|
on European Economics |
|
Issue of 2009‒07‒17
fourteen papers chosen by Giuseppe Marotta University of Modena and Reggio Emilia |
| By: | Barbara Meller; Dieter Nautz |
| Abstract: | This paper uses the European Monetary Union (EMU) as a natural experiment to investigate whether more effective monetary policy reduces the persistence of inflation. Taking into account the fractional integration of inflation, we confirm that inflation dynamics differed considerably across Euro area countries before the start of EMU. Since 1999, however, results obtained from panel estimation indicate that the degree of long run inflation persistence has converged. In line with theoretical predictions, we find that the persistence of inflation has significantly decreased in the Euro area probably as a result of the more effective monetary policy of the ECB. |
| Keywords: | Monetary Policy Effectiveness and Inflation Persistence, Panel Test for Fractional Integration, Change in Inflation Persistence |
| JEL: | C22 C23 E31 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2009-037&r=eec |
| By: | Zsolt Darvas (Bruegel, Institute of Economics of the Hungarian Academy of Sciences and Corvinus University of Budapest) |
| Abstract: | This paper studies the transmission of monetary policy to macroeconomic variables in three new EU Member States in comparison with that in the euro area with structural time-varying coefficient vector autoregressions. In line with the Lucas Critique reduced-form models like standard VARs are not invariant to changes in policy regimes. The countries we study have experienced changes in monetary policy regimes and went through substantial structural changes, which call for the use of a time-varying parameter analysis. Our results indicate that in the euro area the impact on output of a monetary shock have decreased in time while in the new member states of the EU both decreases and increases can be observed. At the last observation of our sample, the second quarter of 2008, monetary policy was the most powerful in Poland and comparable in strength to that in the euro area, the least powerful responses were observed in Hungary while the Czech Republic lied in between. We explain these results by the credibility of monetary policy, openness and the share of foreign currency loans. |
| Keywords: | monetary transmission, time-varying coefficient vector autoregressions, Kalman-filter |
| JEL: | C32 E50 |
| Date: | 2009–07–02 |
| URL: | http://d.repec.org/n?u=RePEc:mkg:wpaper:0903&r=eec |
| By: | Rita Duarte (Banco de Portugal, Research Department, 148 Rua do Comercio, P-1101 Lisbon Codex, Portugal.); Carlos Robalo Marques (Banco de Portugal, Research Department, 148 Rua do Comercio, P-1101 Lisbon Codex, Portugal.) |
| Abstract: | This paper investigates the dynamics of aggregate wages and prices in the United States (US) and the Euro Area (EA) with a special focus on persistence of real wages, wage and price inflation. The analysis is conducted within a structural vector error-correction model, where the structural shocks are identified using the long-run properties of the theoretical model, as well as the cointegrating properties of the estimated system. Overall, in the long run, wage and price inflation emerge as more persistent in the EA than in the US in the face of import price, unemployment, or permanent productivity shocks. This finding is robust to the changes in the sample period and in the models’ specifications entertained in the paper. JEL Classification: C32, C51, E31, J30. |
| Keywords: | structural error-correction model, impulse response function, persistence. |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:200901067&r=eec |
| By: | Darné, O.; Ferrara, L. |
| Abstract: | In addition to quantitative assessment of economic growth using econometric models, business cycle analyses have been proved to be helpful to practitioners in order to assess current economic conditions or to anticipate upcoming fluctuations. In this paper, we focus on the acceleration cycle in the euro area, namely the peaks and troughs of the growth rate which delimitate the slowdown and acceleration phases of the economy. Our aim is twofold: First, we put forward a reference turning point chronology of this cycle on a monthly basis, based on gross domestic product and industrial production index. We consider both euro area aggregate level and country specific cycles for the six main countries of the zone. Second, we come up with a new turning point indicator, based on business surveys carefully watched by central banks and short-term analysts, in order to follow in real-time the fluctuations of the acceleration cycle. Classification-JEL : C22, C52, E32. |
| Keywords: | Acceleration cycle, Euro area, Dating chronology, Turning point indicator, Business surveys. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:239&r=eec |
| By: | Bianka Dettmer; Fredrik Erixon; Andreas Freytag (Friedrich-Schiller-University Jena, School of Economics and Business Administration); Pierre Olivier Legault Tremblay |
| Abstract: | Sino?European trade relations have been controversially discussed mainly, if not only, because of the increasing European Union's bilateral trade deficit with China. As from the European perspective trade with China becomes more important, the structural adjustment process of the Chinese economy from inter?industry to intra?industry trade is not as intensively discussed. We show how the emergence of China on the world markets has affected European comparative advantages over time. The change in bilateral trade is compared to the overall development of European comparative advantages to highlight the features of the structural change in China. We show that China is increasingly specialising in technology intensive goods. This development is absolutely in accordance with the historical perspective on country's upgrading in technology while integrating into the world economy. Technology intensive Schumpeter goods are either of a mobile or an immobile type based on the selection criterion of separating research and production process. While China predominantly focuses on the mobile type of Schumpeter goods, the European Union maintains its comparative advantages in immobile technology intensive goods, which are harder to imitate. Based on technology intensity, the second issue presented in the paper focuses on the Chinese integration into the world?wide value?added chain, which has been fragmented across borders in recent years. Not least due to increasing FDI, intra?industry trade has become more prevalent in bilateral trade relations with China. |
| Keywords: | Comparative advantage, Intra-industry trade, Fragmentation, EU, China |
| JEL: | F11 F14 |
| Date: | 2009–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-053&r=eec |
| By: | Albert Solé-Ollé (Universitat de Barcelona); Paula Salinas (Universitat de Barcelona) |
| Abstract: | Several arguments derived from fiscal federalism theory suggest that decentralization may lead to improved levels of efficiency in the provision of public goods and services. The aim of this study is to examine this hypothesis by evaluating the effects of decentralization on educational outcomes in Spain. These are measured using a survival rate, defined as the ratio between the number of students who enrolled in upper-secondary (non-compulsory) education and the number of students enrolled in the final year of lower-secondary (compulsory) education during the previous academic year. We use a panel data set comprising the 50 provinces of Spain for the years 1978 to 2005, a period that covers the entire process of decentralization. Since education competences were devolved to the regions at different points in time, we can estimate the effects of these reforms by applying the differences-in-differences method and by using the non-decentralized autonomous regions as the comparison group. We find that decentralization in Spain had a positive impact on educational outcomes when pupils on vocational training programmes are not taken into account, and that the richer the region is the more marked the effect becomes. However, this improvement in educational outcomes is achieved at the expense of enrolment in vocational training programmes. These effects might reflect a better match between population preferences and educational policies consequent upon decentralization. |
| Keywords: | Decentralization, Policy Evaluation, Education |
| JEL: | H11 H43 H52 I28 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2009/7/doc2009-10&r=eec |
| By: | Simonetta Longhi; Malcolm Brynin |
| Abstract: | We use British and German panel data to analyse job changes involving a change in occupation. We assess: (1) the extent of occupational change, taking into account the possibility of measurement error in occupational codes; (2) whether job changes within the occupation differ from occupation changes in terms of the characteristics of those making such switches; and (3) the effects of the two kinds of moves in terms of wages and job satisfaction. We find that occupation changes differ from other job changes, generally reflecting a less satisfactory employment situation, but also that the move in both cases is positive in respect of change in wages and job satisfaction. |
| Keywords: | Job change, occupation change, Britain, Germany |
| JEL: | J24 J62 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp204&r=eec |
| By: | Dominika Kalinowska; Karl W. Steininger |
| Abstract: | The authors apply a computable general equilibrium (CGE) modeling framework to carry out a two-country comparison for Austria and Germany assessing the impact of road charging (RC). The pricing policy measure is introduced for the private motorized transport mode and applies to the overall road network. To derive and compare distributional effects of passenger car RC, the mode-specific travel demand of private households is integrated into the CGE model. Furthermore, the modeling framework accounts for different household categories with respect to disposable net income and the corresponding travel demand profiles introduced in terms of behavioral mobility parameters as well as household travel expenditures. Comparing the country-specific results, we find country-specific differences in the impact of RC on household categories, as well as similarities. The differences that we find indicate the importance of particular parameters for the evaluation of infrastructure pricing policy reforms. We can relate differences to prevalent country-specific differences in sociodemographic characteristics, land use structure, territorial population distribution, as well as macroeconomic indicators. To add substance to the two-country impact assessment, a sensitivity analysis is carried out, introducing different RC revenue use schemes. We find differences in distributional effects under equity concerns to be closely related to the revenue use pattern as well as to country- and household-specific travel demand profiles. |
| Keywords: | Computable general equilibrium model, redistributive effects, road charging |
| JEL: | D58 H23 R48 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp907&r=eec |
| By: | Chevalier, P-A.; Lecat, R.; Oulton, N. |
| Abstract: | Studies of firm-level data have shown that there is a huge dispersion of productivity across firms even when industries are narrowly defined. So there is a significant opportunity for the least productive firms to catch up to the most productive. The formers’ convergence could therefore constitute an important part of productivity growth at the macroeconomic level. This article sheds light on this convergence process in the 1990s and the 2000s in France and on some of the factors which can explain it. Productivity convergence was stronger for labour productivity than for total factor productivity. But most importantly the speed of convergence has slowed during the course of the 1990s, a fact which is explained principally by the acceleration of the productivity of firms on the technological frontier. Three possible explanations of these stylised facts are considered: globalisation, information technology, and competition. Globalisation and information technology may have benefited the most productive firms more and the growth of competition may at the same time have stimulated the productivity of firms at the frontier while discouraging the convergence of the least productive firms. |
| Keywords: | Convergence ; productivity ; TFP ; globalisation ; ICT ; competition. |
| JEL: | D24 D40 F10 J24 L11 O33 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:237&r=eec |
| By: | Vinod Mishra; Ingrid Nielsen; Russell Smyth |
| Abstract: | This paper examines the relationship between the female labour force participation rate and total fertility rate for the G7 countries over the period 1960 to 2004 using panel unit root, panel cointegration, Granger causality and long-run structural estimation. The paper’s main findings are that the female labour force participation rate and total fertility rate are cointegrated for the panel of G7 countries; that long-run Granger causality runs from the total fertility rate to the female labour force participation rate and that a 1-per cent increase in the total fertility rate results in a 0.4 per cent decrease in the female labour force participation rate for the G7 countries. |
| Keywords: | fertility, female labour force participation, panel unit roots, panel cointegration, G7 countries. |
| JEL: | C22 C52 J13 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2006-13&r=eec |
| By: | Ma Elisa Casanova Domenech; Patricia Garcia-Duran Huet; Montserrat Millet Soler (Universitat de Barcelona) |
| Abstract: | The WTO rules have had a direct influence upon the 2006 reform of the European Common Market Sugar Organisation. The pre-2006 sugar CMO was not in a position to successfully face neither the recent Resolution of the World Trade Organisations Dispute Settlement Body and the liberalisation demands made in the Doha Round context. Through a comparative analysis of the European sugar regime, before and after the reform, this paper argues that the 2006 changes are the minimum improvements necessary to face present international challenges. |
| Keywords: | common agricultural policy, doha round, world trade organization, european union, common market organization for sugar |
| JEL: | F13 Q17 Q18 K33 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bar:bedcje:2009227&r=eec |
| By: | Hynninen S (University of Jyvaskyla); Longhi S (Institute for Social and Economic Research) |
| Abstract: | This paper analyses the impact that local labour market conditions have on entry wages of highly educated workers in Great Britain and Finland. In both countries, workers entering the labour market in regions with (or periods of) tighter job competition obtain lower wages. Competition from employed job seekers has a negative impact on entry wages in both countries, while competition from unemployed job seekers has a negative impact only in Finland. Overall, the wage elasticity is larger in Great Britain than in Finland, suggesting that centralised collective bargaining might mitigate the impact that local labour market conditions have on entry wages. |
| Date: | 2009–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2009-20&r=eec |
| By: | Jean-Claude Barbier (Centre d'Economie de la Sorbonne); Fabrice Colomb (Centre d'Economie de la Sorbonne); Per Kongshøj Madsen (Centre for Labour Market Research (CARMA)) |
| Abstract: | Flexicurity, as a notion, has spread since 2000, from its use in Netherlands and Denemark. The origin of the word is well known : invented by a sociologist who was an aide to the Dutch minister of labour in 1990. Demark became emblematic of flexicurity in 2004-2005. We compare public and social debates in Denmark and in France during from 2000 to 2008 : we show that the same superficial international discourse was used by both countries but with different goals and within different institutions. International discourses are not a signal of convergence of social systems and labour markets. We could rather say taht common ideas expressed in English are adapted and translated in order to fit the national system so that they can be used as resources by actors in the elaboration of national compromises. From that point of view, "Europeanization" is confined to a superficial layer of political discourses and to their justification at a very abstract and general level. |
| Keywords: | Flexicurity, comparison, France, Denmark, discourses, Europeanization. |
| JEL: | J28 J88 Z13 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:09046&r=eec |
| By: | Avouyi-Dovi, S.; Bardos, M.; Jardet, C.; Kendaoui, L.; Moquet , J. |
| Abstract: | The aim of this paper is to build and estimate a macroeconomic model of credit risk for the French manufacturing sector. This model is based on Wilson's CreditPortfolioView model (1997a, 1997b); it enables us to simulate loss distributions for a credit portfolio for several macroeconomic scenarios. We implement two simulation procedures based on two assumptions relative to probabilities of default (PDs): in the first procedure, firms are assumed to have identical default probabilities; in the second, individual risk is taken into account. The empirical results indicate that these simulation procedures lead to quite different loss distributions. For instance, a negative one standard deviation shock on output leads to a maximum loss of 3.07% of the financial debt of the French manufacturing sector, with a probability of 99%, under the identical default probability hypothesis versus 2.61% with individual default probabilities. |
| Keywords: | macro stress test ; credit risk model ; loss distribution. |
| JEL: | G32 C22 C53 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:238&r=eec |