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on European Economics |
| By: | Elbourne, A.; Salomons, R. (Groningen University) |
| Abstract: | We assess the role of equity markets in the transmission of monetary policy in the EU. We use a structural VAR model based upon the models of Kim and Roubini [2000] and Brischetto and Voss [1999] and we find that there are differences in monetary policy transmission across our sample of countries. The largest output losses following a monetary shock are seen in a core of euro area countries: Austria, Belgium, Finland, France, and Germany. Germany also displays the largest response of prices and is followed by Austria and Finland. Variance decompositions also suggest that the bank based core euro area countries are different from market based countries. As regards the channels of transmission we find no evidence to suggest an equity wealth effect channel in the euro area and only circumstantial evidence for the UK. We do, however, find that those countries that use equity finance (the UK and the Netherlands) suffer smaller output losses following a monetary shock indicating that a bank lending channel is less likely to be present in these countries. |
| Keywords: | monetary policy, equity markets, VAR modelling. JEL Classifications: E44, E52, G15 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:rugsom:04e15&r=eec |
| By: | Philipp Maier |
| Abstract: | Inflation differentials resulting from EMU enlargement have so far mostly been discussed within the Balassa-Samuelson framework, i.e. resulting from inflation in nontradable goods. We analyse the inflationary consequences of convergenceof tradable goods' prices. Using disaggregated price level data, simulations show that inflation in the new EU member states might on average be 1.5-3.5 percentage points higher than in the current euro area (with considerable variation between the new EU members). These inflationary effects even exceed most simulations of the Balassa-Samuelson effect. The `burden of adjustment' rests mainly on the shoulders of the new EU members if the European Central Bank sets monetary policy in response to inflation developments in the entire currency area. In contrast the impact of EMU enlargement on the current euro area is limited, due to the small economic weight of the new EU member states. |
| Keywords: | Price level differences; convergence; EMU enlargement |
| JEL: | E30 E31 E50 F40 |
| Date: | 2004–09 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:010&r=eec |
| By: | Christian Joerges |
| Abstract: | The present efforts in Europe to achieve more uniformity in private law and the debates on a European civil code need to be understood in a wider context. Europe is plagued by concerns over its problem-solving potential and its acceptance amongst citizens. The response is ambitious projects. Eastern Enlargment, a Constitution, a Code. The project of a European civil code is the least visible among the three - and yet specifically instructive. The Europeanization of private law is to a large degree about the restructuring of the linkages of private law with its more comprehensively, albeit selectively Europeanized regulatory environment and the manner in which it is embedded in welfare state institutions. Europe has to learn how the openness of national markets can coexist with differences in legal cultures, differently shaped relations between state and 'society'. In its multi-level system of governance none of the established legal disciplines can provide guidance for the denationalization and Europeanization of private law. The Europeanization process needs to be understood and organized as a process of discovery and learning. Only then can Europe can make productive use of its diversity |
| Keywords: | Europeanization; legitimacy; multilevel governance; national autonomy; direct effect; economic law; European citizenship; harmonisation; supremacy |
| Date: | 2004–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:erp:euilaw:p0010&r=eec |
| By: | Buddelmeyer, Hielke (Melbourne Institute of Applied Economic and Social Research and IZA Bonn); Mourre, Gilles (ECFIN, European Commission); Ward, Melanie (European Central Bank, CEPR and IZA Bonn) |
| Abstract: | A growing part-time employment share has been a main feature of a number of industrialized countries over the past two decades. A considerable variation in the rate of part-time work is evident by gender, age group, industrial sector and occupation. The stylized facts support the view that part-time employment represents an important opportunity particularly for young, older and female workers to enter the labour markets of the European Union. For the majority of workers in these groups, the decision to work part-time has been a voluntary one, which is all the more satisfactory in terms of welfare maximization. Our results indicate that the development of the part-time employment rate over time and the strong variation in the PTR across countries are significantly affected by policy and institutions. In particular policy measures geared toward encouraging part-time work are found to be positively related to actual part-time developments. These measures include both the legal framework directly affecting part-time positions and the creation of financial incentives (subsidies and improvement of social protection) to take up a part-time job. Moreover, other labour market institutions, including benefit systems and the stringency of employment protection legislation for regular contracts, are found to significantly but indirectly influence the growth in part-time work. |
| Keywords: | part-time employment, labour supply, labour market policies, institutions, regulations, subsidies |
| JEL: | J21 J22 J28 |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1415&r=eec |
| By: | T. DHONT; F. HEYLEN |
| Abstract: | In this paper we analyse the impact of distortionary taxes, transfers related to structural nonemployment and productive government expenditures on employment and long-run growth. Our theoretical model builds on Barro (JPE, 1990) which we extend by endogenizing the decision to work and by allowing two kinds of government expenditures. The model explains what we basically observe in the data: (i) higher growth and employment in the US (low taxes and low transfers related to structural non-employment), (ii) higher growth and employment in Scandinavia (high taxes, but high productive expenditures and low transfers related to structural non-employment) and (iii) lower growth and poor employment in continental Europe (high taxes, high transfers, lower productive government expenditures). |
| Keywords: | fiscal policy, taxes, transfers, government spending, employment, unemployment, endogenous growth, welfare state |
| JEL: | E24 E62 J22 O41 |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:04/275&r=eec |
| By: | David-Jan Jansen; Jakob de Haan |
| Abstract: | This paper studies ECB and Bundesbank communication on monetary policyduring the first years of the European Economic and Monetary Union. We study whether statements by different (groups of) central bankers have been contradictory and whether differences have diminished over time. We find that statements on the interest rate, inflation and economic growth have indeed been contradictory. Fur- thermore, national central banks continue to dominate communication on monetary policy. Finally, only the ECB Executive Board has observed radio silence before ECB Governing Council meetings. A positive conclusion is that, over time, interest rate statements have become less contradictory. |
| JEL: | E32 G21 G28 G31 |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:007&r=eec |
| By: | Paul Tang; Gerard Verweij |
| Abstract: | The Netherlands wants to reduce the administrative burden for businesses between 2003 and 2007 with a quarter. With the aid of the so called Standard Cost Model, the burden is estimated to amount to 16.4 billion euro in 2002. This is about 3.6 % of the Dutch gross domestic product (GDP). However, a significant part of the administrative burden, over 40% of the total, is the direct result of international, mainly European legislation. This makes the reduction of the administrative burden a European issue. Besides, a reduction in one member state may affect the economies in other member states. <P> This memorandum considers the direct and indirect effects of reducing the administrative burden on firms. Reducing the burden is expected among other things to boost investment, adding to the increase in production and labour productivity. For an individual country a unilateral reduction probably has different effects than a reduction that is part of a co-ordinated, European effort to scale down the administrative burden of government regulations. <P> To assess the indirect effects, within the economy of the European Union and between European economies, we employ the CPB’s general-equilibrium model WorldScan, which simultaneously takes account of the different product and factor markets in the world economy and which models many European economies in detail. The Netherlands is one of the very few countries, which currently has detailed information on the administrative burden of government regulations. Therefore, we assume that the key figures for the Netherlands also hold for the other member states of the European Union. This assumption implies that for the whole European Union an administrative burden exists of 340 billion euro in 2002. Better data for other member states are needed to arrive at a complete assessment of direct and indirect effects. <P> Conclusions <P> Based on Dutch data, reducing the administrative burden with 25% leads to a 1.7% increase in real GDP for the European Union. The long-term effect is higher than the initial impact, since the reduction induces extra capital accumulation and brings spillovers from extra R&D. The production growth is not fully translated into welfare gains. The gap between the two follows from a loss in terms-of-trade, but is generally small. For individual EU-25 member states the effects are broadly similar. <P> The simulations show that the gains from a co-ordinated reduction are somewhat larger than from a unilateral reduction. The main reason is not terms-of-trade effects but rather spillovers from extra R&D investment. The macro-economic results do not change when an alternative, uneven distribution of the administrative burden on sectors is assumed. With this alternative distribution agriculture and services see the largest gains in production. |
| Keywords: | administrative burden; deregulation. europe; european union; international trade |
| JEL: | D58 E6 F4 K20 |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:memodm:93&r=eec |
| By: | Dikova, D.; Witteloostuijn, A. van (Groningen University) |
| Abstract: | Departing from the traditional transaction cost approach in diversification mode literature, this study investigates the influence of experimental organizational learning on the choice between acquisition and a greenfield investment. We provide empirical support that prior experience with acquisitions and/or greenfield investments, firms predominant international strategy (global or multidomestic) and the technological intensity of the parent play a crucial role in subsequent diversifications. Furthermore, contrary to extant arguments that foreign ownership decision is independent of a diversification mode choice we demonstrate that the type of ownership (joint venture vs. wholly owned subsidiary) is a significant predictor of firms preference for acquisition or a greenfield. Unlike Caves and Mehra (1986) and Larimo (2002) who found a positive relationship between acquisitions and full ownership, we show that acquisitions in Central and Eastern European (CEE) transition eco! nomies are unlikely to be wholly owned subsidiaries. In addition, we contribute to extant diversification literature by introducing another neglected predictor of firms diversification strategy: We demonstrate the incremental power of host-countries institutional structure on investors diversification choice. |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:rugsom:04g26&r=eec |
| By: | Helen Lückge; Sonja Peterson |
| Abstract: | To meet their Kyoto targets under the Burden Sharing Agreement, most European countries plan to make use of the flexible project mechanisms “Clean Development Mechanism” (CDM) and “Joint Implementation” (JI). In addition, CDM and JI credits can be used by installations to fulfil their obligations in the upcoming European emissions trading scheme. This paper compiles information from a variety of sources to give an overview over the different options to acquire CDM and JI credits and the extent to which European governments and companies plan to make use of these options. |
| Keywords: | European Union, CDM and JI, Emissions trading |
| JEL: | Q48 Q54 Q58 |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1232&r=eec |
| By: | Tooraj Jamasb; Michael Pollitt |
| Abstract: | The energy market liberalisation process in Europe is increasingly focused on electricity market integration and related cross border issues. This signals that the liberalisation of national electricity markets is now closer to the long-term objective of a single European energy market. The interface between the national electricity markets requires physical interconnections and technical arrangements. However, further progress towards this objective also raises important issues regarding the framework within which the integrated market is implemented. This paper reviews the progress towards a single European electricity market. We then discuss the emerging issues of market concentration, investments, and security of supply as well as some aspects of market design and regulation that are crucial for dynamic performance of a single European market. |
| Keywords: | Electricity, energy, liberalisation, regulation, integration, European Union |
| JEL: | L11 L22 L Q48 |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0471&r=eec |
| By: | Benito Arruñada; Manuel González; Alberto Fernández |
| Abstract: | We explain why European trucking carriers are much smaller and rely more heavily on owner-operators (as opposed to employee drivers) than their US counterparts. Our analysis begins by ruling out differences in technology as the source of those disparities and confirms that standard hypotheses in organizational economics, which have been shown to explain the choice of organizational form in US industry, also apply in Europe. We then argue that the preference for subcontracting over vertical integration in Europe is the result of European institutions—particularly, labor regulation and tax laws—that increase the costs of vertical integration. |
| Keywords: | Transaction costs, governance, hybrids, transportation |
| JEL: | D23 L14 L22 L92 |
| Date: | 2004–06 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:767&r=eec |
| By: | Marcel Gérard |
| Abstract: | Beyond the traditional debates over information exchange vs flat taxation at source, legislative advances have produced interesting innovations and suggestions concerning how to tax international savings. We examine some of these advances, which we then use to set forth and investigate a proposal for European and international savings taxation. That proposition combines the outcome of a recent Dutch reform and lessons from the US qualified intermediaries mechanism. We show that such a system exhibits the same desirable properties as exchange of information, but potentially at reduced compliance cost, and is sustainable within a repeated game framework. |
| Keywords: | European Union, international taxation, savings income |
| JEL: | H31 H73 H87 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1340&r=eec |
| By: | Henk. L.M. Kox (CPB, Netherlands); Arjan Lejour (CPB, Netherlands); Raymond Montizaan |
| Abstract: | The paper sketches the basic patterns and facts about service trade, foreign direct investment and regulation in the EU. We conclude that the last decade trade in services has increased substantially, in particular in business services. This is also the case for foreign direct investment (in services). The level of regulation within the EU has decreased. Product-market regulation and FDI restrictions have been lowered. The process of deregulation proceeds with different speed, and this is the cause of an increased variance in the level of regulation over Europe. The level of regulation in the EU is relatively high in comparison with other OECD countries. The pace of deregulation in Europe during the 1990s was higher than in the United States, causing a process of convergence. Nonetheless, the level of product market regulation for non-manufacturing sectors is in the EU still considerably higher than in the USA. |
| Keywords: | European Union, EU, internal market, services, service trade, direct investment, FDI, market regulation |
| JEL: | F15 F23 L8 L5 |
| Date: | 2004–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpit:0412002&r=eec |
| By: | Helge Berger; Till Mueller |
| Abstract: | The likely extension of the euro area has triggered a debate on the organization of the ECB, in particular on the apparent mismatch between relative economic size and voting rights in the Council. We present a simple model of optimal representation in a federal central bank addressing this question. Optimal voting weights reflect two opposing forces: the wish to insulate common monetary policy from changing preferences at the national level, and the attempt to avoid an overly active or passive reaction to idiosyncratic national economic shocks. A perfect match between economic size and voting rights is rarely optimal, and neither is the “one country, one vote principle”. Empirically, there are indications that the pattern of over- and under-representation of member countries in the ECB Council might be extreme by the standards of the US Fed and German Bundesbank and not always optimal. |
| Keywords: | Central Bank, Federal Central Bank, Currency Union, optimal representation, voting, ECB |
| JEL: | D72 E52 E58 F33 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1344&r=eec |
| By: | Stefan Napel; Mika Widgrén |
| Abstract: | This paper analyzes the a priori influence of the European Parliament (EP) and the Council of Ministers (CM) on legislation of the European Union adopted under its codecision procedure. In contrast to studies which use conventional power indices, both institutions are assumed to act strategically. Predicted bargaining outcomes of the crucial Conciliation stage of codecision are shown to be strongly biased towards the legislative status quo. Making symmetric preference assumptions for members of CM and EP, CM is on average much more conservative because of its internal qualified majority rule. This makes CM by an order of magnitude more influential than EP, in contrast to a seeming formal parity between the two ‘co-legislators’. |
| Keywords: | power measurement, European Union codecision procedure, bargaining, spatial voting, decision procedures |
| JEL: | C70 C78 D70 D72 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1347&r=eec |
| By: | José De Sousa (LESSOR et ROSES); Julie Lochard (ROSES) |
| Abstract: | The positive effect of a common currency on trade is empirically well-documented, but the reason of this effect remains unclear. In this paper, we argue that part of the currency union effect on trade is indirect. Currency unions foster foreign direct investment (FDI), which promotes trade due to complementary effects between trade and FDI. Using data for 22 OECD countries, we find that half of the euro impact on trade is driven by additional FDI. |
| Keywords: | Currency union, trade, FDI |
| JEL: | F15 F21 F33 |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:mse:wpsorb:j04111&r=eec |