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541. Home Bias, Transactions Costs, And Prospects For The Euro: A More Detailed Analysis

Author:
Catherine L. Mann and Ellen E. Meade
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper brings together the literature on determination of home bias in equity holdings and the portfolio balance model of exchange rates to consider whether the dollar might be affected by a change in transactions costs that alters international portfolio allocations. Our empirical findings lend support to the view that transactions costs have a significant influence on US portfolio holdings, even after accounting for float market share. In addition, new survey evidence on the equity holdings of European firms indicates home bias for European investors, and points to a reduction in the magnitude of this home bias since 1997.
Topic:
Economics and International Trade and Finance
Political Geography:
United States and Europe

542. Europeanization and the Retreat of the State

Author:
Volker Schneider and Frank M. Häge
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
Is the state on the retreat? We examine this question through an analysis of changing patterns of government involvement in infrastructure provision, which is generally considered to be one of the primary functions of the modern state. Based on an analysis of the extent of privatization of infrastructure companies between 1970 and 2000 across twenty-six OECD countries, we find that there is indeed a general trend towards less public infrastructure provision visible in all of the countries and that the main factors associated with the extent of privatizations are EU membership and government ideology. We argue that the trend of privatizing infrastructure companies was triggered by a change of the prominent economic discourse in the 1970s and that a rightist party ideology and EU membership fostered the adoption and implementation of these ideas in domestic settings.
Topic:
Development, Economics, and Government
Political Geography:
Europe

543. Spain in the EU: fifteen years may not be enough

Author:
Miguel Sebastian
Publication Date:
11-2002
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
Europe has been the driving force of economic policy in Spain over the last four decades and the key factor behind the modernization and globalisation of the Spanish Economy. The accession to the EEC in 1986 was a crucial step in the process of economic and political integration.
Topic:
Economics and International Trade and Finance
Political Geography:
Europe

544. Temporary work agencies and equilibrium unemployment

Author:
Michael Neugart and Donald Storrie
Publication Date:
10-2002
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
A striking feature of OECD labor markets in the 1990s has been the very rapid increase of temporary agency work. We augment the equilibrium unemployment model as developed by Pissarides and Mortensen with temporary work agencies in order to focus on their role as matching intermediaries and to examine the aggregate impact on employment. Our model implies that the improvement in the matching efficiency of agencies led to the emergence and growth of temporary agency work. We also show that temporary agency work does not necessarily crowd out other jobs.
Topic:
Development, Economics, and Politics
Political Geography:
Europe

545. Building the Dual Earner/Dual Carer Society: Policy Developments in Europe

Author:
Marcia Meyers and Janet Gornick
Publication Date:
10-2002
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
A new model of work and family life is emerging out of contemporary debates on social citizenship and the characteristics of the “woman-friendly” welfare state. The dual-earner/ dual-carer model refers to a social and economic arrangement in which men and women engage symmetrically in both paid work in the labor market and in unpaid work in the home. Parents' ability to balance family and market responsibilities, and to allocate employment and childcare-giving equally between mothers and fathers, could be facilitated by a package of state policies. Three areas of supportive policy – all invarious states of development across Europe – include: (1) family leave schemes that provide job protections and wage replacement for parents of young children; (2) affordable, high quality early childhood education and care, to a limited extent for very young children and to a much larger extent for children aged three to school-age; and (3) labor market regulations aimed at shortening the standard work week and strengthening re-muneration for reduced-hour employment. In this paper, we review European policy provisions, and then turn our attention to the United States case. We suggest that embracing the vision of the dual-earner/ dual-carer society may help to draw diverse but unified support for family policy development in the United States.
Topic:
Economics, Government, and Human Welfare
Political Geography:
United States and Europe

546. Three Worlds of Working Time: Policy and Politics in Work-time Patterns of Industrialized Countries

Author:
Brian Burgoon and Phineas Baxandall
Publication Date:
09-2002
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
Given the underdeveloped attention to political and policy origins of aggregate work time patterns in the work-time literature, and the lack of any significant attention to work-time in the broader comparative political economy literature, this paper has pursues a broad mandate: to bring more politics into the study of work-time, and work-time into the study of politics. Using data allowing better comparison among OECD countries, we argue that study of working time needs to consider annual hours per employee and per working-age person, shaped by a range of social as well as direct work-time policies. We also argue that union interest in work-time reduction is more ambiguous than customarily supposed, with union interests likely mediated by a range of other conditions, especially female labor market participation and female union membership. Finally, we argue that attention to party systems and policy clusters should begin with consideration of Social Democratic, Liberal and Christian Democratic worlds of work time. We support these arguments with cross-section time-series study of 18 OECD countries, and brief qualitative studies of work-time in Finland, the United States, and the Netherlands.
Topic:
Economics and Industrial Policy
Political Geography:
United States, Europe, and Netherlands

547. Economic Policy Coordination in EMU: Institutional and Political Requirements

Author:
Stefan Collignon
Publication Date:
05-2002
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
This paper looks at the macroeconomic performance of EMU since it started in 1999. It argues that Euroland has benefited from a benign environment, appropriate monetary policy and structural reforms. However, there is no institution clearly in charge of formulating coherent economic policies in Euroland and this is reflected in the euro's external value. The paper then evaluates the need for policy coordination, distinguishing between weak and strong forms of coordination failure. It shows that intergovernmental coordination may be an answer to the latter, pareto-improving multiple equilibria. However, overcoming weak coordination failure requires further policy delegation to the EU-level, particularly for the definition of an aggregate fiscal policy stance. Yet, this is only possible if the democratic deficit resulting from intergovernmental cooperation is closed by a European-wide policy consensus. To achieve this should be the objective of a European constitution.
Topic:
Economics, Government, and International Cooperation
Political Geography:
Europe

548. European Monetary Union: between the stakeholder and the stockholder models of capitalism

Author:
Carlos A. Rozo
Publication Date:
05-2002
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
From the mid-1980s on a new attitude towards self-determination appeared in Western European integration. With the Maastricht Treaty of 1992 and, later, with the Amsterdam Treaty of 1997 the member countries of the European Community manifested their determination to be active players in the new international order. Accepting and instituting the single market and monetary union constituted, however, a challenge of compatibility between the traditional model of welfare European capitalism and the impositions coming from globalization under the neo-liberal model of Anglo-Saxon capitalism. This issue is examined here under two perspectives. The first reviews the implications which globalization has had on the European model of capitalism and the second the complications for monetary management as Europe moves from a nationally regulated to a union regulated financial structure.
Topic:
International Relations, Economics, and Treaties and Agreements
Political Geography:
Europe

549. Kosovo/a Standing Technical Working Group, Thirteenth Meeting: Integration Returns

Author:
Robert Curis
Publication Date:
06-2002
Content Type:
Working Paper
Institution:
European Centre for Minority Issues
Abstract:
The International Community should concentrate its efforts on the process of returns rather than looking to the numbers of individual returnees. . The present authorities (Provisional Institutions of Self Government – PISG – and United Nations Mission In Kosovo) should be assisted in promoting the right of all Internally Displaced Persons to return to their homes or remain in their present domicile, through ensuring the necessary social, institutional and legal preconditions for minorities to remain in Kosovo. This will help in promoting confidence building and dialogue that work toward reconciliation and tolerance between communities. . Financial assistance should be given towards organizing a proper education system for young people – if the process of returns targets only older people the effectiveness of the process is at stake. Financial support for returns should continue to be provided. Financial and technical assistance should be provided to finish projects begun in the last few years (reconstruction of houses, etc.)
Topic:
Civil Society, Development, and Economics
Political Geography:
Europe

550. Kosovo/a Standing Technical Working Group, Eleventh Meeting: Economic Development and Labour

Author:
Graham Holliday
Publication Date:
12-2002
Content Type:
Working Paper
Institution:
European Centre for Minority Issues
Abstract:
The Standing Technical Working Group (STWG) was established in March 2001 to address important issues of public policy in Kosovo/a at a technical level. It is composed of experts from Kosovo/a NGOs, the political parties and other civil society representatives. Its membership is fully interethnic and it prides itself on being able to conduct debate in Kosovo/a in an interethnic way. The Group reviews technical aspects of current policy and formulates proposals and critical questions in relation to them. It then seeks to engage the relevant appointed local and international representatives on these issues. In response to the changed political environment in Kosovo/a following the Assembly elections in November 2001, the Group sought to enhance its role in public policy analysis and development through the establishment of four expert working groups. These Expert Committees (ECs) have devoted their activities in 2002 to monitoring policy developments in four areas considered most relevant to the needs of all communities in Kosovo/a. One of these is the Expert Committee on Economic Development and Labour.
Topic:
Civil Society, Development, and Economics
Political Geography:
Europe

551. Criteria Of Success And Failure In Hungary's Democratisation Process – A Methodological Experiment For Comparable National Case Studies

Author:
Zoltan Martinusz
Publication Date:
10-2002
Content Type:
Working Paper
Institution:
Geneva Centre for Security Sector Governance (DCAF)
Abstract:
The objective of this paper is to provide a brief general analysis of the democratisation of the security sector in Hungary in the decade following the political changes of 1989-1990 and highlight elements of success and failure. It must be underlined at the very beginning that the following analysis is of an experimental nature and is intended to serve more as a basis for future debate than an ultimate framework and example for similar analyses regarding other countries.
Topic:
Security, Democratization, and Economics
Political Geography:
Europe and Hungary

552. How does globalisation affect local production and knowledge systems? The surgical instrument cluster of Tuttlingen, Germany

Author:
Gerhard Halder
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
Institute for Development and Peace
Abstract:
The recent discussion of the winners and losersfrom globalisation has given prominence to regional development and industrial clusters in the global organisation of production and know-how. Tuttlingen, in southern Germany, is the recognised world leader in the global surgical instruments industry. However, price competition from emerging low-cost locations in South and South/East Asia and Eastern Europe, and rapid technological developments in medical engineering pose new challenges for the Tuttlingen cluster. In the past, institutional joint action was one of the pillars of the cluster's success, but there are doubts as to whether such institutions can face the new challenges. New public-private initiatives suggest a way forward, but it is too early to gauge their impact. In the past there wereimportant examples of small and medium sized firms coming togetherin joint marketing, production, and research and development efforts. While they continue, local competition has become more intense, making inter-firm co-operation more difficult. Some firms do, however, co-operate with suppliers further down the value chain, particularly those in Pakistan and Malaysia. The new challenges are also leading to further differentiation, both amongst firms as well as between producers and traders within the cluster. The most radical forms of product and functional upgrading are being concentrated in the cluster' sleading large firms. Innovation seems to be linked to close ties with end-users, the concentration of knowledge in medical engineering, and changes in surgical practices and health care delivery. Thus, the cluster while the 'big fish' in its own pond of surgical instruments, is having to come to terms with being a 'small fry' in the larger sea that constitutes the global health care sector.
Topic:
Development, Economics, Globalization, and Regional Cooperation
Political Geography:
Europe, East Asia, and Germany

553. Substitutability Cross-Stream Between Oriented Markets: Conventions in the Wine Sector of France

Author:
Harrison C. White
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
Institute for Social and Economic Research and Policy at Columbia University
Abstract:
I explicitly model the social mechanism that constructs markets. Producers array along a market profile along which buyers trade off quality for volume. Outcome features can be predicted from two ratios of parameters, yielding a MAP. Five distinct families of market cultures correspond to its regions. As previous work showed, Supply equaling Demand is transmuted into matchings across local variabilities of valuation with volume and with quality. Such matching is vulnerable to unraveling, but it can be achieved with market oriented either upstream or downstream.
Topic:
Economics and Industrial Policy
Political Geography:
Europe and France

554. Inflation Persistence and Optimal Monetary Policy in the Euro Area

Author:
Pierpaolo Benigno and J. David Lopez-Salido
Publication Date:
12-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
In this paper we first present supporting evidence of the existence of heterogeneity in inflation dynamics across euro area countries. Based on the estimation of New Phillips Curves for five major countries of the euro area, we find that there is significant inertial (backward looking) behavior in inflation in four of them, while inflation in Germany has a dominant forward looking component. In the second part of the paper we present an optimizing agent model for the euro area emphasizing the heterogeneity in inflation persistence across regions. Allowing for such a backward looking component will affect the evaluation of the degree of nominal rigidities relevant for the monetary policy design. We explore the welfare implications of this circumstance by comparing the adjustment of the economies and the area as a whole in response to terms-of-trade shocks under four monetary policy rules: fully optimal, optimal inflation targeting, HICP targeting and output gap stabilization.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
Europe

555. The Road to Adopting the Euro: Monetary Policy and Exchange Rate Regimes in EU Candidate Countries

Author:
Fabio M. Natalucci and Federico Ravenna
Publication Date:
12-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper examines the choice of exchange rate regime in EU candidate countries during the process of accession to the European Monetary Union (EMU). In the presence of real exchange rate appreciation due to the Balassa-Samuelson effect, candidate countries face a trade-off between trend appreciation of the nominal exchange rate and high inflation rates. In a general equilibrium model of an emerging market economy, we show that under a fixed or heavily managed exchange rate the Balassa-Samuelson effect might prevent compliance with the Maastricht inflation criterion, unless a contractionary policy is adopted. We then discuss how the real exchange rate appreciation shifts the output gap/inflation variance trade-off, increasing the cost of managing or fixing the exchange rate. As a consequence, the requirement of membership in the Exchange Rate Mechanism (ERM-II) and the Maastricht inflation criterion constrain the policy choice while providing no additional benefit to countries credibly committed to joining the Euro. Finally, we show that relaxing either the exchange rate requirement or the inflation criterion has sharply different business cycle implications for the accession countries.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
Europe

556. Monetary Union, Price Level Convergence, and Inflation: How Close is Europe to the United States?

Author:
John H. Rogers
Publication Date:
10-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
In light of 50 years of economic policies designed to integrate Europe -- culminating in the elimination of euro zone national currencies in early 2002 -- and a vast academic literature on international economic integration, it is of interest to assess how far European integration has come in practice. Using a unique data set, I document the pattern of price dispersion across European and U.S. cities from 1990 to 2001. I find a striking decline in dispersion for traded goods prices in Europe, most of which took place between 1991 and 1994. The level of traded goods price dispersion in the euro area is now quite close to that of the United States. A decline in dispersion of non-tradeables prices in Europe has also taken place, but to a smaller extent. For U.S. cities, there is no evidence of a decline in price dispersion, even for tradeables. I examine several possible explanations for the decline in European price dispersion, including harmonization of tax rates, convergence of incomes and labor costs, liberalization of trade and factor markets, and increased coherence of monetary policy. I also investigate how much of the variation in national inflation rates in Europe can be explained by price level convergence. Finally, after showing that prices in likely next-round entrants into the euro zone are well below prices in Western Europe, I discuss the potential inflationary consequences of accession into monetary union for Eastern Europe.
Topic:
Economics and International Trade and Finance
Political Geography:
United States and Europe

557. Equity Prices, Household Wealth, and Consumption Growth in Foreign Industrial Countries: Wealth Effects in the 1990s

Author:
Carol C. Bertaut
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Although most recent empirical research regarding the size and significance of the impact of changes in wealth on consumption has looked for such effects in the United States, equity prices in the 1990s rose considerably in most other industrial countries as well. This paper investigates the strength of the wealth effect across countries. Using a variety of methods, I find evidence of significant wealth effects in the United Kingdom and Canada of a size comparable to that in the United States, reflecting the importance of equities in aggregate household wealth in these countries. A significant wealth effect is also evident in Japan, but because household wealth has changed little on balance in Japan in recent years, this channel has been less important in explaining Japanese consumption growth in the second half of the 1990s. Despite a rapid appreciation in equity prices and an increase in equity ownership in the major continental European countries since 1995, equities remain a less important form of household wealth in most of these countries, and the consumption response to changes in wealth remains limited. However, in some smaller European countries where equity issuance is more common, the emerging evidence suggests that wealth effects may be more important.
Topic:
International Relations, Economics, Globalization, and International Trade and Finance
Political Geography:
United States, United Kingdom, Europe, and Canada

558. International Coordination of Macroeconomic Policies: Still Alive in the New Millennium?

Author:
Joseph E. Gagnon, Dale W. Henderson, Brian M. Doyle, and Laurence H. Meyer
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
In this paper we provide two building blocks for an analysis of international policy coordination: (1) a survey of models of policy coordination, and (2) an account of experience with policy coordination among the G-7 countries and within Europe since the breakdown of the Bretton Woods System. Using these building blocks, we investigate the correspondence between the models and experience and attempt to draw lessons for both the modelers and the practitioners. We find that the correspondence is close enough that the models help in analyzing several instances of actual policy coordination, but that the correspondence could be even closer. As for lessons for modelers, we suggest that they devote more attention to the analysis of information exchange, a key feature of practical policy coordination; to the coordination of different types of policies; to the ramifications of political divisions within countries; and to the implications of market irrationality and speculative bubbles. As for lessons for policy makers, we suggest that they give more consideration to the choice of their ultimate objectives, in particular to whether the current account should always be close to balance; to achieving better internal policies; and to the greater use of fiscal policy as a stabilization tool.
Topic:
International Relations, Economics, Globalization, and International Trade and Finance
Political Geography:
Europe

559. Regional Influences on U.S. Monetary Policy: Some Implications for Europe

Author:
Ellen E. Meade and D. Nathan Sheets
Publication Date:
02-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper looks at the monetary policy decisions of the U.S. Federal Reserve and asks whether those decisions have been influenced solely by national concerns, or whether regional factors have played a role. All of the Federal Reserve's policymakers have some regional identity, i.e., either their positions explicitly carry some regional affiliation or their region of origin is a factor that must be considered in the selection process. This research is relevant for the Fed, and it may also be relevant for Europe's fledgling central bank in Frankfurt. Critics have asserted that ECB policymakers have an incentive to base policy on national developments and respond to national political pressures. We find that Fed policymakers do take into account developments in regional unemployment when deciding monetary policy, and that these regional developments are more important for central bankers at the hub than in the spokes. These findings are robust to a variety of different specifications of the voting equation.
Topic:
Economics and International Trade and Finance
Political Geography:
United States and Europe

560. Precocious British Industrialization: A General Equilibrium Perspective

Author:
N.F.R. Crafts and C. Knick Harley
Publication Date:
01-2002
Content Type:
Working Paper
Abstract:
The British industrial revolution created an industrial economy. While casual discourse conflates industrialization and economic growth, Britain was remarkable primarily for the pronounced structural change that occurred rather than for rapid economic growth. Uniquely the British labour force became highly industrialized even prior to the move to free trade in the 1840s. On the eve of the abolition of the Corn Laws the share of agriculture in employment had already declined to levels that were not reached in France and Germany until the 1950s.
Topic:
Economics and Industrial Policy
Political Geography:
Britain, Europe, France, and Germany