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on Microeconomic European Issues |
| By: | Bernardo Caldarola; Dario Mazzilli; Aurelio Patelli; Angelica Sbardella |
| Abstract: | Structural change consists of industrial diversification towards more productive, knowledge intensive activities. However, changes in the productive structure bear inherent links with job creation and income distribution. In this paper, we investigate the consequences of structural change, defined in terms of labour shifts towards more complex industries, on employment growth, wage inequality, and functional distribution of income. The analysis is conducted for European countries using data on disaggregated industrial employment shares over the period 2010-2018. First, we identify patterns of industrial specialisation by validating a country-industry industrial employment matrix using a bipartite weighted configuration model (BiWCM). Secondly, we introduce a country-level measure of labour-weighted Fitness, which can be decomposed in such a way as to isolate a component that identifies the movement of labour towards more complex industries, which we define as structural change. Thirdly, we link structural change to i) employment growth, ii) wage inequality, and iii) labour share of the economy. The results indicate that our structural change measure is associated negatively with employment growth. However, it is also associated with lower income inequality. As countries move to more complex industries, they drop the least complex ones, so the (low-paid) jobs in the least complex sectors disappear. Finally, structural change predicts a higher labour ratio of the economy; however, this is likely to be due to the increase in salaries rather than by job creation. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.07906 |
| By: | Sergio Destefanis (University of Salerno); Valter Di Giacinto (Bank of Italy) |
| Abstract: | This paper focuses on the impact of EU structural funds (SFs) on the GDP per capita of 183 European NUTS2 regions throughout the 1990-2015 period. To allow for the endogeneity of funds allocation to regions, we estimate a bivariate structural panel VAR model, allowing for unobserved heterogeneity through a rich menu of deterministic controls. Our main identifying restriction is rooted on the widely documented long lags affecting the implementation of EU’s Cohesion Policy. Through a spatial VAR specification, we also estimate spillovers from local SF expenditure on other areas. We find positive and highly significant multipliers measuring the local response of GDP to an exogenous shock in local SF expenditure, with a long-run value settling at 2.6. The spillover effects on GDP from an exogenous shock to SFs are also positive and significant, but much smaller (about one fifth of the within-region responses). When partitioning our sample according to features suggested by the literature (size, stage of development and EU funding regimes), we find that within-region multipliers are higher in regions with a larger population, located in countries supported by the Cohesion Fund, and interested by the Convergence objective. Spillovers are also heterogenous across different groups of regions, turning out to be negative in regions belonging to countries not supported by the Cohesion Fund. All this evidence is validated in qualitative terms by a robustness check concerned with the choice of spatial weights |
| Keywords: | Cohesion Policy, Spatial structural VAR, Fiscal multipliers, Spillovers, EU NUTS2 regions |
| JEL: | C33 E62 H50 |
| Date: | 2022–12 |
| URL: | https://d.repec.org/n?u=RePEc:ahy:wpaper:wp35 |
| By: | Tomas Sestorad (Institute of Economic Studies of the Faculty of Social Sciences, Charles University & The Czech National Bank, Monetary Department, Prague, Czech Republic); Natalie Dvorakova (Institute of Economic Studies of the Faculty of Social Sciences, Charles University; Prague, Czech Republic) |
| Abstract: | This paper examines the drivers of the post-pandemic surge in inflation in four small open economies: Czechia, Hungary, Poland, and Slovakia. For this purpose, a Bayesian structural vector autoregressive model with sign-zero restrictions and block exogeneity is employed. The results show that both foreign demand and foreign supply shocks have contributed significantly to inflation in the post-2020 period across countries, alongside notable contributions from domestic factors explaining differences among economies. Specifically, supply-side shocks are identified as the primary domestic factor across all countries, whereas domestic demand shocks were much less influential. Exchange rate shocks were pronounced in Hungary only, while monetary policy shocks have had a minimal impact on inflation since 2022 in all the countries considered. Additionally, we provide decompositions of core inflation, highlighting the predominance of domestic factors. |
| Keywords: | Bayesian VAR, extraordinary events, inflation, sign-zero restrictions, small open economies |
| JEL: | C32 E31 E32 E52 F41 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:fau:wpaper:wp2024_36 |
| By: | Georgarakos, Dimitris (European Central Bank); Gorodnichenko, Yuriy (University of California, Berkeley); Coibion, Olivier (University of Texas at Austin); Kenny, Geoff (European Central Bank) |
| Abstract: | We implement a survey-based randomized information treatment that generates independent variation in the inflation expectations and the uncertainty about future inflation of European households. This variation allows us to assess how both first and second moments of inflation expectations separately affect subsequent household decisions. We document several key findings. First, higher inflation uncertainty leads households to reduce their subsequent durable goods purchases for several months, while a higher expected level of inflation increases them. Second, an increase in uncertainty about inflation induces households to tilt their portfolios towards safe and away from riskier asset holdings. Third, higher inflation uncertainty encourages household job search, leading to higher subsequent employment among the unemployed and less under-employment among the employed. Finally, we document that the level of inflation expectations has a different effect from uncertainty in inflation expectations and thus it is crucial to take into account both to measure their separate effects on decisions. |
| Keywords: | inflation uncertainty, consumption, household finance, labor supply, consumer expectations survey |
| JEL: | E31 C83 D84 G51 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17317 |
| By: | Claudiu Tiberiu Albulescu (Politehnica University of Timisoara) |
| Abstract: | This paper investigates the asymmetric relationship between corporate tax avoidance and total factor productivity (TFP) using firm-level data for 141 European oil and gas companies, covering the period 2007 to 2015. Firstly, we rely on the novel mechanism advanced by Rovigatti and Mollisi (2018) to compute firms’ TFP. Secondly, we resort to Canay’s (2011) panel data fixed-effect quantile approach to assess the nonlinear, asymmetric effect that tax avoidance has on a firm’s productivity. As novelty, we use two proxy variables to estimate tax avoidance, namely companies’ holding structures and tax haven location. We discover that the impact of tax avoidance on TFP is not straightforward. On the one hand, we report mixed empirical findings regarding the impact of firms’ organization in holding structures on TFP. On the other hand, tax haven location enhances the productivity of oil and gas companies from the extractive industry. Finally, we show that the impact of tax avoidance on TFP is stronger at higher quantiles, that is, for higher levels of productivity. Our findings show that offshore profit transfers represent a quite common practice for European oil and gas firms, in particular for the large companies, which helps them to increase their productivity level. In our analysis we control for the role of ownership structure, firm size, intangibles, indebtedness and energy price dynamics. To check the robustness we use different approaches to compute the TFP. |
| Keywords: | TFP, tax avoidance, oil and gas companies, tax haven, quantile regression |
| JEL: | O |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:inf:wpaper:2024.15 |
| By: | Iustina Alina Boitan (Faculty of Finance and Banking, Bucharest University of Economic Studies); Wafaa Shabban (Doctoral School of Finance, Bucharest University of Economic Studies) |
| Abstract: | The study investigates the presence of unilateral or bilateral causality relationship between country-level environmental indicators (as a component of the ESG) and main banking system indicators represented by profitability, solvency, liquidity, efficiency, credit quality and savings ratio, as well as bank concentration. Five indicators belonging to the environmental dimension of the ESG are considered, related to food security, carbon emissions and pollution, and respectively energy sources and energy security. In line with the warnings issued by European authorities regarding the potential of environmental risks to be exacerbated by the physical adverse effects of climate change, we conducted the statistical analysis with an exclusive focus on European Union countries that exhibit a temperate climate profile. Granger causality test is employed in a country-by-country approach to assess the relationship between banking system and environmental indicators, in terms of a cause ? effect framework. Findings outline a significant relationship in terms of causality between country-level environmental indicators and banking system indicators. Interestingly, two out of the five environmental indicators (agriculture, forestry, and fishing value added, and respectively CO2 emissions) are always included in at least one causal relationship with banking system indicators, for every country in the sample. The influence of environmental indicators on banking activity (unidirectional) is most pronounced and precedes banking changes especially in Spain and Portugal, with Italy positioning at the bottom of the ranking. Another result points that banking indicators in most countries considered are particularly sensitive to previous changes in the carbon emissions level, in the production of electricity and energy consumption from polluting sources such as coal or fossil fuels. In terms of bilateral causality occurrence, Greece, Portugal and Spain witness most of them. The variables most often included in the causal interplay are related on one hand to CO2 emissions and agriculture, forestry, and fishing value added, and on the other hand to bank credit to bank deposits (a proxy for bank liquidity) and bank cost to income ratio (a proxy of the operational efficiency). |
| Keywords: | Environment; CO2 emissions; Renewable energy; Fossil fuel energy, Electricity production from coal; Agriculture, Forestry, and fishing; Banking system; Granger causality |
| JEL: | G21 Q20 Q59 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:sek:iefpro:14516428 |
| By: | Valentin Burban; Bruno De Backer; Andreea Liliana Vladu |
| Abstract: | This article measures the degree of potential de-anchoring of inflation expectations in the euro area vis-à-vis the inflation objective of the European Central Bank (ECB). A no-arbitrage term structure model that allows for a time-varying long-term mean of inflation expectations, pt*, is applied to inflation-linked swap (ILS) rates, while taking into account survey-based inflation forecasts. Estimates of pt* have been close to 2% since the mid-2000s, indicating that long-term inflation expectations have overall remained well anchored to the ECB’s inflation objective. As this objective is however related to the "medium term", expectations components of various forward ILS rates are extracted: they appear to have been broadly anchored, with tentative signs of de-anchoring up to the two-year horizon. Using backcasted ILS rates, estimates of pt* are much above 2% in the early 1990s, but they converge to levels below 2% by the end of the decade when the ECB was established. |
| Keywords: | Inflation-Linked Swap Rates, Surveys, No-Arbitrage, Shifting Endpoint, Inflation Expectations |
| JEL: | G10 G32 Q54 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:bfr:banfra:965 |
| By: | Fabrice Gilles; Yannick L'Horty; Ferhat Mihoubi |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:tep:teppwp:wp24-07 |
| By: | Renáta K?e?ková (Czech University of Life Sciences Prague); Daniela ?álková (Czech University of Life Sciences Prague); Radka Procházková (Czech University of Life Sciences Prague); Sergyi Yekimov (Czech University of Life Sciences Prague) |
| Abstract: | Tourism demand plays a significant role in a country's economy and influences macroeconomic stability. Understanding the determinants of tourism demand is fundamental, especially in the context of the fast-changing global economic conditions. This study focuses on the Czech Republic and neighbouring countries and examines how selected macroeconomic variables - namely nominal exchange rates, inflation rates, GDP per capita and employee compensation - affect tourism demand as indicated by the number of guests and overnight stays in hotels and other accommodation facilities. The main aim of this paper is to assess the relationship between these macroeconomic variables and the demand for inbound tourism based on data from Germany, Austria, Poland and Slovakia and the Czech Republic over the period 2000-2022. A sub-objective is to use the results of this analysis to forecast the future development of tourism demand in the Czech Republic up to 2028. The data set was obtained from multiple sources, including the Czech Statistical Office, Eurostat, and the World Bank, ensuring reliability. The analysis was carried out using the Gauss-Markov least squares method, which allowed estimating the relationships between macroeconomic variables and tourism demand. Time series analysis, including exponential smoothing methods, was used to model and predict future trends in tourism demand. The findings show that nominal exchange rate, inflation rate and GDP per capita have a significant impact on tourism demand, with differences depending on the country of origin. For example, an increase in the inflation rate in Poland, Slovakia and the Czech Republic tends to reduce the number of tourists from these countries staying in Czech hotels, while a similar increase in Germany and Austria has the opposite effect and increases the number of tourists from these countries. These results highlighted the complexity of the relationship between macroeconomic variables and tourism demand and shown that country-specific economic policies can significantly affect tourist´s flow. The study also provides a forecast of tourism recovery in the Czech Republic, predicting a return to pre-COVID-19 levels of tourist arrivals and overnight stays by the end of 2024, with continued growth through 2028. These findings are valuable for policy makers and industry stakeholders planning development of the tourism sector in the Czech Republic. |
| Keywords: | Tourism Demand, Macroeconomic Variables, Czech Republic, Forecasting, Exchange Rate, Inflation Rate |
| JEL: | C51 C53 L83 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:sek:iefpro:14516470 |