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on European Economics |
| By: | Jean Marc Israël (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Carlos Sánchez Muñoz (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | External statistics – specifically balance of payments and international investment position statistics – are among the primary statistics on which policy-making bodies and markets rely as a basis for their decisions in globalised economies. Monitoring and enhancing data quality in the context of rapidly changing economies impose heavy constraints on compilers of these statistics. As it becomes increasingly important worldwide to adhere to a set of international statistical standards in order to ensure the comparability of statistics, the elaboration of meaningful EU/ euro area aggregates hinges critically on attaining a high degree of homogeneity across countries’ contributions. In addition to offering their own value for analysis, the euro area external statistics are the main source for the compilation of the rest-of-the-world account in the quarterly euro area (financial and nonfinancial) accounts. Bearing this in mind, a lot has been achieved since the inception of the euro area to harmonise concepts and definitions in line with international statistical standards, to review the data collection and compilation systems, as well as to enhance the overall data quality. However, asymmetries1 both across euro area countries and with counterparts elsewhere still need to be overcome. Additionally, new challenges lie ahead for compilers of statistics, with the steady process of globalisation and the increasing role of financial innovation (in terms of both new instruments and new institutional vehicles) observed in financial markets. While the compilation of euro area statistics continues to be based on country contributions, which are mostly derived from national collection systems in accordance with the principle of subsidiarity, common tools are built up and maintained by the European Central Bank and national compilers. In particular, the Centralised Securities Database is playing a pivotal role in the move towards security-by-security reporting and should greatly enhance the quality of security-related information, i.e. portfolio investment flows, stocks and income. The tremendous work of European statisticians towards producing harmonised euro area statistics that are fit for purpose has also benefited statisticians elsewhere and is playing an important role in the current updating of international standards (the 1993 System of National Accounts and the International Monetary Fund’s Balance of Payments Manual, fifth edition). Statisticians have worked in close cooperation in various European fora to clarify concepts and identify best practices with a view to enhancing data quality and reducing the reporting burden. This paper aims to make this experience widely available. |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20070067&r=eec |
| By: | Hendrik Jürges (Mannheim Research Institute for the Economics of Aging (MEA)) |
| Abstract: | I compare education-, income-, and wealth-related health inequality using data from 11 European countries and the US. The health distributions in the US, England and France are relatively unequal independent of the stratifying variable, while Switzerland or Austria always have relatively equal distributions. Some countries such as Italy dramatically change ranks depending on the stratifying variable. |
| Date: | 2007–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:mea:meawpa:07140&r=eec |
| By: | Lawrence Christiano (Northwestern University and National Bureau of Economic Research. Mailing address: Department of Economics, Northwestern University, 2001 Sheridan Road, Evanston, Illinois 60208, USA.); Roberto Motto (European Central Bank, Kaiserstrasse 29, D-60311, Frankfurt am Main, Germany.); Massimo Rostagno (European Central Bank, Kaiserstrasse 29, D-60311, Frankfurt am Main, Germany.) |
| Abstract: | The US Federal Reserve cut interest rates more vigorously in the recent recession than the European Central Bank did. By comparison with the Fed, the ECB followed a more measured course of action. We use an estimated dynamic general equilibrium model with financial frictions to show that comparisons based on such simple metrics as the variance of policy rates are misleading. We find that - because there is greater inertia in the ECB’s policy rule - the ECB’s policy actions actually had a greater stabilizing effect than did those of the Fed. As a consequence, a potentially severe recession turned out to be only a slowdown, and inflation never departed from levels consistent with the ECB’s quantitative definition of price stability. Other factors that account for the different economic outcomes in the Euro Area and US include differences in shocks and differences in the degree of wage and price flexibility. JEL Classification: C51, E52, E58. |
| Keywords: | Policy activism, DSGEmodel, policy inertia, shocks. |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20070774&r=eec |
| By: | Ray Barrell; Rebecca Riley; Fitzgerald, J. |
| Abstract: | This paper considers the macroeconomic effects of the migration that followed the enlargement of the EU in May 2004. At that time the EU was expanded to include 10 New Member States (NMS) predominantly from Central and Eastern Europe. In the wake of accession the number of workers migrating to the EU-15 from the poorest of the NMS increased significantly. In part the result of the liberal immigration policies adopted, and restrictive policies adopted elsewhere, Ireland and the UK have become popular destination countries for NMS workers. Here we illustrate the potential macroeconomic consequences of these migration flows across Europe, highlighting the impacts in both the receiving and sending countries. |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:nsr:niesrd:292&r=eec |
| By: | Floriana Cerniglia (Department of Economics, University of Milan-Bicocca); Laura Pagani (Department of Economics, University of Milan-Bicocca) |
| Abstract: | In this paper we empirically study the preferences of European citizens concerning the allocation of powers between EU and the member States. To this aim, we use various issues of the Eurobarometer survey from year 1995 to year 2003. In the first part of the paper we present descriptive results regarding preferences of EU citizens by country and by policy domains and we find interesting results pointing out a ranking of countries according to their level of Europeanism, and a quite clear pattern of preferences relative to the allocation of competences for specific policy domains. In the second part of the paper we turn to econometric analysis; first, we regress a measure of “Europeanism” of EU citizens on a number of individual characteristics including demographic information and various indicators of the attitude towards EU. Next, we select a certain number of policy domains and, for each of these, we investigate which individual characteristics make European citizens more prone to prefer centralisation of competences. Also econometric analysis reveals interesting patterns regarding EU citizens’ preferences for allocation of powers. |
| JEL: | H11 H77 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:mib:wpaper:118&r=eec |
| By: | Antonio Afonso (European Central Bank, Kaiserstrasse 29, D-60311, Frankfurt am Main, Germany.); Peter Claeys (European University Institute, Via della Piazzuola, 43, I-50133 Firenze, Italy.) |
| Abstract: | The main focus of this paper is the relation between the cyclical components of total revenues and expenditures and the budget balance in France, Germany, Portugal, and Spain. We try to uncover past trends behind the development of public finances that contribute to explaining the current stance of fiscal policy. The disaggregate analysis of fiscal policy in an SVAR that mixes long and short-term constraints allows us to look into the transmission channels of fiscal policy and to derive a model-based indicator of structural balance. The main conclusions are that fiscal slippages are mainly due to reversals in tax policies, which are unmatched by expenditure adjustments. As a consequence, deficits rise when economic conditions worsen but cause a ‘ratcheting up’ in the size of government in economic booms. The Stability and Growth Pact has not eradicated these procyclical policies. Bad policies in good times also contribute to aggregate macroeconomic instability. JEL Classification: E62, E65, E66, H61, H62. |
| Keywords: | Fiscal indicator, structural balance, SGP, SVAR, short and long-term restrictions. |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20070775&r=eec |
| By: | Henk Kox; Luis Rubalcaba |
| Abstract: | A pervasive trend that characterised the past two decades of European economic growth is that the share in the economy of commercial services, and particularly business services, grows monotonically, and this mainly to the expensive of the manufacturing sector. The structural shift reflects a changing and increasingly complex social division of labour between economic sectors. The fabric of inter-industry relations is being woven in a new way due to the growing specialisation in knowledge services, the exploitation of scale economies for human capital, lowered costs of outsourcing in-house services, and the growing encapsulation of manufacturing products in a ‘service jacket’. Business services, which inter alia includes the software industry and other knowledge-intensive business services (KIBS), play a key role in many of these processes.<BR> We argue that in recent decades business services contributed heavily to European economic growth, in terms of employment, productivity and innovation. A direct growth contribution stems from the businessservices sector’s own remarkably fast growth, while an indirect growth contribution was caused by the positive knowledge and productivity spill-overs from business services to other industries. The spill-overs come in three forms: from original innovations, from speeding up knowledge diffusion, and from the reduction of human capital indivisibilities at firm level. The external supply of knowledge and skill inputs exploits positive external scale economies and reduces reduces the role of internal (firm-level) scale (dis)economies associated with these inputs. The relatively low productivity growth that characterises some business-services sectors may be a drag on the sector's direct contribution to overall economic growth. The paper argues that there is no reason to expect a "Baumol disease" effect as long as the productivity and growth spill-overs from KIBS to other economic sectors are large enough.<BR> Finally, the paper concludes by pinpointing some policy 'handles' that could be instrumental in boosting the future contibution of business services to overall European economic growth. |
| JEL: | E32 L2 L8 L16 O3 O4 O52 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:memodm:183&r=eec |
| By: | Rui Henrique Alves (CEMPRE and Faculdade de Economia da Universidade do Porto, Portugal); Óscar Afonso (CEMPRE and Faculdade de Economia da Universidade do Porto, Portugal) |
| Abstract: | In this paper, we compare the present process of definition and implementation of fiscal policies in the European Union with the main conclusions of the “fiscal federalism” theory. This is done in order to draw possible lessons for future evolution, particularly taking into account the possibility of creating a European “Federation of Nation-States”, which we supported in a previous work. We argue that these main conclusions are easily compatible with the emergence of a largely decentralised “Federation”, but are still far distant from the present situation. In this context, we argue for several important lines of change in the short-run, namely an effective change in the process of coordinating fiscal policies and a credible reform of the Stability and Growth Pact, and in the medium-long-run, namely an important increase in the size of the European budget. |
| Keywords: | Fiscal federalism, fiscal policy, European budget, fiscal discipline |
| JEL: | E62 H77 H61 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:244&r=eec |
| By: | Balázs Égert (Oesterreichische Nationalbank, Foreign Research Division) |
| Abstract: | This paper provides a comprehensive review of the factors that can cause price levels to diverge and which are at the root of different inflation rates in Europe including the EU-27. Among others, we study the structural and cyclical factors influencing market and non-market-based service, house and goods prices, and we summarise some stylised facts emerging from descriptive statistics. Subsequently, we set out the possible mismatches between price level convergence and inflation rates. Having described in detail the underlying economic factors, we proceed to demonstrate the relative importance of these factors on observed inflation rates first in an accounting framework and then by relying on panel estimations. Our estimation results provide the obituary notice for the Balassa-Samuelson effect. Nevertheless, we show that other factors related to economic convergence may push up inflation rates in transition economies. Cyclical effects and regulated prices are found to be important drivers of inflation rates in an enlarged Europe. House prices matter to some extent in the euro area, whereas the exchange rate plays a prominent (but declining) role in transition economies. |
| Keywords: | price level, inflation, Balassa-Samuelson, tradables, house prices, regulated prices, Europe, transition |
| JEL: | E43 E50 E52 C22 G21 O52 |
| Date: | 2007–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:onb:oenbwp:138&r=eec |
| By: | Thomas de Graaff; Michiel van Leuvensteijn |
| Abstract: | In this paper, we study the effects of housing market institutions on labour mobility. We construct durations for individuals leaving their current job for a different job, becoming unemployed or leaving the labour market, from a sample of households from 14 European countries in 1994–2001. We merge this data with country specific housing market institutions, such as transaction taxes, and language and religion diversity. Similar to previous studies, estimated hazards indicate that home-ownership reduces job-to-job mobility as well as the probability to become unemployed or economically inactive on a individual level. However, a comparison between countries reveals that countries with high levels of homeownership rates also have high levels of unemployment. Therefore, this paper is able to reconcile the seemingly contrasting empirical results from both the macroeconomic and the microeconomic level. |
| Keywords: | housing market; transaction costs; labor mobility; unemployment |
| JEL: | J60 J61 R23 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:82&r=eec |
| By: | Raffaele Paci; Stefano Usai |
| Abstract: | The recent resurgence of growth studies has clearly established that technological progress and knowledge accumulation are among the most important factors in determining the performance of regional and national economic systems. Nonetheless, few empirical studies have tried to analyse the flows of technology and knowledge across regional economies in Europe due to the lack of adequate indicators. In this paper we propose new evidence on the characteristics of knowledge flows across European regions based on a statistical databank, set up by CRENoS, on regional patenting and citations at the European Patent Office spanning from 1978 to 2004 and classified by ISIC sectors (3 digit). We consider 175 regions of 17 countries in Europe assigning each patent a region according to the place of residence of the inventors; then, we examine in- and out-flows of patent citations as a proxy of knowledge connections, while looking also at their sectoral differences and dynamics through time. The econometric analysis is based on a model where the transmission and exchange of knowledge across regions is mainly affected by geographical distance together with a set of spatial dummy variables. Moreover, we make several controls to check for the robustness of our results with respect to the inclusion of other characteristics of the origin and destination regions (production structure, economic conditions and technological efforts) as well as different estimation methods. The main result is that knowledge flows decrease as the geographical distance between the origin and the destination region increase. Furthermore, knowledge flows tend to be higher among contiguous regions and areas within the same country. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:200704&r=eec |
| By: | Carlo Fiorio (University of Milan); M. Florio (University of Milan); S. Salini (University of Milan); P. Ferrari (University of Milan) |
| Abstract: | The research question addressed by this paper is a simple one: are European consumers happy with the services provided by the utilities after two decades of reforms? We focus on electricity, gas, water, telephone in the EU 15 Member States. The variables we analyse are consumers’ satisfaction with accessibility, price and quality, as reported in three waves of Eurobarometer survey, 2000-2002-2004, comprising around 47,000 observations. We use ordered logit models to analyze the impact of privatization and regulatory reforms, as represented by an OECD dataset, controlling for individual and country characteristics. Our results do not support a clear association between consumers’ satisfaction and a standard reform package of privatization, vertical disintegration, liberalization. |
| Keywords: | Consumers’ Satisfaction, Gas, Electricity, Telephone, Water, Eurobarometer |
| JEL: | L94 L95 L96 L50 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2007.2&r=eec |
| By: | Gregory Corcos; Massimo Del Gatto; Giordano Mion; Gianmarco I.P. Ottaviano |
| Abstract: | Recent theoretical models predict gains from international trade coming from intra-industry reallocations, due to a firm selection effect. In this paper we answer two related questions. First, what is the magnitude of this selection effect, and how does it compare to that of intra-national trade? Second, would the removal of ’behind-the-border’ trade frictions between integrated EU countries lead to large productivity gains? To answer these questions, we extend and calibrate the Melitz and Ottaviano (2005) model on productivity and trade data for European economies in 2000, and simulate counterfactual trade liberalization scenarios. We consider 11 EU countries and a total of 31 economies, including 21 French regions. Our first result is that, in the French case, international trade has a sizeable impact on aggregate productivity, but smaller than that of intra-national trade. Second, substantial productivity gains (around 20%) can be expected from ’behind-the-border’ integration. In both experiments, we predict the corresponding variations in average prices, markups, quantities and profits. We show that the model fits sales and exports data reasonably well, and we perform a number of robustness checks. We also suggest some explanations for the substantial cross-economy and cross-industry variations in our estimates of productivity gains, highlighting the importance of accessibility and competitiveness. |
| Keywords: | European integration, intra-national trade, firm-level data, firm selection, gains from trade, total factor productivity |
| JEL: | F12 R13 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:200706&r=eec |
| By: | Luigi Landolfo (Department of Economics, University of Warwick, Coventry, CV4 7AL, United Kingdom.) |
| Abstract: | This paper aims to analyze the impact of external factors, such as the nominal effective exchange rate, foreign demand and the terms of trade, on the euro area real economy. In particular, the paper estimates the quantitative impact that changes in these factors have on net trade, real GDP and the Harmonized Consumer Price Index (HICP). To this end, we estimate a Dynamic Simultaneous Equation Model (DSEM) accounting for the presence of key exogenous variables. The tool utilized here to measure the impact of various shocks on the real economy is the impulse response function. The study is also conducted at sub-components level. First, we estimate the model replacing net trade with its sub-components, namely, the volume of exports and the volume of imports. Then, we re-estimate the model by dividing the terms of trade index into import and export prices. Overall, we estimate three models. Two of these models show consistent results. We found that the nominal effective exchange rate and foreign demand are the main determinants of the trade balance. Nevertheless, while foreign demand strongly affects real GDP, the nominal effective exchange rate affects it only slightly. Among the external factors, foreign demand has the strongest impact on real GDP. Regarding the impact of the nominal effective exchange rate on import prices and HICP, we found that the exchange rate pass-through for the euro area is not very high. This result is broadly in line with the findings presented in Hahn (2003). JEL Classification: C32, E52. |
| Keywords: | Net trade, Real economy, ECB. |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20070789&r=eec |
| By: | Clas Wihlborg; Larry Wall; Maria. J Nieto; Thomas F. Huertas; Gillian G.H. Garcia; George G.Kaufman; David G. Mayes; Robert A.Eisenbeis; Rosa M. Lastra |
| Abstract: | On November 20, 2006 the FMG organised a conference on 'Prompt Corrective Action & Cross-Borders Supervisory Issues in Europe'. This conference was the fourth and final in a series of events in the field of Regulation and Financial Stability that have been organised with the support of the Economic and Social Research Council. In this volume the FMG/LSE publishes a selection of the papers presented at this conference. |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:fmg:fmgsps:sp171&r=eec |
| By: | Vicente Royuela (Faculty of Economics, University of Barcelona.); Jordi Lopez-Tamayo (Faculty of Economics, University of Barcelona.); Jordi Suriñach (Faculty of Economics, University of Barcelona and European University Institute.) |
| Abstract: | In recent years, we have seen how the quality of work life has been focused and defined by the European Commission (EC). In our study we compare the EC definition with the academic one and try to see how close they are. We also analyse the possibility of applying the institutional definition to the Spanish case through the development of specific indicators. Our main conclusions are that QWL is increasingly important for policy makers. In addition, it is essential to have objective indicators and to conduct surveys in order to reliably measure QWL. |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:ira:wpaper:200713&r=eec |
| By: | Paola Criscuolo (SPRU, University of Sussex) |
| Abstract: | One consequence of the internationalisation of R&D, particularly in high-tech sectors such as chemicals and pharmaceuticals, may be the transfer of foreign technology from the multinational to other firms in its home country. This phenomenon, which may be termed inter-firm reverse technology transfer, has not yet been directly analysed by either the international management literature or the literature on foreign direct investment. But its implications for policy – particularly in Europe – may be significant. Drawing on the evolutionary theory of the multinational, and on the concept of embeddedness, this paper is a first attempt at addressing this issue. We test the hypothesis of inter-firm reverse technology transfer by performing a patent citation analysis on a database of USPTO patents applied for by 24 chemical and pharmaceutical companies over the period 1980-99. Our findings suggest that multinationals act as a channel for the transmission of knowledge developed abroad to other home country firms. These results point to an alternative understanding of foreign direct R&D investment and its implications for both the home country’s technological activity, and its competitive performance in general |
| Keywords: | Multinational firms; patent citation; embeddedness; international technology transfer |
| JEL: | F23 L65 O30 |
| Date: | 2007–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:sru:ssewps:107&r=eec |
| By: | Annika Alexius (Uppsala University); Bertil Holmlund (Uppsala University and IZA) |
| Abstract: | A widely spread belief among economists is that monetary policy has relatively short-lived effects on real variables such as unemployment. Previous studies indicate that monetary policy affects the output gap only at business cycle frequencies, but the effects on unemployment may well be more persistent in countries with highly regulated labor markets. We study the Swedish experience of unemployment and monetary policy. Using a structural VAR we find that around 30 percent of the fluctuations in unemployment are caused by shocks to monetary policy. The effects are also quite persistent. In the preferred model, almost 30 percent of the maximum effect of a shock still remains after ten years. |
| Keywords: | unemployment, monetary policy, structural VAR |
| JEL: | J60 E24 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2933&r=eec |
| By: | Jürgen Maurer (Mannheim Research Institute for the Economics of Aging (MEA)) |
| Abstract: | This paper investigates the interplay of socioeconomic and medical determinants of health care utilization among elderly Europeans from ten countries. Using novel strictly comparable cross-national data from the Survey of Health, Ageing and Retirement in Europe (SHARE), the study exploits recent semi- and nonparametric estimation methods to illustrate how individual socioeconomic status and health determine health care utilization in different institutional settings. Our flexible estimation method allows for the use of multiple health measures to adjust for individual differences in health care need without sacrificing cross-national comparability of the resulting estimates. Within countries, we find only a small, if any, socioeconomic gradient. Moreover, all health systems appear to be reasonably responsive to differences in care need. At the same time, we find considerable variation in treatment intensity across countries, which we cannot fully explain by differences in health care need. |
| Date: | 2007–07–17 |
| URL: | http://d.repec.org/n?u=RePEc:mea:meawpa:07144&r=eec |
| By: | Thure Traber; Claudia Kemfert |
| Abstract: | Effects of renewable support legislation on electricity prices have been analyzed with a plethora of models. However, these models neglect at least one of the following aspects which we take into account in our analysis: oligopolistic market behavior of dominant firms, emission trading, restricted electricity trade and production capacities, and effects on producer prices and firm profits. In this paper we use the electricity market model EMELIE and decompose the impact of the feed-in of renewable energy in Germany into two effects: a substitution effect triggered by the displacement of conventional sources and a permit price effect induced via the ETS. We find that the renewable support increases consumer prices slightly by 0.1 Eurocent/kWh, while the producer price decreases by 0.4 Eurocent/kWh. In addition, emissions from electricity generation in Germany are reduced by 32 Mt CO2, but are hardly altered if we consider the European electricity sector in total. Finally, the profits of most firms are significantly reduced by the support policy unless the firms combine relatively carbon intensive production equipment with a loose connection to the German grid. |
| Keywords: | Value of a statistical life (VSL), compensating wage differentials, work accidents, job changes |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp712&r=eec |
| By: | Brian Henry; Simon Kirby |
| Abstract: | Recent time series evidence favouring a supply-side interpretation of long-run unemployment in the UK is based on the finding of cointegration between unemployment and wage pressure variables. We show that this is necessary but not sufficient. The key assumptions in recent work, that a single relation exists between unemployment and wage pressure variables and that the causality is from these variables to unemployment, both appear to be invalid. In the light of this, and evidence of its serious parameter instability, this model of long-run UK unemployment seems flawed. |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:nsr:niesrd:293&r=eec |
| By: | Georg Zachmann; Christian von Hirschhausen |
| Abstract: | This paper applies the literature on asymmetric price transmission to the emerging commodity market for EU emissions allowances (EUA). We utilize an error correction model and an autoregressive distributed lag model to measure the relationship between CO2 price changes and the development of wholesale electricity prices. Using data from the German market for electricity and EUAs, we find that the rising prices of EUAs have a stronger impact on wholesale electricity prices than falling prices -- the first empirical evidence of asymmetric cost passthrough for these new allowances. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp708&r=eec |
| By: | Henk Kranendonk; Johan Verbruggen |
| Abstract: | Since late 2004, CPB Netherlands Bureau for Economic Policy Analysis has been using the macro-econometric model SAFFIER for its short-term and medium-term analyses. This model resulted from the integration of the quarterly model SAFE and the yearly model JADE. SAFFIER is a multi-purpose model. The quarterly version of the model, used for short-term analyses, only differs from its yearly version, used for medium-term analyses, in the specification of the lag structures. All other (non-technical) specifications are identical in both versions of the model. Simultaneously with the integration of SAFE and JADE, some innovations with respect to the modelling of the wage rate, private consumption, exports, the public sector and the house-price development have been incorporated. In the wage equation, the elasticity of the replacement rate is no longer constant, but is depending on the actual labour-market situation.<br> This publication sketches the outlines of the SAFFIER model, focusing on the main innovations. In order to explain the working of the model, the results from a number of standard shocks are presented. |
| Keywords: | macro-econometric model; wage equation; simulations |
| JEL: | C30 C53 E17 E27 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:docmnt:144&r=eec |
| By: | Andreas Buhn; Alexander Karmann; Friedrich Schneider |
| Abstract: | This paper presents the first MIMIC (multiple indicator multiple causes) model estimate of the size and development of the shadow economy and of do-it-yourself (DIY) activities in Germany from 1970 to 2005. By 2005, they reached a level of about 17% and 4.94%. While the shadow economy has regularly increased over the years, DIY activities – though quite sizeable – have remained more or less constant since the early 1990s. The driving forces for the shadow economy are regulation and tax burden whereas for DIY activities, the level of unemployment is the main factor. |
| Keywords: | Shadow economy; Do-it-yourself activities; Tax burden; Regulation; Domestic currency in circulation; Unemployment; MIMIC models |
| JEL: | O17 O5 D78 H2 H11 H |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:cra:wpaper:2007-14&r=eec |
| By: | Josef Fersterer (Landesstatistischer Dienst Salzburg, Austria); Jörn-Steffen Pischke (Department of Economics, London School of Economics, United Kingdom); Rudolf Winter-Ebmer (Department of Economics, Johannes Kepler University Linz, Austria) |
| Abstract: | Little is known about the payoffs to apprenticeship training in the German speaking countries for the participants. OLS estimates suggest that the returns are similar to those of other types of schooling. However, there is a lot of heterogeneity in the types of apprenticeships offered, and institutional descriptions suggest that there might be an important element of selection in who obtains an apprenticeship, and what type. In order to overcome the resulting ability bias we estimate returns to apprenticeship training for apprentices in failed firms in Austria. When a firm fails, current apprentices cannot complete their training in this firm. Because apprentices will be at different stages in their apprenticeship at that time, the failure of a firm will manipulate the length of the apprenticeship period completed for some apprentices. The time to the firm failure therefore serves as an instrument for the length of the apprenticeship completed both at the original firm and at other firms. We find instrumental variables returns which are similar or larger than the OLS returns in our sample, indicating relatively little selection. |
| Keywords: | Human capital; returns to schooling; firm-based training; ability bias |
| JEL: | J24 J31 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2007_14&r=eec |
| By: | Edward Nelson |
| Abstract: | This paper argues that the inflation targeting regime prevailing in the United Kingdom is not the result of a change in policymaker objectives. By conducting an analysis of U.K. policymakers that parallels Romer and Romer's (2004) study of Federal Reserve Chairmen, I demonstrate that policymaker objectives have been essentially unchanged over the past five decades. Instead, the crucial underpinning of U.K. inflation targeting has been an overhaul of doctrine-a changed view of the transmission mechanism. This overhaul can be understood in terms of changes in policymakers' views on the values of a few key parameters in their specifications of the economy's IS and Phillips curves. Specifically, the changed views pertain to the issues of whether interest rates enter the IS equation, and the extent of policymaker influence on those rates; whether the level of the output gap appears in the Phillips curve when the gap is negative; and whether a speed-limit term matters for inflation dynamics. Contrary to conventional wisdom, changing views on the expected-inflation term in the Phillips curve do not play a role. |
| Keywords: | Inflation (Finance) - Great Britain ; Monetary policy - Great Britain |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2007-026&r=eec |
| By: | Eduard H.M. Ponds; Bart van Riel (Netherlands Social-Economic Council (SER)); ; |
| Abstract: | In response to the perfect storm of falling stock returns and interest rates that hit pension funds in 2000, many companies in the United States and the United Kingdom have shifted from defined benefit (DB) to defined contribution (DC) schemes. In contrast, Dutch pension plans have mainly preserved their defined benefit character in recent years, although they have switched from "final-pay" to "average-wage" schemes. The average-wage plans may be better viewed as hybrid DB-DC schemes. They are like DB plans in that accrued pension rights are based on an employee's wages and years of service, and contribution rates can be raised in response to a funding shortfall. They are like DC plans in that the annual indexation factor, which is applied to both the accrued rights of active workers and the benefits of retired workers, is tied to the fund's financial status and, therefore, investment returns. As a result, these hybrid plans have two mechanisms - contribution rates and indexation - to control solvency risk, effectively minimizing the risk of under-funding. |
| Keywords: | falling stock returns, interest rates, pension funds 2000, defined benefit, defined contribution, DB, DC, United States, United Kingdom, investment returns, contributions rates, indexation |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2007-7-5&r=eec |