectations. These findings suggest that it may take more time to bring inflation expectations fully in line with central bank objectives. |
| Keywords: | inflation expectations; firms; surveys; anchoring |
| JEL: | E31 E52 |
| Date: | 2025–01–31 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedfwp:99484 |
| By: | VEUGELERS Reinhilde; AMARAL-GARCIA Sofia (European Commission - JRC) |
| Abstract: | The EU is challenged by a persistent leadership gap in the global health innovation landscape, with the US leading in corporate health innovation and venture capital (VC) funding. The EU health innovation landscape is more concentrated in older "incumbent leading firms, " while the US has a more dynamic landscape with higher R&D growth rates. Financing constraints are highly relevant in the health sector, particularly for startups and scale-ups with risky breakthrough ideas and technologies. The EU-US gap in dynamic innovative performance in health may be partly due to differences in access to risk finance, particularly venture capital. This paper analyzes trends in VC financing for health-related innovations in Europe compared to the US, using data from Dealroom. The results show that the weakness of the European health VC market continues to hold in the early and late stages, where less progress seems to have been made. Some of the main findings include the following: the EU is lagging behind the US in the number of health VC deals, with a larger gap in late-stage deals; European deal sizes are below the US, with a larger gap in late-stage deals, the EU has a lower occurrence of co-investment deals, which does not help reduce the gap in health VC deals. Overall, the European health VC market is particularly missing larger-sized investors (investment funds) with late-stage deals. To address this gap, policy attention is needed to identify and reduce barriers for European health VC investors to grow to a critical scale and engage in a higher number and larger-sized deals. All in all, Europe should further develop and strengthen its strongest asset, i.e., its Open Single Market, reducing the fragmentation in flows of venture capital, reaching a truly single European Venture Capital market. For an EU open strategic autonomy industrial policy for health, an open single market for health remains the critical instrument to further develop and monitor. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:wpaper:202501 |
| By: | Casas, Pablo; Christou, Tryfonas; García Rodríguez, Abián; Lazarou, Nicholas Joseph; Salotti, Simone |
| Abstract: | We provide a macroeconomic evaluation of the impact of the 2014-2020 European Social Fund, the Youth Employment Initiative and the labour market interventions of the REACT-EU programme, using data updated to the end of 2023. We use the spatial dynamic general equilibrium model RHOMOLO, modified to include endogenous labour force participation, to analyse the impact of nearly €110 billion in total, showing how GDP, employment, wages and various measures of inequality respond to the policies. The results suggest that the European labour market policy has a substantial positive impact on the regional economies of the Union and on the labour force, with long-lasting positive effects on GDP and employment, and a reduction in regional disparities and macroeconomic educational mismatches. |
| Keywords: | European Social Fund, regional labour markets, general equilibrium modelling. |
| JEL: | C68 J20 J30 R13 |
| Date: | 2025–01–21 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123410 |
| By: | Jens H. E. Christensen; Sarah Mouabbi; Caroline M. Paulson |
| Abstract: | We document that German inflation-linked government bond yields contain a convenience or safety premium averaging 0.33 percent. Yet, the German Federal Finance Agency decided to cease all future issuance of these bonds in November 2023. We examine the market response to this announcement and find that neither the safety premia nor the trading conditions of these bonds have been negatively impacted. Hence, this bond market remains a rich source of information on real rates in the euro area in addition to offering investors a safe inflation-protected asset. |
| Keywords: | affine arbitrage-free term structure model; financial market frictions; premium; rstar; safety premium |
| JEL: | C32 E43 E52 G12 |
| Date: | 2025–01–30 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedfwp:99506 |
| By: | José Alberto Fuinhas (Faculty of Economics, and Centre for Business and Economics Research (CeBER), University of Coimbra); Asif Javed (School of Advanced Studies, University of G. D'Annunzio Chieti-Pescara); Dario Sciulli (Department of Economic Studies, University of G. D'Annunzio Chieti-Pescara); Edilio Valentini (Department of Economic Studies, University of G. D'Annunzio Chieti-Pescara) |
| Abstract: | Governments across the globe are implementing stricter environmental policies to combat climate change and promote sustainability. This study contributes to the growing literature exploring the influence of environmental policy on skill-biased employment across various occupations. Specifically, we examine the causal effect of the revised version of Environmental Policy Stringency Index (EPS) and its components on skill-biased employment, focusing on occupations such as managers, professionals, technicians, and manual workers across 21 European economies from 2008 to 2020. Using the Method of Moments Quantile Regression (MMQR), the findings reveal that stringent environmental policies affect employment shares across different occupational categories. Skilled workers tend to benefit more from such policies, with a notable increase in the employment of professionals across all policy measures and a more differentiated impact among technicians and managers. In contrast, manual workers are generally adversely affected by environmental policies. These asymmetric effects on occupations exacerbate labour market inequalities, including disparities in employment levels and potential earnings. This research highlights the importance of designing tailored policies to mitigate adverse labour market outcomes while facilitating a transition to sustainable economic practices. |
| Keywords: | Environmental policy stringency, Skilled workers, Employment, Method of Moments Quantile Regression |
| JEL: | Q58 J24 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:fem:femwpa:2025.02 |
| By: | CURTALE Riccardo (European Commission - JRC); STUT Martijn (European Commission - JRC); ALESSANDRINI Alfredo; DEUSTER Christoph (European Commission - JRC); BATISTA E SILVA Filipe (European Commission - JRC); NATALE Fabrizio (European Commission - JRC); DIJKSTRA Lewis (European Commission - JRC) |
| Abstract: | The European Union is experiencing profound demographic shifts. This paper presents an analysis of observed population trends encompassing observations for the period 2000-2022 and projections until 2040 at the NUTS3 level. The projections were obtained by regionalizing the 2021 Ageing Report’s demographic projections using the Demography-Economy-Land use interaction (DELi) model, which considers explicitly the interlinkages between demographic and economic dynamics. Results show that urban regions are expected to increase their populations primarily due to economic opportunities pulling migrants, while intermediate and rural regions are projected to face population decline, with remote rural regions being the most affected. The natural change rate is trending downwards across all regional typologies, while the net migration rate, historically positive in all typologies, is projected to compensate for the natural change only in urban regions. The implications of these demographic changes are far-reaching, affecting labour markets, public service provision, and economic growth. The paper discusses the potential for regional convergence in GDP per capita, particularly in rural regions close to cities, and the challenges posed by changes in the demographic structure, affected by increasing old age dependency ratio and a shrinking working-age population, and the need for adaptation. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:termod:202501 |
| By: | Julio Saavedra |
| Abstract: | AbstractThe European Union faces several simultaneous threats to its competitiveness: weakness in the industries of the future, insufficient innovation, expensive energy, the need to green its economy, and geopolitical and trade shifts, to name but a few. The EconPol Europe Annual Conference, on whose proceedings this policy brief is based, focused on three aspects that could make a substantial contribution to securing prosperity in the EU, but are in a lamentable state: they all currently fall far short of their potential. These are the power of the single market, the level of its innovation, and the capacity to defend itself. Both the high-level speakers at the conference as well as EconPol and ifo research make clear that some low-hanging fruit are there for the taking, if only the political will were there, a good dose of national chauvinism could be overcome, and an effective communication campaign were undertaken to explain to voters why some measures are not only necessary, but unavoidable. Key MessagesTo secure its future prosperity, Europe needs to tackle three principal challenges to its competitiveness: leveraging the power of its single market, improving its level of innovation, and building the capacity to defend itself.Policy measures to reduce non-tariff barriers for the EU’s trade in services should include the EU-wide standardization of qualifications, and the digitalization of public administrations and services.To boost growth by fostering disruptive technologies, EU innovation policy should be technology-neutral, competitively awarded, and designed to lever-age the powers of public procurement and of the EU single market. Maintaining peace by preparing for war must be the guiding principle when it comes to European defense policy. The EU must create a single market for defense and implement a collectively borrowed fund, similar to the €750 billion COVID recovery fund. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:econpb:_68 |
| By: | Mathilde Esposito (Aix Marseille Univ, CNRS, AMSE, Marseille, France) |
| Abstract: | In the literature on secular stagnation, demographic aging is widely blamed for lowering the IS curve of aggregate demand and therefore the natural interest rate. However, very little is said about the impact of workforce aging on long-term aggregate supply, or so-called potential GDP. To fill this gap, this study delves into the effects of workforce aging on two key components of the remarkably sluggish potential GDP growth of developed countries: hours worked and labour productivity. First, using a novel macro-accounting decomposition of EU-KLEMS data, we find that old-labour input has the highest contribution to growth, through both increased hours worked and shifts in labour composition in the EU, US and Japan. Second, we use panel stochastic frontier models highlighting that, however, old workers have an adverse effect on labour productivity growth frontier—though increasing technical efficiency, i.e., reducing the distance to this frontier. |
| Keywords: | Demographic Aging; Potential Growth; Labour Input; Stochastic Frontier Analysis; Labour Productivity and EU-KLEMS |
| JEL: | J11 J21 J24 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:aim:wpaimx:2425 |
| By: | Ryan Niladri Banerjee; Julián Caballero; Enisse Kharroubi; Renée Spigt; Egon Zakrajsek |
| Abstract: | Natural language text analysis of 80, 000 company financial statements published by 14, 000 non-financial firms in the euro area, United Kingdom and United States shows that around 50% of firms with variable rate debt hedge their interest rate risk. Firms that hedge interest rate risk tend to be larger and have smaller cash buffers and lower equity valuations. When interest rates rise, firms that hedge their interest rate risk experience a smaller negative impact on their interest coverage ratios and market valuations. They are also better able to maintain the size of their workforce. Our analysis highlights the importance of, and the challenges in, getting a comprehensive overview of hedging activity among non-financial firms. |
| Date: | 2023–12–13 |
| URL: | https://d.repec.org/n?u=RePEc:bis:bisblt:81 |
| By: | Mathias Silva (Aix Marseille Univ, CNRS, AMSE, Marseille, France); Michel Lubrano (Aix Marseille Univ, CNRS, AMSE, Marseille, France) |
| Abstract: | When estimated from survey data alone, the distribution of high incomes in a population may be misrepresented, as surveys typically provide detailed coverage of the lower part of the income distribution, but offer limited information on top incomes. Tax data, in contrast, better capture top incomes, but lack contextual information. To combine these data sources, Pareto models are often used to represent the upper tail of the income distribution. In this paper, we propose a Bayesian approach for this purpose, building on extreme value theory. Our method integrates a Pareto II tail with a semi-parametric model for the central part of the income distribution, and it selects the income threshold separating them endogenously. We incorporate external tax data through an informative prior on the Pareto II coefficient to complement survey micro-data. We find that Bayesian inference can yield a wide range of threshold estimates, which are sensitive to how the central part of the distribution is modelled. Applying our methodology to the EU-SILC micro-data set for 2008 and 2018, we find that using tax-data information from WID introduces no changes to inequality estimates for Nordic countries or The Netherlands, which rely on administrative registers for income data. However, tax data significantly revise survey-based inequality estimates in new EU member states. |
| Keywords: | top income correction, Pareto II, Bayesian inference, extreme value theory, EU-SILC |
| JEL: | C11 D31 D63 I31 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:aim:wpaimx:2429 |
| By: | Robert Gold; Jakob Lehr |
| Abstract: | This paper shows that regional policies can decrease populist support. We focus on the "development objective" ("Objective-1") of the European Regional Development Fund (ERDF), meant to support lagging-behind regions. For causal inference, we exploit three sources of quasi-exogenous variation in a Regression-Discontinuity-Design (RDD), a Difference-in- Differences framework (DiD), and with matching techniques. Using NUTS3-level panel data on the outcomes of elections to the EU parliament, observed over the period 1999-2019, we consistently find that Objective-1 transfers reduces the vote share of right-fringe parties by about 2.5 pp. Left-fringe party support is not affected. Complementary analyses of individual-level survey data from the Eurobarometer show that the European Union’s regional policy increases trust in democratic institutions and decreases discontent with the EU. |
| Keywords: | Populism, Regional Policies, European Integration, Regression Discontinuity Design |
| JEL: | D72 H54 R11 R58 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_638 |
| By: | Tommaso Pardi (IDHES - Institutions et Dynamiques Historiques de l'Économie et de la Société - UP1 - Université Paris 1 Panthéon-Sorbonne - UP8 - Université Paris 8 Vincennes-Saint-Denis - UPN - Université Paris Nanterre - UEVE - Université d'Évry-Val-d'Essonne - CNRS - Centre National de la Recherche Scientifique - ENS Paris Saclay - Ecole Normale Supérieure Paris-Saclay, MSH Paris-Saclay - Maison des Sciences de l'Homme - Paris Saclay - UVSQ - Université de Versailles Saint-Quentin-en-Yvelines - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique - ENS Paris Saclay - Ecole Normale Supérieure Paris-Saclay, ENS Paris Saclay - Ecole Normale Supérieure Paris-Saclay); Marc Alochet (X - École polytechnique - IP Paris - Institut Polytechnique de Paris); Bernard Jullien (UB - Université de Bordeaux); Samuel Klebaner (CEPN - Centre d'Economie de l'Université Paris Nord - CNRS - Centre National de la Recherche Scientifique - Université Sorbonne Paris Nord) |
| Abstract: | From executive summary (page 6): Why do we need a small, affordable, sustainable electric vehicle (ASEV)? Why do we not have an ASEV in Europe? What can we learn from countries (Japan, China) where such AS(E)V exist? How can we promote a European made ASEV ? 1) Create a sub-M1 category (M1 ASEV) and create a new-M0 category (M0 ASEV) 2) Adjust the CO2 regulation for ASEV and more efficient decarbonisation 3) Introduction of a dedicated financial framework to support production take-off 4) Introduction of a European Eco score for cars: 5) Promotion of a European ASEV toolkit for Member States, regions and cities What would be the impact of ASEV on decarbonisation, just transition and European industry competitiveness? |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04878220 |
| By: | Gerth, Florian; Briggs, Chad M.; Diaz, John Francis T. |
| Abstract: | This paper investigates the dynamics of entering and exiting firms in determining the long-lasting drop in aggregate Total Factor Productivity (TFP) following the Great Recession in the UK. We decompose the growth rate of UK industry productivity over the 2006-2014 period into four components; the within, the between, the entry, and the exit effect employing the Diewert and Fox (2010) method using the FAME micro-level dataset. The main factor driving the aggregate TFP decline is the within effect, which is the productivity decline within surviving firms. However, the entry and exit effects also significantly contribute to the long-lasting drop in aggregate TFP. First, exiting firms tend to have higher than average TFP. Second, newly entering firms tend to have lower than average TFP. And third, newly entering firms fail to increase their TFP levels over time, thereby depressing the within effect. |
| Keywords: | Great Recession; Firm Dynamics; United Kingdom; Total Factor Productivity; Credit Rationing |
| JEL: | D24 E13 E32 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123325 |
| By: | Bajgar, Matej; Criscuolo, Chiara; Timmis, Jonathan |
| Abstract: | This paper presents new evidence on the growing scale of large businesses in the United States, Japan and 11 European countries. It documents a broad increase in industry concentration across the majority of countries and sectors over the period 2002–2017. The rising concentration is strongly linked to investment in intangibles—particularly innovative assets; and software and data—and this relationship is magnified in more globalised industries. The results are consistent with intangibles disproportionately benefiting large firms, enabling them to scale up and increase their market shares by leveraging intangibles across multiple markets. |
| Keywords: | intangible investment; business groups; concentration |
| JEL: | J1 C1 |
| Date: | 2025–01–27 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126673 |
| By: | Louis Fargier (COACTIS - COnception de l'ACTIon en Situation - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne, UJM - Université Jean Monnet - Saint-Étienne) |
| Abstract: | In this study, we examine the market's reaction to four events that we have identified as significantly increasing the likelihood of the adoption of a directive in the European Union strengthening requirements in terms of extra-financial information disclosure. We expect and observe an average negative overall market reaction. We show that investors perceive the costs (direct and indirect) induced by this directive as far outweighing the expected benefits. In addition, we show that, for companies that have already incurred part of the direct costs, the market reaction is less negative. Our research contributes to the literature on investors' perceptions of the regulatory changes surrounding non-financial information, and on investors' expectations of corporate non-financial communication. These results also have empirical utility, given the many current debates on the latest regulatory developments, particularly on the applicability of CSRD. Although we do not provide a direct answer to this question, we are able to highlight the concerns felt by investors regarding the adoption of this directive. |
| Abstract: | Dans cette étude, nous examinons la réaction du marché à quatre événements que nous avons identifiés comme accroissant significativement la probabilité d'adoption d'une directive dans l'Union Européenne renforçant les exigences en termes de divulgation d'informations extrafinancières. Nous prévoyons et constatons une réaction globale moyenne négative du marché. Nous montrons que les investisseurs perçoivent les coûts (directs et indirects) induits par cette directive comme largement supérieurs aux avantages attendus. De plus, nous démontrons que, pour les entreprises ayant déjà engagé une partie des coûts directs, la réaction du marché est moins négative. Notre recherche contribue à enrichir la littérature, d'une part sur la perception de l'évolution réglementaire entourant l'information extra-financière par les investisseurs, et d'autre part, sur les attentes des investisseurs vis-à-vis de la communication extra-financière des entreprises. Ces résultats revêtent également une utilité empirique, étant donné les nombreux débats actuels sur les dernières évolutions réglementaires, notamment sur l'applicabilité de la CSRD. Bien que nous ne fournissions pas une réponse directe à cette question, nous sommes en mesure de mettre en évidence les inquiétudes ressenties par les investisseurs quant à l'adoption de cette directive. |
| Keywords: | non-financial reporting, event study, market reaction, CSRD, reporting extra-financier, étude d'événements, réaction du marché CSRD |
| Date: | 2024–05–29 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04890383 |
| By: | Fernando Avalos; Wenqian Huang; Kevin Tracol |
| Abstract: | European futures markets for natural gas and electricity were deeply disrupted by the events following the Russian invasion of Ukraine, including through large fluctuations in margins. The fluctuations in margins put significant liquidity demands on market participants, prompting the official sector to establish liquidity facilities in some jurisdictions. Fluctuations in initial margins were associated with material reductions in open interest of market participants, in line with standard deleveraging mechanisms seen in financial markets. |
| Date: | 2023–09–13 |
| URL: | https://d.repec.org/n?u=RePEc:bis:bisblt:77 |
| By: | John Theal; Pavel Dvorak |
| Keywords: | Composite indicator, benefit of the doubt, data envelopment analysis, financial inclusion, digital inclusion, payments, digitalization, performance benchmarking |
| JEL: | C14 C43 C44 I30 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:bcl:bclwop:bclwp191 |
| By: | Pouliakas, Konstantinos (European Centre for the Development of Vocational Training (Cedefop)); Santangelo, Giulia (European Centre for the Development of Vocational Training (Cedefop)) |
| Abstract: | Understanding the labour market impact of new, autonomous digital technologies, particularly generative or other forms of artificial intelligence (AI), is currently at the top of the research and policy agenda. Many initial studies, though not all, have shown that there is a wage premium to AI skills in labour markets. Such evidence tends to draw on data from web-based sources and typically deploys a keyword approach for identifying AI skills. This paper utilises representative adult workforce data from 29 European countries, the second European skills and jobs survey, to examine wage differentials of the AI developer workforce. The latter is uniquely identified as part of the workforce that writes programs using AI algorithms. The analysis shows that, on average, AI developers enjoy a significant wage premium relative to a comparably educated or skilled workforce, such as programmers who do not yet write code using AI at work. Wage decomposition analysis further illustrates that there is a large unexplained component of such wage differential. Part of AI programmers' larger wage variability can be attributed to a greater performance-based component in their wage schedules and higher job-skill requirements. |
| Keywords: | artificial intelligence, skills, wage differentials, performance-based pay |
| JEL: | J24 J31 J71 M52 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17607 |
| By: | Philipp M. Richter; Joschka Wanner |
| Abstract: | In this EconPol Policy Report, we assess various options for EU climate policy utilizing a quantitative trade and environment model. We investigate the EU’s 2030 emission reduction target, evaluate the impact of the newly introduced Carbon Border Adjustment Mechanism (CBAM), and analyze different climate coalitions with the EU at their core, including the recently launched “G7-led Climate Club.” We thereby assess the impact on both national and global emissions accounting for carbon leakage, on international economic competitiveness and changes in the global market shares of the EU, as well as on aggregate income gains and losses.Our findings indicate that EU climate policies do not impose substantial costs, have a limited impact on global emissions, but generate substantial gains from avoided climate damages. The only modest global emission reduction is primarily due to the EU’s relatively small share in global emissions and carbon leakage in response to its climate policy. Our analysis demonstrates that the CBAM reduces, but does not entirely eliminate, carbon leakage and helps prevent income losses for the EU. In contrast to the low average costs for the EU across all scenarios, we show that the costs of climate policy are disproportionately borne by resource-rich countries. Achieving significant global emission reductions will require a climate coalition. However, our findings suggest that relying solely on a “G7-led Climate Club” is insufficient for the necessary global emission reductions. This underscores the need to foster a comprehensive global coalition. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:econpr:_53 |
| By: | Klaus Adam; Tobias Renkin; Gabriel Züllig |
| Abstract: | We estimate the dynamics of relative markups, marginal costs and prices over the firm life cycle using detailed firm data from Denmark. Relative marginal costs fall strongly over the first 15 years of firm life, but relative prices fall only weakly because of a strong rise in relative markups. Relative price trends thus underestimate trends in relative productivity. This distorts recent estimates of the optimal inflation target downward by 0.2-1.2% per year. We show that relative markups increase following the introduction of new products and the discontinuation of old products, suggesting that product turnover is important driver of markup dynamics at the firm level. Only about one third of the decrease in relative marginal cost over the firm age is explained by movements in relative productivity, with the remainder being due to non-homotheticities and increasing returns in the production function. |
| Keywords: | relative markups, marginal costs, prices over the firm life, optimal inflation |
| JEL: | E52 L11 L13 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_626 |
| By: | Cinthia de Souza |
| Abstract: | This paper analyses the role of sovereign investor groups in shaping financial instability and asymmetries within the Eurozone and their interaction with its institutional framework. It proposes a framework to assess the impacts of government debt outflows on countries’ financial fragility under varying scenarios, including different paces of Quantitative Tightening (QT) and evolving investor group dynamics. Our findings indicate that foreign investors play a potential asymmetrical role in the Eurozone, exhibiting destabilising behaviour towards peripheral government debt. This uneven role can be exacerbated by a market-based institutional approach to public debt or mitigated by appropriate support for these state liabilities. By combining the impacts of QT with the potential reemergence of foreign flow asymmetries in sovereign markets, our findings highlight that such dynamics could further deepen the Eurozone's core-periphery divide. |
| Keywords: | Sovereign Debt; Government Bondholders; Financial Asymmetries;Eurozone Jel Classification:H63; G15; E58 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:usi:wpaper:921 |
| By: | Sandambi, Nerhum |
| Abstract: | The study analyses foreign trade between Portugal and the OECD countries in the period 1980-2020. The objective, of course, is to analyse foreign trade and understand the main factors that influence foreign trade. The analysis is estimated using a gravity model, analysed using ordinary least squares, random effects, fixed effects and the Hausman Taylor estimator. According to the results, there is a negative impact of the real GDP of the country of origin, Portugal being in the sample, and a positive impact on the economies of the destination countries, thus being relevant for explaining trade. These results are related to the fact that most OECD countries have a significantly larger economic size than Portugal. Physical distance produced results that show a negative impact on the volume of trade transacted, so when trade is made with the countries furthest away from Portugal (with Australia, for example), the volume of trade drops to -5.60 ‘coeteris paribus’. On the other hand, the real effective exchange rate (reer) has a positive impact of 1.6. We also used some binary variables to analyse whether trade is made with a country that belongs to an economic integration zone itself, so trade made with a country in the European Union produces negative impacts, unlike the results of the binary variable MERCOSSUR, which characterises whether countries belong to this economic bloc, where there are positive impacts on trade volume when trade is made with Brazil or Argentina, for example. |
| Date: | 2025–01–20 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:x7bes |
| By: | Georges Daw (Université Paris-Saclay, Faculté Jean Monnet Droit, Économie, Management, , LED - Laboratoire d'Economie Dionysien - UP8 - Université Paris 8 Vincennes-Saint-Denis) |
| Abstract: | In demand since time immemorial, increasingly used as intermediate consumption and at the heart of energy and digital transitions, mineral substances are vital to the functioning of economies. While all are important, not all are strategic, and even less so, critical (as lithium). The European Union depends on them. Since 2010, the European Commission has produced statistics evaluating a broad and extensible set of criticality sub-indicators integrated in a two-dimensional matrix (Supply Risk, SR, and Economic Importance, EI) and a list of critical substances based on a combination of SR and EI, updated every 3 years. This article takes a closer look at one of these dimensions, namely the EI one. Our proposed dimension, "Economic effect, EE", integrates cost of using raw materials. Articulated in coherence with EI and assessed over the most recent period, it is compared with EI for lithium. EE suggests a systematically higher criticality than EI. Lithium stands out as 4% more critical. The dynamics of its criticality, on the other hand, is non-monotonic, enriching that of EI. The article also numerically illustrates the prospective use of SR, EI and EE. In addition, an up-to-date overview of lithium (markets, uses, production costs, supply, demand, prices, stocks and trade) has been provided, both for the EU and worldwide. |
| Abstract: | Sollicitées depuis la nuit des temps, de plus en plus utilisées comme consommations intermédiaires et au cœur des transitions énergétique et numérique, les substances minérales sont vitales pour le fonctionnement des économies. Si toutes sont importantes, toutes ne sont pas stratégiques, et encore moins critiques (comme le lithium). L'Union européenne en dépend. Depuis 2010, la Commission européenne produit des statistiques évaluant un ensemble large et extensible de sous-indicateurs de criticité intégrés dans une matrice bidimensionnelle (risque d'approvisionnement, RS, et importance économique, IE) et une liste de substances critiques basée sur une combinaison de RS et d'IE, mise à jour tous les 3 ans. Cet article examine de plus près l'une de ces dimensions, à savoir celle de l'IE. La dimension que nous proposons, « Effet économique, EE », intègre le coût d'utilisation des matières premières. Articulée en cohérence avec l'IE et évaluée sur la période la plus récente, elle est comparée à l'IE pour le lithium. L'EE suggère une criticité systématiquement plus élevée que l'IE. Le lithium se distingue par une criticité supérieure de 4 %. La dynamique de sa criticité, en revanche, est non-monotone, enrichissant celle de l'IE. L'article illustre également numériquement l'utilisation prospective de SR, EI et EE. En outre, un aperçu actualisé du lithium (marchés, utilisations, coûts de production, offre, demande, prix, stocks et commerce) a été fourni, tant pour l'UE que pour le monde. |
| Keywords: | JEL classification: A10 A12 F52 F60 N54 Q31 Q32 Raw materials criticality Lithium European Commission's criticality assessments Supply risk Economic importance Economic effect |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04872358 |
| By: | Madsen, Theis; Kountouris, Ioannis; Bramstoft, Rasmus; Koundouri, Phoebe; Keles, Dogan |
| Abstract: | Decarbonization of the energy system is a major challenge for today’s energy system to combat climate change. This challenge is addressed in the EU through different political strategies and plans such as the European Green Deal, Fit-for-55, and REPowerEU, which set specific emission reduction goals for 2030 and 2050. Different mechanisms are in place to achieve these goals, such as the system-wide ETS and the country-level National Energy and Climate Plans. However, there is a difference in the enforcement level between European countries, despite their connection to the same integrated energy system. Hence, there might be discrepancies between the effectiveness of the EU system-level target and the achievements of national goals and plans. To understand and address these discrepancies, we utilize the open-source, sector-coupled energy system optimization model Balmorel to analyze the impact of different decarbonization methods in a fully interconnected, pan-European energy system. In three scenarios, we consider 1) the use of only a system-level carbon budget in line with Fit-for-55 and the European Green Deal, 2) the application of a carbon budget at the country level, and 3) the use of a carbon tax instead of a budget on all production of electricity, heat, and hydrogen. The novelty of this paper lies in the first comparison of these three decarbonization mechanisms and their impact on alignment with policy targets. We demonstrate that the pan-European energy system can reach decarbonization targets across all scenarios. Still, diving from the system perspective into the country level, challenges appear, causing nations to overshoot their allocated budgets. Country-level emission targets are more effective with little cost increase compared to the only system-level target scenario but also cause cross-border effects of fossil fuel based energy production. The carbon tax scenario is the most effective at decarbonizing but comes at up to 27 % higher costs in intermediary years, requiring more early investments. |
| Keywords: | Energy policy, Energy Transition Pathway, Decarbonization Strategies, Balmorel, Energy System Modeling |
| JEL: | C3 C8 O2 |
| Date: | 2024–02 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121998 |
| By: | Antonio Cutanda (Universidad de Valencia, Valencia, Spain); Juan A. Sanchis (Universidad de Valencia and ERICES, Valencia, Spain) |
| Abstract: | In this study, we evaluate how the COVID-19 pandemic affected households’ non-durable spending in 2020. To this end we compare actual individual effective spending with predictions derived from an estimated consumption function, using data from the Spanish SHF panel. Our findings show that the pandemic effect was significantly smaller in individuals than in aggregate NA data, particularly for income measures. Moreover, the estimated reduction in non-durable consumption is positively related to wealth but negatively related to household income. Additionally, we regress each individual estimated decline in non-durable spending on a broad set of indicators for different economic policy measures against the COVID-19. The results indicate that these kinds of interventions were unable to significantly support non-durable expenditure, which may account for the rise in savings during the pandemic. |
| Keywords: | Consumer Spending, Panel data, COVID-19, Fiscal Policy |
| JEL: | C23 D12 E21 E65 H31 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:eec:wpaper:2501 |