This paper examines the vulnerability of labour markets to adverse economic shocks. We define labour market exposure as the cumulated amount of excess unemployment generated by a shock before unemployment returns to steady-state. We use a panel of 19 countries covering the period 1985–2010 to assess the influence of labour market policies on labour market exposure, which is also calculated country by country. We find that less generous unemployment insurance, more active labour market policies or a lower minimum wage imply a trade-off between average unemployment and labour market exposure, as they help low-skilled workers to get out of unemployment at the cost of increased vulnerability to adverse shocks. On the other hand, reducing the tax wedge is conducive to both lower steady-state unemployment and labour market exposure. — Alain de Serres and Fabrice Murtin
{"title":"Unemployment at Risk: The Policy Determinants of Labour Market Exposure to Economic Shocks","authors":"Alain de Serres, F. Murtin","doi":"10.1111/1468-0327.12038","DOIUrl":"https://doi.org/10.1111/1468-0327.12038","url":null,"abstract":"This paper examines the vulnerability of labour markets to adverse economic shocks. We define labour market exposure as the cumulated amount of excess unemployment generated by a shock before unemployment returns to steady-state. We use a panel of 19 countries covering the period 1985–2010 to assess the influence of labour market policies on labour market exposure, which is also calculated country by country. We find that less generous unemployment insurance, more active labour market policies or a lower minimum wage imply a trade-off between average unemployment and labour market exposure, as they help low-skilled workers to get out of unemployment at the cost of increased vulnerability to adverse shocks. On the other hand, reducing the tax wedge is conducive to both lower steady-state unemployment and labour market exposure. — Alain de Serres and Fabrice Murtin","PeriodicalId":236508,"journal":{"name":"Wiley-Blackwell: Economic Policy","volume":"90 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132879968","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
type="main" xml:id="ecop12033-abs-0001"> This study analyses the link between student test scores and the school students attend, the policies and practices of the schools, students' family background and their parents' involvement in their education using data from the 2009 wave of the Program for International Student Assessment. We find that (1) a substantial proportion of the variation of test scores within countries is associated with the school students attend; (2) a sizeable proportion of the school fixed effects is associated with school policies and teaching practices beyond national policies or other mechanisms that sort students of differing abilities among schools; (3) school fixed effects are a major pathway for the link between family background and test scores. The implication is that what schools do is important in the level and dispersion of test scores, suggesting the value of further analysis of what goes on in schools to pin down causal links between policies and practices and test score outcomes. — Richard B. Freeman and Martina Viarengo
本研究利用2009年国际学生评估项目(Program for International student Assessment)的数据，分析了学生考试成绩与学生就读的学校、学校的政策和做法、学生的家庭背景以及家长对其教育的参与之间的联系。我们发现(1)各国考试成绩的很大一部分变化与学生就读的学校有关;(2)相当大比例的学校固定效应与学校政策和教学实践有关，而不是与国家政策或其他机制有关，这些机制将不同能力的学生分类到不同的学校;(3)学校固定效应是家庭背景与考试成绩联系的主要途径。这意味着，学校的行为对考试成绩的水平和分布很重要，这表明，进一步分析学校的情况，以确定政策和实践与考试成绩结果之间的因果关系，是有价值的。——Richard B. Freeman和Martina Viarengo
{"title":"School and Family Effects on Educational Outcomes Across Countries","authors":"Richard B. Freeman, M. Viarengo","doi":"10.1111/1468-0327.12033","DOIUrl":"https://doi.org/10.1111/1468-0327.12033","url":null,"abstract":"type=\"main\" xml:id=\"ecop12033-abs-0001\"> This study analyses the link between student test scores and the school students attend, the policies and practices of the schools, students' family background and their parents' involvement in their education using data from the 2009 wave of the Program for International Student Assessment. We find that (1) a substantial proportion of the variation of test scores within countries is associated with the school students attend; (2) a sizeable proportion of the school fixed effects is associated with school policies and teaching practices beyond national policies or other mechanisms that sort students of differing abilities among schools; (3) school fixed effects are a major pathway for the link between family background and test scores. The implication is that what schools do is important in the level and dispersion of test scores, suggesting the value of further analysis of what goes on in schools to pin down causal links between policies and practices and test score outcomes. — Richard B. Freeman and Martina Viarengo","PeriodicalId":236508,"journal":{"name":"Wiley-Blackwell: Economic Policy","volume":"42 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116393932","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
type="main" xml:id="ecop12034-abs-0001"> Governments throughout the OECD allocate a large share of societies' capital and risk through their credit-related activities. Hence, accurate cost estimates for credit support programmes are a prerequisite for efficient resource allocation, transparency, effective management and public oversight. I find that OECD governments generally take their cost of capital to be their own borrowing rate, rather than using a weighted-average cost of capital that includes the cost of risk borne by taxpayers and the general public in their role as equity holders. That practice, which is institutionalised in government accounting and budgetary rules, results in cost estimates for credit support that are significantly downwardly biased relative to a fair-value metric that recognises the full cost of risk. The size and possible real consequences of those distortions are illustrated with analyses of the European Bank for Reconstruction and Development, the European Stability Mechanism and the Tennessee Valley Authority. — Deborah Lucas
经合组织各国政府通过信贷相关活动分配了很大一部分社会资本和风险。因此，准确估计信贷支助方案的费用是有效分配资源、透明度、有效管理和公众监督的先决条件。我发现，经合组织各国政府通常将其资本成本视为自己的借款利率，而不是使用加权平均资本成本，后者包括纳税人和普通公众作为股权持有人承担的风险成本。这种做法已在政府会计和预算规则中制度化，导致信贷支持的成本估算，相对于确认风险全部成本的公允价值指标，有明显的向下偏差。欧洲复兴开发银行(European Bank for Reconstruction and Development)、欧洲稳定机制(European Stability Mechanism)和田纳西河谷管理局(Tennessee Valley Authority)的分析说明了这些扭曲的规模和可能的实际后果。——黛博拉·卢卡斯
{"title":"Evaluating the Cost of Government Credit Support: The OECD Context","authors":"Deborah J. Lucas","doi":"10.1111/1468-0327.12034","DOIUrl":"https://doi.org/10.1111/1468-0327.12034","url":null,"abstract":"type=\"main\" xml:id=\"ecop12034-abs-0001\"> Governments throughout the OECD allocate a large share of societies' capital and risk through their credit-related activities. Hence, accurate cost estimates for credit support programmes are a prerequisite for efficient resource allocation, transparency, effective management and public oversight. I find that OECD governments generally take their cost of capital to be their own borrowing rate, rather than using a weighted-average cost of capital that includes the cost of risk borne by taxpayers and the general public in their role as equity holders. That practice, which is institutionalised in government accounting and budgetary rules, results in cost estimates for credit support that are significantly downwardly biased relative to a fair-value metric that recognises the full cost of risk. The size and possible real consequences of those distortions are illustrated with analyses of the European Bank for Reconstruction and Development, the European Stability Mechanism and the Tennessee Valley Authority. — Deborah Lucas","PeriodicalId":236508,"journal":{"name":"Wiley-Blackwell: Economic Policy","volume":"35 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117008195","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The correlation between a firm’s size and its productivity level varies considerably across OECD countries, suggesting that some countries are more successful at channelling resources to high productivity firms than others. Accordingly, we examine the extent to which regulations affecting product, labour and credit markets influence productivity, via their effect on the efficiency of resource allocation. Our results suggest that there is an economically and statistically robust negative relationship between policy-induced frictions and productivity, though the specific channel depends on the policy considered. In the case of employment protection legislation, product market regulations (including barriers to entry and bankruptcy legislation) and restrictions on foreign direct investment, this is largely traceable to the worsening of allocative efficiency (i.e. a lower correspondence between a firm’s size and its productivity level). By contrast, financial market under-development tends to be associated with a higher fraction of low productivity relative to high productivity firms. Furthermore, stringent regulations are more disruptive to resource allocation in more innovative sectors, though the nature of innovation turns out to be important. Politiques publiques et allocation des ressources : Des preuves provenant des entreprises dans les pays de l'OCDE La correlation entre la taille d’une entreprise et son niveau de productivite varie considerablement selon les pays de l’OCDE, ce qui suggere que certains pays reussissent mieux a affecter les ressources a des entreprises a forte productivite que d’autres. Par consequent, nous examinons dans quelle mesure les reglementations affectant les marches des produits, du travail et du credit influent sur la productivite, grâce a leur effet sur l’efficacite de l’affectation des ressources. Nos resultats suggerent qu’il existe une relation economiquement et statistiquement negative robuste entre les frictions induites par la politique et la productivite, meme si le canal specifique depend de la politique consideree. Dans le cas de la legislation sur la protection de l’emploi, de la reglementation des marches de produits (y compris les barrieres a l’entree et a la legislation sur les faillites) et des restrictions a l’investissement direct a l’etranger, c’est en grande partie attribuable a la deterioration de l’efficacite allocative (i.e. une faible correspondance entre la taille de l’entreprise et son niveau de productivite). En revanche, le sous-developpement du marche financier tend a etre associe a une proportion plus elevee des entreprises a faible productivite par rapport aux entreprises a forte productivite. En outre, les reglementations strictes perturbent plus l’allocation des ressources dans des secteurs plus innovants, bien que la nature de l’innovation s’avere etre importante.
{"title":"Public Policy and Resource Allocation: Evidence from Firms in OECD Countries","authors":"D. Andrews, F. Cingano","doi":"10.1111/1468-0327.12028","DOIUrl":"https://doi.org/10.1111/1468-0327.12028","url":null,"abstract":"The correlation between a firm’s size and its productivity level varies considerably across OECD countries, suggesting that some countries are more successful at channelling resources to high productivity firms than others. Accordingly, we examine the extent to which regulations affecting product, labour and credit markets influence productivity, via their effect on the efficiency of resource allocation. Our results suggest that there is an economically and statistically robust negative relationship between policy-induced frictions and productivity, though the specific channel depends on the policy considered. In the case of employment protection legislation, product market regulations (including barriers to entry and bankruptcy legislation) and restrictions on foreign direct investment, this is largely traceable to the worsening of allocative efficiency (i.e. a lower correspondence between a firm’s size and its productivity level). By contrast, financial market under-development tends to be associated with a higher fraction of low productivity relative to high productivity firms. Furthermore, stringent regulations are more disruptive to resource allocation in more innovative sectors, though the nature of innovation turns out to be important. Politiques publiques et allocation des ressources : Des preuves provenant des entreprises dans les pays de l'OCDE La correlation entre la taille d’une entreprise et son niveau de productivite varie considerablement selon les pays de l’OCDE, ce qui suggere que certains pays reussissent mieux a affecter les ressources a des entreprises a forte productivite que d’autres. Par consequent, nous examinons dans quelle mesure les reglementations affectant les marches des produits, du travail et du credit influent sur la productivite, grâce a leur effet sur l’efficacite de l’affectation des ressources. Nos resultats suggerent qu’il existe une relation economiquement et statistiquement negative robuste entre les frictions induites par la politique et la productivite, meme si le canal specifique depend de la politique consideree. Dans le cas de la legislation sur la protection de l’emploi, de la reglementation des marches de produits (y compris les barrieres a l’entree et a la legislation sur les faillites) et des restrictions a l’investissement direct a l’etranger, c’est en grande partie attribuable a la deterioration de l’efficacite allocative (i.e. une faible correspondance entre la taille de l’entreprise et son niveau de productivite). En revanche, le sous-developpement du marche financier tend a etre associe a une proportion plus elevee des entreprises a faible productivite par rapport aux entreprises a forte productivite. En outre, les reglementations strictes perturbent plus l’allocation des ressources dans des secteurs plus innovants, bien que la nature de l’innovation s’avere etre importante.","PeriodicalId":236508,"journal":{"name":"Wiley-Blackwell: Economic Policy","volume":"63 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126875484","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
type="main" xml:id="ecop12023-abs-0001"> Japan has the highest debt to GDP ratio among advanced countries, and many studies find that the current fiscal regime of Japan is not sustainable. Yet, the Japanese government bond continues to enjoy low and stable interest rates. The most plausible explanation for such an apparent anomaly is that the bonds are predominantly held by the Japanese residents, who are willing to absorb increasing amount of Japanese Government Bonds (JGB) without requiring high yields. Even if the Japanese residents continue to invest their new saving into the government bonds, however, Japan's fiscal situation is not sustainable, which this paper shows through simulations under various scenarios. In all of the scenarios that assume the fiscal policy stance of the Japanese government does not change in the future, we find that the amount of government debt will exceed the private sector financial assets available for the government debt purchase in the next 10 years or so. The paper also shows that sufficiently large tax increases and/or expenditure cuts in the future would put the government debt on a sustainable path. Thus, if the market believes that Japan will embark on such fiscal consolidation in the next 10 years, at most, the low JGB yields are justifiable. If and when the expectation changes, however, a fiscal crisis can be triggered even before the government debt hits the ceiling of the private sector financial assets. — Takeo Hoshi and Takatoshi Ito
{"title":"Defying Gravity: Can Japanese Sovereign Debt Continue to Increase Without a Crisis?","authors":"T. Hoshi, Takatoshi Ito","doi":"10.1111/1468-0327.12023","DOIUrl":"https://doi.org/10.1111/1468-0327.12023","url":null,"abstract":"type=\"main\" xml:id=\"ecop12023-abs-0001\"> Japan has the highest debt to GDP ratio among advanced countries, and many studies find that the current fiscal regime of Japan is not sustainable. Yet, the Japanese government bond continues to enjoy low and stable interest rates. The most plausible explanation for such an apparent anomaly is that the bonds are predominantly held by the Japanese residents, who are willing to absorb increasing amount of Japanese Government Bonds (JGB) without requiring high yields. Even if the Japanese residents continue to invest their new saving into the government bonds, however, Japan's fiscal situation is not sustainable, which this paper shows through simulations under various scenarios. In all of the scenarios that assume the fiscal policy stance of the Japanese government does not change in the future, we find that the amount of government debt will exceed the private sector financial assets available for the government debt purchase in the next 10 years or so. The paper also shows that sufficiently large tax increases and/or expenditure cuts in the future would put the government debt on a sustainable path. Thus, if the market believes that Japan will embark on such fiscal consolidation in the next 10 years, at most, the low JGB yields are justifiable. If and when the expectation changes, however, a fiscal crisis can be triggered even before the government debt hits the ceiling of the private sector financial assets. — Takeo Hoshi and Takatoshi Ito","PeriodicalId":236508,"journal":{"name":"Wiley-Blackwell: Economic Policy","volume":"19 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134639778","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Conventional wisdom holds that protectionism is counter‐cyclic; tariffs, quotas and the like grow during recessions. While that may have been a valid description of the data before the First World War, it is now inaccurate. Since the Second World War, protectionism has not been counter‐cyclic; tariffs and non‐tariff barriers simply do not rise systematically during downturns. I document this new stylised fact with a panel of data covering over 180 countries and 40 years, using over a dozen measures of protectionism and six of business cycles. I test and reject a number of potential reasons why protectionism is no longer counter‐cyclic. A ‘diagnosis of exclusion’ leads me to believe that modern economics may well be responsible for the decline in protectionism's cyclic behaviour; economists are more united in their disdain for protectionism than virtually any other concept. This in turn leaves one optimistic that the level of protectionism will continue to decline along with its cyclicality. — Andrew K. Rose
{"title":"The March of an Economic Idea? Protectionism Isn't Counter�?Cyclic (Anymore)","authors":"A. Rose","doi":"10.1111/1468-0327.12017","DOIUrl":"https://doi.org/10.1111/1468-0327.12017","url":null,"abstract":"Conventional wisdom holds that protectionism is counter‐cyclic; tariffs, quotas and the like grow during recessions. While that may have been a valid description of the data before the First World War, it is now inaccurate. Since the Second World War, protectionism has not been counter‐cyclic; tariffs and non‐tariff barriers simply do not rise systematically during downturns. I document this new stylised fact with a panel of data covering over 180 countries and 40 years, using over a dozen measures of protectionism and six of business cycles. I test and reject a number of potential reasons why protectionism is no longer counter‐cyclic. A ‘diagnosis of exclusion’ leads me to believe that modern economics may well be responsible for the decline in protectionism's cyclic behaviour; economists are more united in their disdain for protectionism than virtually any other concept. This in turn leaves one optimistic that the level of protectionism will continue to decline along with its cyclicality. — Andrew K. Rose","PeriodicalId":236508,"journal":{"name":"Wiley-Blackwell: Economic Policy","volume":"40 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122645196","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Jeromin Zettelmeyer, Christoph Trebesch, G. Gulati
The Greek debt restructuring of 2012 stands out in the history of sovereign defaults. It achieved very large debt relief – over 50 per cent of 2012 GDP – with minimal financial disruption, using a combination of new legal techniques, exceptionally large cash incentives, and official sector pressure on key creditors. But it did so at a cost. The timing and design of the restructuring left money on the table from the perspective of Greece, created a large risk for European taxpayers, and set precedents – particularly in its very generous treatment of holdout creditors – that are likely to make future debt restructurings in Europe more difficult.
{"title":"The Greek Debt Restructuring: An Autopsy","authors":"Jeromin Zettelmeyer, Christoph Trebesch, G. Gulati","doi":"10.1111/1468-0327.12014","DOIUrl":"https://doi.org/10.1111/1468-0327.12014","url":null,"abstract":"The Greek debt restructuring of 2012 stands out in the history of sovereign defaults. It achieved very large debt relief – over 50 per cent of 2012 GDP – with minimal financial disruption, using a combination of new legal techniques, exceptionally large cash incentives, and official sector pressure on key creditors. But it did so at a cost. The timing and design of the restructuring left money on the table from the perspective of Greece, created a large risk for European taxpayers, and set precedents – particularly in its very generous treatment of holdout creditors – that are likely to make future debt restructurings in Europe more difficult.","PeriodicalId":236508,"journal":{"name":"Wiley-Blackwell: Economic Policy","volume":"82 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121674890","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
O. Bargain, Mathias Dolls, C. Fuest, Dirk Neumann, A. Peichl, N. Pestel, Sebastian Siegloch
The current debt crisis has given rise to a debate concerning deeper fiscal integration in Europe. The view is widespread that moving towards a ‘fiscal union’ would have stabilizing effects in case of macroeconomic shocks. We study the economic effects of introducing two elements of a fiscal union: an EU-wide tax and transfer system and a fiscal equalization mechanism. Using the European tax-benefit calculator EUROMOD, we exploit representative household micro data from 11 eurozone countries to simulate these policy reforms and study their effects on the income distribution and automatic stabilizers. We find that replacing one third of the national tax-benefit systems with a European system would lead to significant redistributive effects both within and across countries. These effects depend on income levels and the structures of existing national systems. The EU system would particularly improve fiscal stabilization in credit constrained countries absorbing 10–15% of a macroeconomic income shock. Introducing a fiscal equalization mechanism would redistribute revenues from high to low income countries. However, the stabilization properties of this system are ambiguous. The results suggest that it might be necessary for Europe to explore alternative ways of improving macroeconomic stability without redistributing income ex ante.
{"title":"Fiscal Union in Europe? Redistributive and Stabilizing Effects of a European Tax�?Benefit System and Fiscal Equalization Mechanism","authors":"O. Bargain, Mathias Dolls, C. Fuest, Dirk Neumann, A. Peichl, N. Pestel, Sebastian Siegloch","doi":"10.1111/1468-0327.12011","DOIUrl":"https://doi.org/10.1111/1468-0327.12011","url":null,"abstract":"The current debt crisis has given rise to a debate concerning deeper fiscal integration in Europe. The view is widespread that moving towards a ‘fiscal union’ would have stabilizing effects in case of macroeconomic shocks. We study the economic effects of introducing two elements of a fiscal union: an EU-wide tax and transfer system and a fiscal equalization mechanism. Using the European tax-benefit calculator EUROMOD, we exploit representative household micro data from 11 eurozone countries to simulate these policy reforms and study their effects on the income distribution and automatic stabilizers. We find that replacing one third of the national tax-benefit systems with a European system would lead to significant redistributive effects both within and across countries. These effects depend on income levels and the structures of existing national systems. The EU system would particularly improve fiscal stabilization in credit constrained countries absorbing 10–15% of a macroeconomic income shock. Introducing a fiscal equalization mechanism would redistribute revenues from high to low income countries. However, the stabilization properties of this system are ambiguous. The results suggest that it might be necessary for Europe to explore alternative ways of improving macroeconomic stability without redistributing income ex ante.","PeriodicalId":236508,"journal":{"name":"Wiley-Blackwell: Economic Policy","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114357347","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study a newly created panel data set of relative prices for a large number of consumer goods among 31 European countries over a 15‐year period. The data set includes eurozone members both before and after the inception of the euro, floating exchange rate countries of Western Europe, and emerging market economies of Eastern and Southern Europe. We find that there is a substantial and continuing deviation from purchasing power parity (PPP) at all levels of aggregation, both for traded and non‐traded goods, even among eurozone members. Real exchange rates (RER) exhibit two clear properties in the sample (a) they are closely tied to gross domestic product (GDP) per capita relative to the European average, at all levels of aggregation and for both cross country time series variation; (b) they are highly positively correlated with variation in the relative price of non‐traded goods. We then construct a simple two‐sector endowment economy model of real exchange rate determination which exhibits these two properties, calibrated to match the data. Simulating the model using the historical relative GDP per capita for each country, we find that for most countries, there is a close fit between the actual and simulated real exchange rate. In terms of policy relevance, the model can offer suggestions of the degree to which real exchange rates in Europe (both in and out of the eurozone) have been overvalued (by approximately 15% in Greece and Portugal and 6% in Italy and Spain).
{"title":"Trends in European Real Exchange Rates","authors":"Martin Berka, M. Devereux","doi":"10.1111/1468-0327.12006","DOIUrl":"https://doi.org/10.1111/1468-0327.12006","url":null,"abstract":"We study a newly created panel data set of relative prices for a large number of consumer goods among 31 European countries over a 15‐year period. The data set includes eurozone members both before and after the inception of the euro, floating exchange rate countries of Western Europe, and emerging market economies of Eastern and Southern Europe. We find that there is a substantial and continuing deviation from purchasing power parity (PPP) at all levels of aggregation, both for traded and non‐traded goods, even among eurozone members. Real exchange rates (RER) exhibit two clear properties in the sample (a) they are closely tied to gross domestic product (GDP) per capita relative to the European average, at all levels of aggregation and for both cross country time series variation; (b) they are highly positively correlated with variation in the relative price of non‐traded goods. We then construct a simple two‐sector endowment economy model of real exchange rate determination which exhibits these two properties, calibrated to match the data. Simulating the model using the historical relative GDP per capita for each country, we find that for most countries, there is a close fit between the actual and simulated real exchange rate. In terms of policy relevance, the model can offer suggestions of the degree to which real exchange rates in Europe (both in and out of the eurozone) have been overvalued (by approximately 15% in Greece and Portugal and 6% in Italy and Spain).","PeriodicalId":236508,"journal":{"name":"Wiley-Blackwell: Economic Policy","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114739495","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper suggests an integrated approach to study selection into and consequences of five modes of preferential economic integration agreements (PEIAs): goods trade agreements (GTAs), services trade agreements (STAs), double taxation treaties (DTTs), bilateral investment treaties (BITs), and currency unions as well as currency pegs (CUAs). A detailed descriptive analysis reveals typical integration patterns, with DTTs and BITs often being first steps towards deeper integration. We consider the effects of PEIAs on bilateral goods trade, services trade, and FDI and provide conclusive evidence that single and combined PEIAs are associated with positive effects not only on single outcome but typically on all outcomes. Investment liberalization through DTTs and BITs seems to be particularly beneficial since concluding them alone or in any combination with other agreements encourages goods trade even more than the liberalization of goods trade per se.
{"title":"Multiple Faces of Preferential Market Access: Their Causes and Consequences","authors":"P. Egger, G. Wamser","doi":"10.1111/1468-0327.12003","DOIUrl":"https://doi.org/10.1111/1468-0327.12003","url":null,"abstract":"This paper suggests an integrated approach to study selection into and consequences of five modes of preferential economic integration agreements (PEIAs): goods trade agreements (GTAs), services trade agreements (STAs), double taxation treaties (DTTs), bilateral investment treaties (BITs), and currency unions as well as currency pegs (CUAs). A detailed descriptive analysis reveals typical integration patterns, with DTTs and BITs often being first steps towards deeper integration. We consider the effects of PEIAs on bilateral goods trade, services trade, and FDI and provide conclusive evidence that single and combined PEIAs are associated with positive effects not only on single outcome but typically on all outcomes. Investment liberalization through DTTs and BITs seems to be particularly beneficial since concluding them alone or in any combination with other agreements encourages goods trade even more than the liberalization of goods trade per se.","PeriodicalId":236508,"journal":{"name":"Wiley-Blackwell: Economic Policy","volume":"30 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122021284","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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