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on Transition Economics |
| By: | Julien Acalin; Leonardo Martinez; Francisco Roch |
| Abstract: | Both policy advice and economic theory advocate for fiscal rules with a clear anchor that reflects fiscal risk and a robust correction mechanism that implements a more ambitious fiscal consolidation when fiscal risk is higher. However, among more than 120 countries with fiscal rules, only six are identified as implementing such robust correction mechanisms: Armenia, Costa Rica, Cyprus, Czech Republic, Poland, and Slovakia. Using synthetic control methods and dynamic panel regressions, this paper finds that the introduction of fiscal rules with robust correction mechanisms has been effective in these countries, triggering a persistent median spread reduction of about 25 percent, or 75 basis points, after one year. |
| Keywords: | Fiscal Rules, Fiscal Risk, Sovereign Spreads, Robust Correction Mechanisms |
| JEL: | C22 E61 E65 G12 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:udt:wpecon:2025_11 |
| By: | Toker Doganoglu (Department of Economics, University of Wuerzburg); Lukasz Grzybowski (Faculty of Economic Sciences, University of Warsaw); Frank Verboven (KU Leuven and CEPR (London), Naamsestraat 69, 3000 Leuven, Belgium) |
| Abstract: | This paper examines the impact of the 2021 revision of the EU energy labeling regulation on the energy efficiency of refrigerators sold in Belgium, France, Germany, and Poland between 2019 and 2022. We analyze detailed product-level sales data to assess whether the introduction of the new labeling system (the New EU Energy Label 2021) improved the energy performance of products available on the market. The results reveal substantial cross-country differences in sales-weighted energy consumption: Germany and Belgium exhibit significantly lower average energy use, reflecting differences in product portfolios and consumer preferences, while consumers in France and Poland tend to purchase less efficient models. After controlling for refrigerator characteristics, average energy consumption declined by 2.8% in France, 3.4% in Belgium, and 3.5% in both Germany and Poland between March 2021 and December 2022. We further estimate a nested logit demand model incorporating both energy labels and the discounted ten-year cost of electricity consumption. The results indicate that, except in Poland, consumers tend to undervalue future energy costs under both the old and new labeling regimes. The estimated willingness to pay (WTP) for labels varies across countries, with some evidence of overvaluation for specific efficiency classes. Using the model, we conduct counterfactual simulations to assess the effects of alternative policy scenarios. The simulations suggest that the 2021 reform led to measurable improvements in the average energy efficiency of refrigerators sold in the EU market. |
| Keywords: | Energy Efficiency, EU Energy Label, Nested Logit |
| JEL: | D12 L51 Q58 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:war:wpaper:2025-26 |
| By: | Stephanie Kang; Francesco Ferlenga |
| Abstract: | We study how expanding immigrants' rights affects their political and social integration by leveraging Romania's 2007 EU accession, which granted Romanian immigrants in Italy municipal voting and residency rights. Using municipality-level event studies, we find: (1) Enfranchisement increased the election of Romanian-born councilors — especially in competitive races — despite limited changes in candidacy rates. It also increased Romanian turnout, suggesting that electoral gains stem from an expanded voter base. An instrumented difference-in-differences analysis shows this is driven by pre-existing Romanian residents, not new arrivals. (2) Consent to organ donation rose among Romanians post-2007, indicating that the expansion of rights extends to prosocial behavior. (3) Nonetheless, immigrant presence continues to raise support for right-leaning parties and security spending while reducing social spending, highlighting persistent native backlash that outweighs immigrant political influence. |
| Keywords: | enfranchisement, migrant integration |
| JEL: | D72 J15 J18 P16 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1521 |
| By: | Andreea Mitrut; Gabriel Kreindler; Margareta Matache; Andrei Munteanu; Cristian Pop-Eleches |
| Abstract: | How does ethnic identification vary with education among disadvantaged minorities? We study this question for Roma people, Europe's largest ethnic minority, using linked Romanian census data and birth records. We measure how individuals change reported ethnicity over time, or “pass.” Roma identification strongly declines with education, from 80% for those with no education to 40% for postsecondary graduates. We estimate a model with persistent individual heterogeneity and find 3-6 times more Roma postsecondary graduates than in official data. Survey data we collect shows that most Romanians are unaware of these patterns. Such selective passing may reinforce stereotypes about marginalized groups. |
| JEL: | I21 I25 J15 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34383 |
| By: | Kristina Butaeva (University of Chicago); Albert Park (Asian Development Bank) |
| Abstract: | In this paper, we conduct the first systematic empirical analysis of income inequality in the People’s Republic of China (PRC) at the provincial level. Using data from the China Household Finance Survey (CHFS) and a semiparametric distribution model, we estimate Gini indices for a set of provincial-level administrative units in 2012, 2014, 2016, and 2018. We find that differences in the “prices” and “quantities” of human capital are important factors in explaining differences in inequality between these provincial areas. Our findings suggest that poor areas are highly disadvantaged compared with rich ones, as they face higher income and educational inequality, as well as higher returns to education, while at the same time exhibiting lower average educational attainment. We conclude that filling existing interprovincial human capital gaps and accelerating labor market integration through appropriate government policies could reduce spatial disparities in inequality levels across regions and overall income inequality in the PRC. |
| Keywords: | income inequality;provinces;People’s Republic of China;human capital |
| JEL: | D31 I24 O15 |
| Date: | 2025–10–24 |
| URL: | https://d.repec.org/n?u=RePEc:ris:adbewp:021691 |
| By: | Patrick A. Imam; Mr. Tigran Poghosyan |
| Abstract: | This paper examines the effectiveness of inflation targeting (IT) frameworks during the global inflation surge of 2022, a shock primarily driven by large adverse supply side disruptions following the onset of the War in Ukraine. The empirical findings suggest that (de jure) IT frameworks did not systematically deliver better inflation outcomes during this episode. The decline in inflation back towards historical norms was broadly comparable across (de jure) IT and non-IT country groups. While (de jure) IT central banks hiked their policy rates by more than non-IT central banks on average, this did not help with achieving better inflation outcomes. Also, we find no evidence of a more flexible exchange rate after the shock in (de jure) IT central banks. These findings suggest that (de jure) IT does not necessarily imply an advantage for monetary policy, particularly in the face of large, global supply shocks. Further analysis is warranted on how monetary policy frameworks can adapt to an environment characterized by more frequent and persistent supply-side disruptions. While using a de facto classification of IT regimes would be preferable, the absence of a comprehensive database makes this infeasible. |
| Keywords: | Inflation Targeting; Central Bank Credibility; Supply Shocks |
| Date: | 2025–10–24 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/212 |
| By: | Esteban García-Mirallas (Banco de España); Maximilian Freier (European Central Bank); Sara Riscao (Organisation for Economic Co-operation and Development (OECD)); Chrysa Leventi (European Commission, Joint Research Centre); Alberto Mazzon (European Commission, Joint Research Centre); Glenn Abela (Central Bank of Malta); Laura Boyd (Central Bank of Ireland); Baiba Brusbārde (Latvijas Banka); Marion Cochard (Banque de France); David Cornille (National Bank of Belgium); Emanuele Dicarlo (Banca d’Italia); Ian Debattista (Central Bank of Malta); Mar Delgado-Téllez (Banco de España); Mathias Dolls (ifo Institute); Ludmila Fadejeva (Latvijas Banka); Maria Flevotomou (Bank of Greece); Florian Henne (Banque centrale du Luxembourg); Alena Harrer-Bachleitner (Office of the Austrian Fiscal Council); Viktor Jászberényi-Király (Magyar Nemzeti Bank); Max Lay (ifo Institute); Laura Lehtonen (De Nederlandsche Bank); Mauro Mastrogiacomo (De Nederlandsche Bank); Tara McIndoe-Calder (Central Bank of Ireland); Mathias Moser (Oesterreichische Nationalbank (OeNB)); Martin Nevicky (National Bank of Slovakia); Andreas Peichl (ifo Institute); Myroslav Pidkuyko (Banco de España); Mojca Roter (Banka Slovenije); Frédérique Savignac (Banque de France); Andreja Strojan Kastelec (Banka Slovenije); Vaidotas Tuzikas (Lietuvos bankas); Nikos Ventouris (Bank of Greece); Lara Wemans (Banco de Portugal) |
| Abstract: | This paper presents a comprehensive characterization of “fiscal drag”—the increase in tax revenue that occurs when nominal tax bases grow but nominal parameters of progressive tax legislation are not updated accordingly—across 21 European countries using a microsimu-lation approach. First, we estimate tax-to-base elasticities, showing that the progressivity built in each country’s personal income tax system induces elasticities around 1.7–2 for many countries, indicating a potential for large fiscal drag effects. We unpack these elasticities to show stark heterogeneity in their underlying mechanisms (tax brackets or tax deductions and credits), across income sources (labor, capital, self-employment, public benefits), and across the individual income distribution. Second, we extend the analysis beyond these elastici-ties to study fiscal drag in practice between 2019 and 2023, incorporating observed income growth and legislative changes. We quantify the actual impact of fiscal drag and the extent to which government policies have offset it, either through indexation or other reforms. Our results provide new insights into the fiscal and distributional effects of fiscal drag in Europe, as well as useful statistics for modeling public finances. |
| Keywords: | personal income tax, inflation, indexation, bracket creep. |
| JEL: | D31 H24 E62 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbb:reswpp:202510-483 |
| By: | Rieder, André; Schnabel, Claus |
| Abstract: | Representative establishment data reveal that over 60% of German plants covered by collective agreements pay wages above the level stipulated in the agree- ments, creating a wage cushion between actual and contractual wages. While collective bargaining coverage has fallen over time, the prevalence of wage cushions has increased, particularly in eastern Germany. Cross-sectional and fixed-effects analyses for 2008-2023 indicate that in western Germany the presence of a wage cushion is mainly related to plant profitability, unemployment, vacancies, and the business cycle. Plants which apply collective agreements at the firm rather than the sectoral level are less likely to have wage cushions since firm-level agreements make it easier to explicitly take firm-specific conditions into account. In eastern Germany, however, the explanatory power of these variables is much lower. Against the backdrop of falling bargaining coverage, the increasing prevalence of wage cushions suggests that the traditionally rigid German system of wage determination has become more flexible and differentiated. |
| Abstract: | Repräsentative Betriebsdaten zeigen, dass über 60% der tarif- gebundenen Betriebe in Deutschland Löhne zahlen, die über dem in Tarifverträgen fest- gelegten Niveau liegen, wodurch ein Lohnpuffer zwischen den tatsächlichen und den vertraglich vereinbarten Löhnen entsteht. Während die Tarifbindung im Laufe der Zeit zurückgegangen ist, hat die Verbreitung der übertariflichen Entlohnung zugenommen, besonders in Ostdeutschland. Querschnitts- und Fixed-Effects-Analysen für 2008-2023 zeigen, dass in Westdeutschland das Vorhandensein eines Lohnpuffers hauptsächlich mit der Rentabilität des Betriebs, der Arbeitslosigkeit, offenen Stellen und dem Konjunk- turzyklus zusammenhängt. Betriebe, die Tarifverträge auf Betriebs- statt Branchen- ebene anwenden, zahlen seltener über Tarif, da es bei Firmentarifverträgen einfacher ist, betriebsspezifische Bedingungen ausdrücklich zu berücksichtigen. In Ostdeutsch- land ist der Erklärungswert dieser Variablen jedoch erheblich geringer. Vor dem Hinter- grund der sinkenden Tarifbindung deutet die zunehmende Verbreitung von Lohnpuffern darauf hin, dass das traditionell starre deutsche System der Lohnfindung flexibler und differenzierter geworden ist. |
| Keywords: | wage determination, collective bargaining, wage cushion, Germany |
| JEL: | J30 J31 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:faulre:330331 |