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on European Economics |
| By: | Brigitte Granville; Dominik Nagly |
| Abstract: | This paper studies the how government policy can influence positively public attitudes towards the Economic and Monetary Union (EMU). |
| Keywords: | Monetary Regime, Monetary System, Real Activity, EMU, Exchange Rates, Currency Area |
| JEL: | E42 E44 F33 F36 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:cgs:wpaper:50&r=all |
| By: | Camille Cornand (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I (UCBL)); Pauline Gandré (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I (UCBL)); Céline Gimet (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I (UCBL), CHERPA - Croyance, Histoire, Espace, Régulation Politique et Administrative - Institut d'Études Politiques [IEP] - Aix-en-Provence - Aix Marseille Université) |
| Abstract: | One of the most striking consequences of the recent episode of sovereign debt market stress in the Eurozone has been the increase in the share of public debt held by the domestic sector in fragile economies. First, we identify the shocks that explain most of the variation in this share in an S-VAR model on a sample of 7 Eurozone countries between 2007 and 2012. Home bias in sovereign debt responds positively to fundamentals and expectations shocks but we find no evidence that the increase in home bias is destabilizing per se. Second, we theoretically model the impact of the previous shocks in a second-generation model of crisis with endogenous home bias in sovereign debt. We derive conditions under which a higher home bias is associated with a change in the government's decision. Finally, we discuss which case of the model best applies to the distinct countries in our sample during the recent sovereign debt crisis in the Eurozone. |
| Keywords: | Eurozone; Sovereign debt crises; Home bias; Bayesian panel S-VAR; Second-generation model |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01015475&r=all |
| By: | Uwe Boewer; Vasiliki Michou; Christoph Ungerer |
| Abstract: | Why is Greece such a surprisingly closed economy? We employ a gravity model of trade to explain the appallingly poor export performance of Greece and argue that weak institutional quality accounts for a large part of this shortfall. Using a rich dataset of bilateral value-added exports of goods and services of 39 exporters and 56 importers for 18 sectors, we first estimate that Greece exports ? less than what regular international trade patterns would predict on basis of Greek GDP, the size of its trading partners and geographical distance. This ranks Greece at the 31st position out of 39 export countries in the competitiveness ranking we construct based on our regressions. The most affected sectors include electrical equipment and machinery while transport, tourism and agriculture perform relatively favourable. We then augment our model with various measures of institutional quality and find that weak institutions can explain much of the missing Greek exports puzzle. We estimate that structural reforms improving the Greek institutional framework to the EU/OECD average level would close between ½ and ¾ of the Greek export gap. These findings suggest that, while Greece has already achieved major improvements in cost competitiveness since the start of the Greek adjustment programme, structural reforms must also address non-cost competitiveness factors, such as the underlying institutional deficits, to unlock Greece's export growth potential. |
| JEL: | C23 E02 F14 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:euf:ecopap:0518&r=all |
| By: | Oana Toader (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR7322 - Université d'Orléans) |
| Abstract: | This study provides estimations of public implicit guarantees over the period 1997 to 2012 using a rating-based model. The investigation focuses on a sample of 45 large, listed European banks. It appears that the main element for determining the value of the public subsidy is the intrinsic strength of the bank. In addition, we provide evidence on the importance of guarantor strength on the value of the implicit guarantee: a higher sovereign rating of a bank‟s home country leads to larger implicit subsidies for bank' debt. Our findings also suggest that the recently observed decrease in the value of implicit subsidies goes beyond the decline in European sovereigns' strength. Rather, it is consistent with the implementation of resolution regimes and practices moving from a "bail-out" resolution policy to "bail-in" recapitalizations. Bank insolvencies would be handled in a more explicit context. Therefore, expectations on implicit public support are reduced. |
| Keywords: | banks ; implicit subsidy ; ratings ; resolution |
| Date: | 2014–06–26 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01015376&r=all |
| By: | Bernardi, Luigi |
| Abstract: | The aim of this paper is to discuss certain critical aspects of the tax reform process that has been taking place in the EU MS since the beginning of the new century. Two separate periods may be identified here. The first -from 2000 to 2011- witnessed very few tax reforms: according to the EU Commission itself, tax reforms were episodic, sparse and generally of a limited nature, To check this hypothesis, the present paper analyzes tax trends during the period 2000-2011, both at aggregate EU level and by disaggregating such trends into those pertaining to each EU MS. In the wake of the great economic crisis, there has been a broader process of tax reform in almost all EU Member Countries, albeit characterized by a reluctance to accept the tax reforms that the European Commission has been recommending to certain specific countries for a number of years now. The final, concluding issue dealt with briefly in this paper, is that of the various obstacles to tax reforms, starting from a recent OECD study of the matter. |
| Keywords: | Taxation policy, Tax reforms, EU Member States Taxation policy, Tax reforms, EU Member States |
| JEL: | H20 |
| Date: | 2014–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:56856&r=all |
| By: | Jonung, Lars (Department of Economics, Lund University) |
| Abstract: | This paper explores the evolution of Swedish fiscal policy from one extreme approach to another one in less than four decades. After the demise of the Bretton Woods-system in the early 1970s, Swedish fiscal policy was based on a Keynesian approach with the goal to stabilize the business cycle and maintain full employment using a large set of instruments in a discretionary manner. In the wake of the deep financial crisis in the early 1990s, this policy paradigm was eventually replaced by a rule-bound scheme. A fiscal framework was set-up as an instrument to rein in public finances. The present goal of fiscal policy is to maintain sustainable public finances while avoiding discretionary measures. |
| Keywords: | Fiscal rules; fiscal policy council; fiscal policy; policy learning; Sweden |
| JEL: | E52 E62 E63 E65 F44 H62 O52 |
| Date: | 2014–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2014_026&r=all |
| By: | Ohlsson, Henry (Department of Economics); Roine, Jesper (Stockholm School of Economics); Waldenström, Daniel (Department of Economics) |
| Abstract: | Inherited wealth has attracted much attention recently, much due to the research by Thomas Piketty (Piketty, 2011; 2014). The discussion has mainly revolved around a long-run contrast between Europe and the U.S., even though data on explicit historical inheritance flows are only really available for France and to some extent for the U.K. We study the long-run evolution of inherited wealth in Sweden over the past two hundred years. The trends in Sweden are similar to those in France and the U.K: beginning at a high level in the nineteenth century, falling sharply in the interwar era and staying low thereafter, but tending to increase in recent years. The levels, however, differ greatly. The Swedish flows were only half of those in France and the U.K. before 1900 and also much lower after 1980. The main reason for the low levels in the nineteenth century is that the capital-income ratio is much lower than in “Old Europe”. In fact, the Swedish capital-income ratio was similar to that in the U.S., but the savings and growth rates were much lower in Sweden than in the U.S. Rapid income growth following industrialization and increasing savings rates were also important factors behind the development of the capital-income ratio and the inheritance flow during the twentieth century. The recent differences in inheritance flows have several potential explanations related to the Swedish welfare state and pension system. Sweden was “un-European” during the nineteenth century because the country was so poor, Sweden is “un-European” today because so much wealth formation has taken place within the welfare state and the occupational pension systems. |
| Keywords: | Inheritance; Capital accumulation; Inverse mortality multiplier |
| JEL: | D30 J10 N10 |
| Date: | 2014–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1033&r=all |
| By: | Philipp M. Richter; Franziska Holz |
| Abstract: | The Russian-Ukrainian crisis has revitalized the European concerns of supply disruptions of natural gas as experienced in 2006 and 2009. However, the European supply situation, regulation and infrastructure have changed since: imports aremore diversified, EU member states better connected and a common regulation on the security of supply has been introduced. Nevertheless, several East European countries are highly dependent on Russian natural gas. This paper investigates different Russian natural gas export disruptions scenarios and analyses short- and long-term reactions to ensure a sufficient supply of natural gas within Europe. We use the Global Gas Model (GGM), a large-scale mixed complementarity representation of the natural gas sector with a high-level of technical granularity with respect to storage and transportation infrastructure. We find that most of the EU member states are not severely affected by a complete drop out of Russian exports. Removing infrastructure bottlenecks within the EU should still be prioritized in order to secure a sufficient natural gas supply for all EU member states. |
| Keywords: | natural gas trade, Russia, Europe, security of supply, infrastructure investment, equilibrium modelling |
| JEL: | Q34 Q37 Q41 C61 L95 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1383&r=all |
| By: | Thomas Hellebrandt |
| Abstract: | The Great Recession has increased concerns over the fairness of the distribution of wealth and income in many societies. Using data on eight advanced economies (Germany, Greece, Ireland, Italy, Slovakia, Spain, the United Kingdom, and United States) between 2007 and 2010, I show how the Great Recession affected income inequality in different countries and how families and the state tried to mitigate its impact - though redistributing income within households and through the tax and benefit system. In most countries redistribution within household, through the social safety net and through direct taxes has been largely successful in offsetting the effect on income inequality of increased earnings inequality caused by the rise in unemployment in this pre-austerity period. I discuss some policy lessons that emerge from the varying experiences of different countries. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp644&r=all |