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on Microeconomic European Issues |
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Issue of 2015‒07‒04
twenty-two papers chosen by Giuseppe Marotta Università degli Studi di Modena e Reggio Emilia |
| By: | Miaoqing Yang; Eugenio Zucchelli |
| Abstract: | Recent studies on the effects of anti-smoking policies on subjective well-being present mixed results and focus mainly on smokers. We contribute to the literature by exploiting the policy experiment provided by the UK public smoking bans and evaluating the impact of smoking bans on the subjective well-being of smokers, non-smokers and couples of different types of smokers. We employ matching techniques combined with flexible difference-in-differences fixed effects panel data models on data from the British Household Panel Survey. We find that the UK public smoking bans appear to have a statistically significant short-term positive impact on the well-being of married individuals, especially among couples with dependent children. These effects appear to be substantial in size, robust to alternative specifications and may be driven by positive externalities due to parental altruism. |
| Keywords: | subjective well-being, smoking bans, policy evaluation, BHPS |
| JEL: | C21 C23 I10 I18 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:cch:wpaper:150009&r=eur |
| By: | Gimenez-Nadal, J. Ignacio; Molina, Jose Alberto |
| Abstract: | This paper analyzes the relationship between health inequality and time allocation decisions of workers in six European countries. Using the Multinational Time Use Study, we find that a better perception of own health is associated with more time devoted to market work activities in all the countries, and with less time in housework activities, for both men and women. However, the evidence for the associations between health and leisure is mixed. This study represents a first step in understanding cross-country differences in the relationship between health status and time devoted to a range of activities for workers, in contrast with other analyses that have mainly focused only on market work. A better understanding of these cross-country differences may help to identify the effects of public policies on inequalities in the uses of time. |
| Keywords: | Health, Time Allocation, Inequality, Multinational Time Use Study |
| JEL: | D13 J16 J22 |
| Date: | 2015–06–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:65334&r=eur |
| By: | Joan Costa Font; Martin Karlsson; Henning Øien |
| Abstract: | Macroeconomic downturns can have both an important impact on the availability of informal care and the affordability of formal long-term care. This paper investigates how the demand for and provision of informal care changed during and after the Great Recession in Europe. We use data from the Survey of Health, Aging and Retirement in Europe (SHARE), which includes a rich set of variables covering waves before and after the Great Recession. We find evidence of an increase in the availability of informal care and a reduction in the use of formal health services (doctor visits and hospital stays) after the economic downturn when controlling for year and country fixed effects. This trend is mainly driven by changes in care provision of individuals not cohabiting with the care recipient. We also find a small negative association between old-age health (measured by the number of problems with activities of daily living) and crisis severity. The results are robust to the inclusion o f individual characteristics, individual-specific effects and region-specific time trends. |
| Keywords: | Long-term care, informal care, great recession, downturn, old age dependency |
| JEL: | I18 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1360&r=eur |
| By: | Osea Giuntella (University of Oxford, IZA); Catia Nicodemo (University of Oxford, CHSEO, IZA); Carlos Vargas Silva (University of Oxford, COMPAS) |
| Abstract: | This paper analyzes the effects of immigration on access to health care in England. Linking administrative records from the Hospital Episode Statistics (2003-2012) with immigration data drawn from the UK Labor Force Survey, we analyze how immigrant inflows affected waiting times in the National Health Service. We find that immigration reduced waiting times for outpatient referrals and did not have significant effects on waiting times in Accident and Emergency (A&E) and elective care. However, there is evidence that immigration increased waiting times for outpatient referrals in more deprived areas outside London. These effects are concentrated in the years immediately following the 2004 EU enlargement and vanish in the medium-run (e.g., 3 to 4 years). Our findings suggest that these regional disparities are explained by both differences in the health status of immigrants moving into different local authorities and in natives’ internal mobility across local authorities. |
| Keywords: | Immigration, waiting times, access to health care, welfare |
| JEL: | I10 J61 |
| Date: | 2015–05–06 |
| URL: | http://d.repec.org/n?u=RePEc:nuf:econwp:1504&r=eur |
| By: | Rastrigina, Olga; Leventi, Chrysa; Sutherland, Holly |
| Abstract: | Very low work intensity and at-risk-of-poverty are two of the three indicators used for monitoring progress towards the Europe 2020 poverty and social exclusion reduction target. Their timeliness is critical for tracing the effectiveness of policy interventions towards reaching this target. However, due in part to the complicated nature of microdata collection and processing, official Eurostat estimates of these indicators become available with a significant delay. This paper presents a method of estimating (‘nowcasting’) very low work intensity and poverty risk using the tax-benefit microsimulation model EUROMOD based on EU-SILC data and combined with up-to-date macro-level statistics from the Labour Force Survey. The method is applied to 12 EU Member States for the period 2009-2013. Its performance is assessed by comparing the EUROMOD estimates with the official Eurostat statistics for the years for which the latter are available. The most important measurement issues of the work intensity indicator that are relevant in the context of nowcasting are also discussed. |
| Date: | 2015–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:ese:emodwp:em9-15&r=eur |
| By: | Cristina Belles-Obrero; Sergi Jiménez-Martín; Judit Vall-Castello |
| Abstract: | We use an exogenous variation in the Spanish legal working age to investigate the effect of education on fertility and infant health. The reform introduced in 1980 raised the minimum legal age to work from 14 to 16 years old. We show that the reform increased educational attainment, which led to 1786 more women remaining childless and 3307 less children being born in the 10 generations after the reform. These negative effects operate through a postponement of first births until an age where the catching up effect cannot take place. We show that woman's marriage market is one channel through which education impacts fertility, delaying the age at which women marry for the first time and reducing the likelihood that a woman marries. Even more importantly, this postponement in fertility seems to be also detrimental for the health of their offspring at the moment of delivery. The reform caused 2,789 more children to be born with less than 37 weeks of gestation, 268 died during the first 24 hours of life and 4,352 were born with low birth weight. We are able to document two channels that contribute to the negative effects on infant health: the postponement in age of delivery as well as a higher employment probability of more educated women, which enhances unhealthier behaviors (smoking and drinking). |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaddt:2015-09&r=eur |
| By: | Sophie-Charlotte Meyer (Schumpeter School of Business and Economics, University of Wuppertal) |
| Abstract: | A widespread finding among studies from the US and the UK is that maternal employment is correlated with an increased risk of child overweight, even in a causal manner, whereas studies from European countries obtain less conclusive results. As evidence for Germany is still scarce, the purpose of this study is to identify the effect of maternal employment on childhood overweight in Germany using two sets of representative micro data. Moreover, we explore potential underlying mechanisms that might explain this relationship. In order to address the selection into maternal full-time employment, we use an instrumental variable strategy exploiting the number of younger siblings in the household as an instrument. While the OLS model suggests that maternal full-time employment is related to a 5 percentage point higher probability of the child to be overweight, IV estimates indicate a 25 percentage points higher overweight probability due to maternal full-time employment. Exploring various possible pathways, we find that maternal employment is associated with unhealthy dietary and activity habits which might explain the positive effect of maternal employment on child overweight to some extent. Several sensitivity analyses confirm the robustness of our findings. |
| Keywords: | aternal employment, childhood overweight, BMI, maternal labor supply |
| JEL: | I12 J22 J13 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:bwu:schdps:sdp15005&r=eur |
| By: | Emre Akgunduz; Egbert Jongen; Paul P.M. Leseman; Janneke Plantenga |
| Abstract: | In this article we present quasi-experimental evidence on the relation between child care subsidies and child care quality. We exploit the difference in funding of private and public centers in the Netherlands. A recent subsidy cut reduced funding for private centers while funding for public centers was unaffected. The quality measurements are from a panel survey in which centers' quality was evaluated through classroom assessments by trained observers. Using differences-in-differences we find that the subsidy reduction caused a statistically significant decrease in quality of one fifth of a standard deviation. We also present results for nonlinear differences-in-differences estimators. The decline in quality is robust across specifications and appears to be driven by a decline in the middle of the distribution. A limitation of our data set is that our pre-reform period is short, so that we can not perform pre-reform placebo tests. |
| JEL: | C21 I21 I28 J13 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:310&r=eur |
| By: | Petros Gkotsis (European Commission – JRC - IPTS) |
| Abstract: | In this report the main results of the study performed in the context of the Advanced Manufacturing for Competitiveness Project are presented. This project aims at developing and testing a methodology based on patent analysis to assess the capacity of the EU R&D Scoreboard companies to develop advanced manufacturing and key enabling technologies which are expected to have a major impact on the productivity, the efficiency, the profitability and the employment in major industrial sectors. The companies listed in the R&D Scoreboard hold a dominant position in KETs and AMT filings with about 61% of total KETs filings and 57% of total AMT filings in 2011. European companies hold almost 50% of the AMT related patent filings and about 50% of these are from Germany headquartered companies. Japanese based companies are responsible for 27% of the AMT filings worldwide and the US for about 24% of all transnational AMT patents. In KETs Japanese companies are dominating the scene, followed by Europe and the USA. Developing and patenting AMT and KETs related technologies seems to become more expensive over the time period under study as the decrease in the average patent intensity since 2004 shows. Larger firms have lower patent intensities than smaller ones and the patent intensity is higher in industry than in the service sector. European firms have the highest patent intensities followed by North American, Asian and companies from the rest of the world. R&D expenditures and patent filings are significantly positively correlated to the number of employees. This correlation is also observed in the case of firms who file AMT patents, larger firms are thus filing more AMT related patents compared to smaller ones. With regard to employment growth, however, we find no significant effect of KETs or AMT filings. The largest shares of KETs related filings are found in the Electronic & Electrical Equipment and Chemicals sectors. Firms in the Electronic & Electrical Equipment sector are also responsible for the largest shares of filings in AMT. Large shares, however, can also be found in the Industrial Engineering sector followed by the Automobiles & Parts and General Industrials sectors. |
| Keywords: | manufacturing, patent |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc95370&r=eur |
| By: | Steve Bradley; Giuseppe Migali |
| Abstract: | This paper investigates whether the increase in university tuition fees in 2006 changed student drop out behaviour. Using data on multiple cohorts of first year students who enrolled between 2003-2010, we estimate duration models controlling for unobserved heterogeneity. Our findings suggest that the policy reform reduced the hazard of dropping out by 16 percent, however, there were differences in the impact of the reform in terms of income groups, the type of university attended and the subject studied. The effect of the reform was not just a one off, but persisted for a number of years after 2006. Drop out behaviour in the post-reform period was also affected by the recession in 2008, and there may have been possible changes in the composition of the student population, which makes it difficult to quantify the full effect of the tuition fee increase. Finally, the tuition fee reform had a spillover effect on the drop out behaviour of Scottish students attending Scottish universities, a group exempt from the tuition fee reform. |
| Keywords: | tuition fee reform, dropouts, duration analysis |
| JEL: | I20 I22 I28 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:86010138&r=eur |
| By: | De Agostini, Paola; Tasseva, Iva Valentinova |
| Abstract: | Using the tax-benefit microsimulation model EUROMOD and Family Resources Survey, we investigate what would have happened to child poverty in the UK in the periods 2010/11–2015/16 and 2015/16–2020/21 under a range of different indexation scenarios of children’s benefits. We find that between 2010/11 and 2015/16 both the relative and absolute child poverty rates would have been lower if children’s benefits were uprated by RPI or if the government had introduced the Child Tax Credit uprating package it promised in 2010. Uprating children’s benefits up to 2020/21 as announced by the government in the Autumn Financial Statement in 2014 would result in real benefit cuts and increase in child poverty. However, triple lock indexation of children’s benefits would sustain their real value and would reduce child poverty rates substantially. |
| Date: | 2015–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:ese:emodwp:em8-15&r=eur |
| By: | Andreas Ziegler (University of Kassel) |
| Abstract: | Based on unique data from representative computer-based surveys among more than 3400 citizens, this paper empirically examines the determinants of climate change beliefs, the support of publicly financed climate policy, and the (stated)willingness to pay a price premium for climate-friendly products in three countries which are key players in international climate policy, namely the USA, Germany (as largest country in the European Un-ion), and China. Our econometric analysis focuses on the effect of ideological identification and especially considers the interrelationship between a right-wing or a left-wing orientation and environmental values. Our estimation results imply that environmental aware-ness is in all three countries the major factor for beliefs and attitudes toward climate change. In Germany, citizens with a conservative, but not social or green orientation significantly less often support the considered climate policy and particularly have a significantly lower willingness to pay a price premium, whereas ideological differences are negligible for climate change beliefs. In contrast, a right-wing orientation has significantly negative effects on all beliefs and attitudes toward climate change in the USA. Furthermore, an increasing environmental awareness decreases ideological differences in the support of publicly financed climate policy in Germany and the USA and especially in general climate change beliefs and beliefs in anthropogenic climate change in the USA. Our estimation results suggest alternative strategies such as specific communication campaigns in order to reduce the climate change skepticism in conservative and right-wing circles in the USA and to increase the support of climate policies among such population groups. |
| Keywords: | Climate change beliefs, climate policy, price premium for climate-friendly products, ideological identification, environmental values, econometric analysis |
| JEL: | Q54 Q58 A13 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201516&r=eur |
| By: | Maciej Lis; Agata Miazga |
| Abstract: | Facing rising energy prices, what are expected to be an outcome of climate package, some household groups will reduce other expenditure in order to satisfy the energy consumption needs. According to Eurostat statistics, energy prices in Poland are lower than in other EU member states, but relatively high when compared to prices of other goods and services. On the basis of the 2013 Polish Household Budget Survey, we analyse determinants of energy prices. We demonstrate that electricity spending is stronger related to household characteristics, whereas heating expenditures to building characteristics. We show that increasing electricity prices affect mainly the most populous households, in particular large families. Contrary, changes in heating prices affect mostly residents of old, large houses, in small towns and in the countryside. Therefore, limiting the energy inefficiency of non-insulated buildings and more education about energy saving are crucial to minimize the social cost of climate policy. |
| Keywords: | energy expenditures, electricity expenditures, heating expenditures, household expenditures, energy prices, energy efficiency |
| JEL: | D12 Q41 Q48 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:ibt:wpaper:wp112015&r=eur |
| By: | Mohammadi, Ali (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Broström, Anders (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Franzoni, Chiara (Politecnico di Milano) |
| Abstract: | In this paper, we study how workforce composition is related to firm’s radical innovation. Previous studies have argued that teams composed by individuals with diverse background are able to perform more information processing and make a deeper use of the information, which is important to accomplish complex tasks. We suggest that this argument can be extended to the level of the aggregate workforce of high technology firms. Our theoretical interest is focused on the extent to which insights from the literatures on science and invention can be applied to firms’ abilities to achieve radical innovation. In particular, we argue that having a set of employees with greater ethnical and higher education diversity is associated with superior radical innovation performance. Using a sample of 3,888 Swedish firms, we find that greater workforce ethnic diversity is positively correlated to the share of a firm’s turnover generated by radical innovation, while it is neutral to incremental innovation. Greater diversity in terms of higher educational disciplinary background of the workforce is positively correlated to the share of turnover generated by both radical and incremental innovation. Contrary to our hypothesis, we also find that having more external collaborations reduces the importance of a workforce with a diverse disciplinary background, while the importance of ethnic diversity is hold unchanged. Our findings hold after using alternatives measures of dependent and independent variables, alternative sample sizes, and alternative estimation techniques including panel data, and structural equation modeling for simultaneous estimation of diversity, R&D intensity and external search. |
| Keywords: | Ethnic diversity; Education diversity; External search; Radical innovation |
| JEL: | J15 J24 J61 O32 |
| Date: | 2015–06–29 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0413&r=eur |
| By: | Karlsson , Charlie (Centre of Excellence in Science (CESIS), Jönköping International Business School, Blekinge In-stitute of Technology, & University of Southern Denmark.); Olsson, Michael (EFF, & University of Skövde) |
| Abstract: | In this paper, we first present how one can create functional economic regions. Then, we elaborate on the economic activity and spatial interaction, which forms functional regions, and the development of the system of functional regions. Our presentation shows that the economy is structured in functional regions, and hence it is important to use functional regions in economic studies, in order to produce correct results, and for regional policy, in order for the policy to be effective. We observe, that the often used NUTS-regions are very large compared to the functional regions. We argue, therefore, that the use of NUTS-regions ought to be replaced by the use of functional regions. This would lead to more reliable results and better policy outcomes. |
| Keywords: | Functional economic region; accessibility; infrastructure; network; regional policy; Europe |
| JEL: | R23 R32 R40 R58 |
| Date: | 2015–06–29 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0415&r=eur |
| By: | Petra Gerlach-Kristen; Seán Lyons |
| Abstract: | Mortgage arrears arise if a household faces affordability problems and/or is in negative equity. Because widespread arrears pose a risk to the stability of banks and limit households' future access to credit, a crucial question is how monetary or macroprudential policies influence their incidence. We use a European household data set to analyse what drives arrears and find that affordability problems, such as unemployment, low income and high mortgage payments, matter, which suggests that monetary policy has an impact. Households facing the dual trigger of affordability problems and negative equity are more likely to go into longer-term arrears; macroprudential regulation preventing high loan-to-value (LTV) ratios can thus also have an impact. |
| Keywords: | Arrears, negative equity, monetary policy, loan-to-value ratios |
| JEL: | D14 E58 G28 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:snb:snbwpa:2015-05&r=eur |
| By: | Vincenzo Andrietti |
| Abstract: | I exploit the quasi-experimental setting offered by a recent reform of the German educational system that reduced the length of academic-track high school by one year without reducing curricular content to investigate how the resulting increase in learning intensity affected student achievement. Using 2000-2009 PISA data and a differences-in-differences approach, I find robust evidence that the reform significantly improved (on average by 0.10-0.11 standard deviations) the reading, mathematics, and science literacy skills acquired by academic-track high school students upon treatment. A more direct estimate of the effects of the increased learning intensity - as measured by state- and grade-specific variation in weekly instructional hours - corroborates the latter finding. Furthermore, I find that the effect on reading skills is driven by girls, while the performance of students that experienced grade retention is significantly worsened after the reform. Finally, although there is no evidence of a significant average effect of the reform on high school grade retention, I do find evidence of heterogenous effects: High school grade retention increases significantly for students with a migration background and for students in the former East states. |
| Keywords: | G8 , PISA , Student Achievement , Cognitive skills , Grade retention , Academic-track high school , Learning intensity |
| JEL: | I21 I28 D04 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:we1506&r=eur |
| By: | Paola Bertoli (University of Economics, Prague); Veronica Grembi (Copenhagen Business School & CEIS, University of Rome "Tor Vergata") |
| Abstract: | We assess the lifesaving effect of hospital proximity using data on fatality rates of road-traffic accidents. While most of the literature on this topic is based on changes in distance to the nearest hospital triggered by hospital closures and use OLS estimates, our identification comes from the exogenous variation in the proximity to cities that are allowed by law to have a hospital based on their population size. Our instrumental variable results, based on Italian municipalities data from 2000 to 2012, show that an increase by a standard deviation of distance to the nearest hospital (5 km) increases the fatality rate by 13.84% on the sample average. This is equal to a 0.92 additional death per every 100 accidents. We show that OLS estimates provide a downward biased measure of the real effect of hospital proximity because they do not fully solve spatial sorting problems. Proximity matters more when the road safety is low; the emergency service is not properly organized, and the nearest hospital has lower quality standards. |
| Keywords: | Access to care, Hospital Proximity, Road-Traffic Accidents, Instrumental Variables, Difference in Differences |
| JEL: | C26 I10 R41 |
| Date: | 2015–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:349&r=eur |
| By: | Lars Hornuf; Matthias Neuenkirch |
| Abstract: | In this paper, we analyze the pricing of cash flow rights in startup companies based on a unique dataset of crowdinvesting backers. Our sample consists of 44 campaigns and includes 1,450 bids made by 499 backers during the period from November 6, 2011 to March 25, 2014 on the German crowdinvesting portal Innovestment. In contrast to all other European crowdinvesting portals, Innovestment is running a multiunit sealed bid second price auction where backers can specify the price they are willing to pay for an investment ticket with the portal and startup specifying a lower threshold. We exploit this unique auction mechanism to analyze backers’ willingness to pay for cash flow rights in a startup company. We find that campaign characteristics, investor sophistication, progress in funding, herding, and stock market volatility influence backers’ willingness to pay in an economically meaningful fashion, whereas we do not find any evidence for a local bias or sniping at the end of an auction. Our findings indicate that portal design and self-regulation might well trump government rules in the pursuit to protect investors. |
| Keywords: | Auction, Crowdinvesting, Innovestment, Regulation, Willingness to Pay |
| JEL: | D44 G11 K20 M13 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:trr:wpaper:201507&r=eur |
| By: | Annette Alstadsæter (University of Oslo); Salvador Barrios (European Commission – Joint Research Center); Gaëtan Nicodème (European Commission); Agnieszka Maria Skonieczna (European Commission); Antonio Vezzani (European Commission – Joint Research Center) |
| Abstract: | Patent boxes have been heavily debated for their role in corporate tax competition.This paper uses firm-level data for the period 2000-2011 for the top 2,000 corporate R&D investors worldwide to consider the determinants of patent registration across a large sample of countries. Importantly, we disentangle the effects of corporate income taxation from the tax advantage of patent boxes. We also exploit a new and original dataset on patent box features such as the conditionality on performing research in the country and their scope. We find that patent boxes have a strong effect on attracting patents mostly due to their favourable tax treatment, especially so for high quality patents. Patent boxes with a large scope in terms of tax base definition have also stronger effects on the location of patents. The size of the tax advantage offered through patent box regimes are found to deter local innovative activities while R&D development conditions tend to attenuate this adverse effect. Our simulations show that on average countries imposing such development conditions tend to grant a tax advantage which is slightly larger than optimal from a local R&D impact perspective. |
| Keywords: | Corporate taxation, patent boxes, location, patents, R&D, nexus approach |
| JEL: | F21 F23 H25 H73 O31 O34 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:tax:taxpap:0057&r=eur |
| By: | Stephanie Carretero (European Commission – JRC - IPTS) |
| Abstract: | This report collects six policy lessons to support public authorities at all levels of the EU Member States for the adequate implementation and use of new technologies in the field of long-term care service provision for older people. These policy lessons have been obtained through the ICT-AGE research project carried out by the JRC-IPTS and funded by DG EMPL, based on the cross-analysis of good practices of technology-enabled services to help older people live independently at home. These lessons are aimed to benefit the public long-term care authorities, to modernise their social protection systems in the field of long-term care, ensuring effectiveness, adequacy and sustainability. They can enable the Member States to carry out the actions and recommendations set out in the 2013 European Commission policy on Social Investment for Growth and Cohesion (SIP) and to implement the country-specific recommendations of the European Semester. The report also provides to the targeted public authorities with different existing instruments with those the European Union could help them to implement these policy lessons. |
| Keywords: | long-term care, social investment, social return, information and communication technologies, active and healthy ageing, quality of care, productivity, carers, financial sustainability, care, savings, ageing in place, social innovation, silver economy, digital single market, ecare, ehealth, ICTs, technology, digital, ageing |
| JEL: | I00 I18 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc96022&r=eur |
| By: | Li, Yuanjing |
| Abstract: | This paper investigates the impacts of intermittent wind power generation in Denmark on the Nordic day-ahead system price and its volatility in the Nord Pool electricity market, by applying an ARMA-GARCH model, accounting for market coupling and the counterbalance effect from hydropower in Norway and Sweden. As a result, we found that wind generation dampens spot prices, consistently with the merit order effect, and also reduces price volatility in the Nordic day-ahead market. The results shed lights on the importance of market coupling and interactions between wind power and hydropower in the Nordic system through cross-border exchanges, which play an essential role in price stabilization. The analysis on intermittency shows that the market signals or the magnitude of price and volatility reductions depend on the initial level of wind generation. Finally, the Danish experience and the Nordic market structure suggest a way out to handle wind intermittency by interplaying with hydropower at the same time relyingon the functioning of an integrated electricity market. |
| Keywords: | Wind power; day-ahead price; volatility; GARCH; Denmark; |
| JEL: | C32 L94 L52 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:dau:papers:123456789/15247&r=eur |