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1002. A Revived Bretton Woods System? Implications for Europe and the United States
- Author:
- Edwin M. Truman
- Publication Date:
- 02-2005
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- This note addresses three topics: (1) Do the recent musings by Dooley, Folkerts-Landau, and Garber (DFG), in particular their argument that the world is operating under a revived Bretton Woods system (BW2), provide a useful framework for thinking about international economic and financial developments and prospects? (2) What does the DFG framework imply for the euro area, and are those implications reasonable? (3) What does the DFG framework imply for the United States, and are those implications reasonable?
- Topic:
- Development and Economics
- Political Geography:
- United States and Europe
1003. Germany and the Future of the Transatlantic Economy
- Author:
- Jan Neutze and Philipa Tucker
- Publication Date:
- 08-2005
- Content Type:
- Policy Brief
- Institution:
- Atlantic Council
- Abstract:
- A senior delegation from the Atlantic Council of the United States, led by W. Bowman Cutter and Paula Stern, visited key government, parliamentary, and private sector stakeholders in Frankfurt, Berlin, and Brussels in spring 2005. The delegation presented the findings of the Atlantic Council report, "The Transatlantic Economy in 2020: A Partnership for the Future?" to numerous business, government, and think tank audiences. This report summarizes the delegation's discussions.
- Topic:
- Development, Economics, and International Trade and Finance
- Political Geography:
- United States, Europe, Germany, and Berlin
1004. Why Are German Employers Associations Declining? A Challenge to the Conventional Wisdom
- Author:
- Wolfgang Schroeder and Stephen J. Silvia
- Publication Date:
- 09-2005
- Content Type:
- Working Paper
- Institution:
- Minda de Gunzburg Center for European Studies, Harvard University
- Abstract:
- This paper challenges the conventional explanation for declining density of German employers associations. The dominant account asserts that German trade unions have taken advantage of increased globalization since the 1980s – which has made internationally active enterprises more vulnerable to production disruptions – to extract additional monopoly rents from multinational employers via aggressive collective bargaining. Small firms have responded to the increased union pressures by avoiding member ship employers associations, which has produced the density declines. Data, however, disconfirm the conventional explanation; compensation increases have actually become increasingly smaller over the decades. This paper presents an alternative explanation that is consistent with the data. We argue that it is the large product manufacturers rather than the trade unions that have greatly increased price pressures on parts suppliers, which has led to a disproportionate number of suppliers to quit employers associations. The paper also discusses these findings in light of the “varieties of capitalism” literature. It points out that this literature has depicted national models as too homogeneous. The decision of several German employers associations to offer different classes of membership represents an accentuation of variety within national varieties of capitalism.
- Topic:
- Civil Society, Economics, and Politics
- Political Geography:
- Europe
1005. The Politics of Budget Consolidation In Britain and Germany: The Impact of Blame-Avoidance Opportunities
- Author:
- Reimut Zohlnhöfer
- Publication Date:
- 07-2005
- Content Type:
- Working Paper
- Institution:
- Minda de Gunzburg Center for European Studies, Harvard University
- Abstract:
- According to parts of the literature, blame avoidance opportunities, i.e. the necessity and applicability of blame avoidance strategies, may differ among countries according to the respective institutional set-ups and between governing parties according to their programmatic orientation. In countries with many veto actors, a strategy of "Institutional Cooperation" among these actors is expected to diffuse blame sufficiently to render other blame avoidance strategies obsolete. In contrast, governments in Westminster democracies should resort to the more unilateral strategies of presentation, policy design and timing. At the same time, parties of the left are expected to have an easier time implementing spending cuts while right parties are less vulnerable when proposing tax increases. Evidence from the politics of budget consolidation in Britain and Germany does not corroborate these hypotheses. Instead, it seems that party competition conditions the effects institutions and the partisan complexion of governments have on the politics of blame avoidance.
- Topic:
- International Relations, Economics, and Politics
- Political Geography:
- Europe
1006. Endogenous OCA Theory: Using the Gravity Model to Test Mundell's Intuition
- Author:
- Hubert P. Janicki, Thierry Warin, and Phanindra Wunnava
- Publication Date:
- 06-2005
- Content Type:
- Working Paper
- Institution:
- Minda de Gunzburg Center for European Studies, Harvard University
- Abstract:
- This paper presents an empirical assessment of the endogenous optimum currency area theory. This study relies on the original intuition developed by Mundell in 1973. The gravity model is used to empirically assess the effectiveness of the convergence criteria by examining location specific advantages that guide multinational investment within the European Union. A fixed effects model based on a panel data of foreign direct investment (FDI) flows within the EU-15 shows that horizontal investment promotes the diffusion of the production process across the national border. Specifically, the examined Maastricht criteria suggest convergence in interest rate, government fiscal policy, and debt play a significant role in attracting multinational investment.
- Topic:
- Economics, International Political Economy, and International Trade and Finance
- Political Geography:
- Europe
1007. Fiscal Perspectives in Europe: Convergence and Debt's Burden
- Author:
- Thierry Warin
- Publication Date:
- 06-2005
- Content Type:
- Working Paper
- Institution:
- Minda de Gunzburg Center for European Studies, Harvard University
- Abstract:
- The paper addresses the question of the fiscal perspectives within the Economic and Monetary Union (EMU). By using a panel data analysis associated with an interpretation in terms of differences instead of levels, the results show a steady convergence of public deficits across the EMU, and that the EMU needs either to comply with the Lisbon agenda, or some kind of a growth strategy, or reduce the interest of the debt in order to regain some fiscal flexibility while abiding by the Stability and Growth Pact (SGP).
- Topic:
- International Relations, Debt, and Economics
- Political Geography:
- Europe
1008. Campaigning in Poetry, Governing in Prose
- Author:
- David Coates
- Publication Date:
- 04-2005
- Content Type:
- Working Paper
- Institution:
- Minda de Gunzburg Center for European Studies, Harvard University
- Abstract:
- New Labour's performance in office–as an orchestrator of economic and social change–is situated against, and evaluated by reference to, two sets of legacies: legacies inherited from the years of Conservative political dominance after 1979; and legacies brought to power by New Labour. The paper argues that the first se t of legacies was deep and enduring, and threw a long shadow forward. It argues that the second set of legacies were highly coherent and intellectually informed, but cumulatively involved a diminution in the capacity of the state. The result has been a two-term government that is sufficiently superficially successful to win a third term; but which has yet seriously to transform the legacies it inherited: to our misfortune, and ultimately–in electoral terms–also probably to its own. This paper is based on my study of New Labour's domestic policy–Prolonged Labour: The Slow Birth of New Labour Britain; I have also co-authored a study of New Labour's policy towards Iraq–Blair's War–which was published by Polity Press in 2004.
- Topic:
- Civil Society, Economics, and Politics
- Political Geography:
- Europe
1009. Still Two Models of Capitalism? Economic Adjustment in Spain
- Author:
- Sebastián Royo
- Publication Date:
- 04-2005
- Content Type:
- Working Paper
- Institution:
- Minda de Gunzburg Center for European Studies, Harvard University
- Abstract:
- The proponents of globalization contend that European countries are now converging on an Anglo-American model of capitalism. Contrary to this prediction, this paper will show that in Spain globalization and EMU have promoted rather than undermined coordination among economic actors. Unable to escape from economic interdependence the Spanish economic actors have developed coordinating capacities at the macro and micro levels to address and resolve tensions between economic interdependence and political sovereignty. In this paper I show that there is at least one more variety than the two–LME and CME–that Hall and Soskice cite and also that it is possible to develop coordination capacities in countries that lack a strong tradition of such capacities. In particular, this paper analyzes the resurgence of national-level social bargaining in Spain in the 1990s. This development was the result of the reorientation of the strategies of the social actors. In a new economic and political context, marked by a process of institutional learning, trade unions have supported social bargaining as a defensive strategy to retake the initiative and influence policy outcomes.
- Topic:
- Economics, Globalization, and Politics
- Political Geography:
- Europe
1010. The Politics of Institutional Learning and Creation: Bank Crises and Supervision in East Central Europe
- Author:
- Gerald A. McDermott
- Publication Date:
- 04-2005
- Content Type:
- Working Paper
- Institution:
- Minda de Gunzburg Center for European Studies, Harvard University
- Abstract:
- This article examines the political conditions shaping the creation of new institutional capabilities. It analyzes bank sector reforms in the 1990s in three leading postcommunist democracies–Hungary, Poland, and the Czech Republic. It shows how different political approaches to economic transformation can facilitate or hinder the ability of relevant public and private actors to experiment and learn their new roles. With its emphasis on insulating power and rapidly implementing self-enforcing economic incentives, the “depoliticization” approach creates few changes in bank behavior and, indeed, impedes investment in new capabilities at the bank and supervisory levels. The “deliberativ e restructuring” approach fostered innovative, cost-effective monitoring structures for recapitalization, a strong supervisory system, and a stable, expanding bank sector.
- Topic:
- International Relations, Economics, and Politics
- Political Geography:
- Europe, Eastern Europe, Poland, and Hungary
1011. Western Capital vs. the Russian State: Towards an Explanation of Recent Trends in Russia's Corporate Governance
- Author:
- Stanislav Markus
- Publication Date:
- 03-2005
- Content Type:
- Working Paper
- Institution:
- Minda de Gunzburg Center for European Studies, Harvard University
- Abstract:
- The literature on corporate governance in Russia stresses the abuse of shareholder rights in the face of various asset-diversion tactics by the management. Attributing this fiasco to a number of structural obstacles and the privatization legacy, the orthodox account fails to incorporate–let alone explain–the recent data demonstrating a qualitative improvement of corporate governance in crucial segments of the Russian economy. This paper disaggregates “corporate governance” into specific institutions and examines their quality at the firm level as well as by sector. The data supporting the analysis is drawn from recent studies by the OECD, UBS Warburg, CEFIR, and other organizations. The causal inference presented in this paper critically evaluates the impact of foreign capital on the improved corporate governance in Russia's blue-chip firms. The paper presents two alternative state-centered scenarios to explain the implementation of internationally accepted standards of corporate governance by Russia's big business.
- Topic:
- Economics, International Trade and Finance, and Politics
- Political Geography:
- Russia, Europe, and Asia
1012. Selling off the "Family Silver": The Politics of Privatization in the OECD 1990-2000
- Author:
- Reimut Zohlnhöfer and Herbert Obinger
- Publication Date:
- 03-2005
- Content Type:
- Working Paper
- Institution:
- Minda de Gunzburg Center for European Studies, Harvard University
- Abstract:
- The 1990s have witnessed unprecedented attempts at privatizing state owned enterprises in virtually all OECD democracies. This contribution analyzes the differences in the privatization proceeds raised by EU and OECD countries between 1990 and 2000. It turns out that privatizations are part of a process of economic liberalization in previously highly regulated economies, as well as a reaction to the fiscal policy challenges imposed by European integration and the globalization of financial markets. In addition, institutional pluralism and union militancy yield significant and negative effects on privatization proceeds. Partisan differences only emerge if economic problems are moderate, while intense economic, particularly fiscal, problems foreclose differing partisan strategies.
- Topic:
- Economics, Globalization, and Politics
- Political Geography:
- Europe
1013. The Spread of Neoliberalism: U.S. Economic Power and the Diffusion of Market-Oriented Tax Policy
- Author:
- Duane Swank
- Publication Date:
- 03-2005
- Content Type:
- Working Paper
- Institution:
- Minda de Gunzburg Center for European Studies, Harvard University
- Abstract:
- I offer an explanation for the widespread diffusion of neoliberal tax policies in the developed democracies. Specifically, I argue that the highly visible 1980s market-conforming tax reform in the United States, the late twentieth century's dominant political economy, creates significant incentives for adoption of neoliberal tax policies by decision makers in other polities. As such, I stress a dominant actor model of the diffusion of neoliberalism that is grounded in asymmetric competition for mobile assets and policy learning. However, while the incentives to follow U.S. tax policy are substantial, the relative weight assigned the costs and benefits of reform and, in turn, the pace and degree of neoliberal policy adoption by other nations is fundamentally contingent on features of domestic political and economic environments. I assess these arguments with empirical models of 1981-to-1998 tax rates on capital in sixteen nations. I find that changes in U.S. tax policy influence subsequent reforms in other polities; in the long-term, all nations move toward the U.S. neoliberal tax structure. Analysis also shows, however, that the responsiveness to US tax reforms is notably greater where linkages with U.S. markets are stronger, where domestic economic stress is deeper, and where uncoordinated market institutions are dominant. I conclude with a discussion of the implications of the present analysis for the volume's central questions: are dominant. I conclude with a discussion of the implications of the present analysis for the volume's central questions: of international policy interdependence and domestic political economic forces in shaping policy change?
- Topic:
- Economics and Politics
- Political Geography:
- United States and Europe
1014. Is Europe Becoming the Most Dynamic Knowledge Economy in the World?
- Author:
- Daniele Archibugi and Alberto Coco
- Publication Date:
- 01-2005
- Content Type:
- Working Paper
- Institution:
- Minda de Gunzburg Center for European Studies, Harvard University
- Abstract:
- The paper discusses the condition and perspective of the European Union in the knowledge economy and the feasibility of the goal given by the European Council at the Summits held in Lisbon (March 2000) and Barcelona (March 2002), that is, to increase European R expenditure up to 3 percent of GDP by 2010. The paper focuses on two aspects: comparative performance with its direct counterparts, in particular the US..; and intra-European distribution of resources and capabilities. A set of technological indicators is presented to show that Europe is still in a consistent delay when compared to Japan and the U.S., especially in R investment and in the generation of innovations. A small convergence occurs in the diffusion of Information and Communication Technologies (ICTs), the sector most directly linked to the concept of the "new economy." In the field of knowledge collaboration, Europe reveals opposing paths in the business and in the academic worlds. Within Europe, the level of investment in scientific and technological activities is so different across countries that it does not merge into a single continental innovation system.
- Topic:
- International Relations, Economics, and Science and Technology
- Political Geography:
- Europe and Lisbon
1015. The Challenges of EU Accession for Post-Communist Europe
- Author:
- David R. Cameron
- Publication Date:
- 02-2005
- Content Type:
- Working Paper
- Institution:
- Minda de Gunzburg Center for European Studies, Harvard University
- Abstract:
- The accession of ten new member states in May 2004 and the prospective accession of several more in the near future will pose severe budgetary, administrative, and operational challenges for the European Union. But however great, the challenges of enlargement pale in comparison with the challenges of accession that will be faced by the new member states, especially those which until a decade ago were governed by Communist parties that presided over centrally-planned and predominantly-collectivized economies. This paper explores five of the most critical challenges that will face the new member states of post-Communist Europe: 1) administering the acquis; 2) deepening and extending the reform and transformation of the economy; 3) reducing the high levels of unemployment and large government, trade, and current account deficits; 4) financing accession in the face of the EU’s budgetary constraints and financial provisions; and 5) coping with all of those challenges in the face of low levels of support for enlargement in many of the member states and high levels of ambivalence and skepticism about membership in most of the new member states. The chapter concludes by noting the low levels of trust in the national government and satisfaction with the way democracy works that exist in most of the new member states and suggests that those low levels of trust and satisfaction will make it difficult for the governments in the new member states to address these challenges while also maintaining sufficient public support to retain office.
- Topic:
- Economics and Government
- Political Geography:
- Europe
1016. ¿Integración por la puerta trasera? La incursión del Tribunal de Justicia de las Comunidades Europeas en materia tributaria
- Author:
- Antonio Cubero and Loreno Ruano
- Publication Date:
- 11-2005
- Content Type:
- Working Paper
- Institution:
- Centro de Investigación y Docencia Económicas
- Abstract:
- To what extent do member states control the process of European integration? This question has traditionally confronted Intergovernmentalists with Neo-functionalists and Institutionalists of various sorts. This paper provides evidence that supports the second school of thought and refines its theoretical claims with a case study: the European Court of Justice's jurisprudence on direct taxation. This is a 'hard case', because in this sector, the member states' resistance to the expansion of Community competence has been particularly virulent. It will be shown how, inspite of this, the Court's jurisprudence has ventured in the field of taxation to the point of undermining the principle upon which rest all national fiscal systems (the distinction between residents and non-residents), putting under severe strain the coherence of national tributary systems. The Court's jurisprudence have also had effects on issues pertaining exclusively to national taxation, through the principle of 'inverted non-discrimination'.
- Topic:
- International Relations, Economics, and Government
- Political Geography:
- Europe
1017. Local Government Gender Mechanisms in the GPKT Micro-region
- Author:
- Kristina Hadzi-Vasileva
- Publication Date:
- 07-2005
- Content Type:
- Policy Brief
- Institution:
- EastWest Institute
- Abstract:
- The areas constituting the GPKT micro-region (fYR Macedonia,1 Serbia and Kosovo) belong to some of the least developed countries in Europe. Transition to market economies has been delayed because of armed conflicts, exclusion from the international community during periods of conflict, as well as the slow process of privatization (in the case of fYR Macedonia and Serbia). Despite the fact they once used to be a part of a single country, the current connection between these areas is unfortunately their characterization of political instability and weak institutions, problems compounded by the common struggle to transform their respective economies.
- Topic:
- Economics, Gender Issues, and Government
- Political Geography:
- Europe, Kosovo, Serbia, and Macedonia
1018. The Aspect of Culture in Promoting Social Inclusion in the European Union: Is the Open Method of Co-ordination (OMC) Working for Ethnic Minorities?
- Author:
- Tove H. Malloy
- Publication Date:
- 09-2005
- Content Type:
- Policy Brief
- Institution:
- European Centre for Minority Issues
- Abstract:
- In the context of making the European economic area competitive while reaching certain social and economic goals, the 2000 European Council at Lisbon initiated an ambitious implementation scheme on its Social Agenda introducing the Open Method of Co-ordination (OMC) as an instrument to streamline and optimize Community and Member States’ policies. The OMC method is a ‘soft governance’ approach aimed at generating real political commitment and different types of norms, procedural as well as substantive, through a highly institutionalized process of information sharing, deliberation, monitoring and learning.1 The method was first introduced in the area of employment and has been followed by an OMC on Social Inclusion (OMC/Incl.). Other focus areas are social protection/pensions and health care. The OMC on employment has recently undergone a first evaluation, and the Commission is preparing to subject the OMC/Incl. to its first evaluation.2 No OMC focuses specifically on minority inclusion but the OMC/Incl. has developed into one of the key areas of European Union (EU) policy implementation that addresses the socioeconomic exclusion of members of ethnic and Roma/Sinti minorities.
- Topic:
- Economics, Regional Cooperation, Minorities, European Union, and Social Services
- Political Geography:
- Europe
1019. Trends in Competitive Balance: Is there Evidence for Growing Imbalance in Professional Sport Leagues?
- Author:
- Arne Feddersen and Wolfgang Maennig
- Publication Date:
- 01-2005
- Content Type:
- Working Paper
- Institution:
- Chair for Economic Policy, University of Hamburg
- Abstract:
- The concept of competitive balance is a central aspect in the literature of sports economics. A popular argumentation of sport functionaries is that dominance of one or a few teams could lead to unequal incomes for the clubs, restrictions in the clubs’ ability to improve sporting performance and ultimately to a loss of attractiveness and loss of income for the league. Following this line of reasoning and alleging a negative trend in competitive sports functionaries often try to implement regulations in team sport leagues. The aim of this paper is to analyze for eight different leagues if there is such a trend existing. For an empirical test for trends in competitive balance of four European soccer leagues (ENG, ESP, GER, ITA) and four US Major Leagues (MLB, NBA, NFL, NHL), OLS regressions with a constant were carried out. For the entire observation period from 1969/70 to 2003/2004, of 48 trends ascertained, only 12 could be observed as being significantly positive (i.e. growing imbalance) with 19 significantly negative (i.e. growing balance). The remaining 17 trends were insignificantly different from zero.
- Topic:
- Economics, Sports, Soccer, Competitive Balance, and Sports Leagues
- Political Geography:
- Europe, Global Focus, and United States of America
1020. Through Economy to Democracy and Security? An Integrated Approach to Stability in South East Europe - 7th Workshop of the Study Group "Regional Stability in South East Europe"
- Author:
- Frederic Labarre
- Publication Date:
- 01-2004
- Content Type:
- Working Paper
- Institution:
- Austrian National Defence Academy
- Abstract:
- In contrast to the Central European transition countries, the economies of South East Europe (SEE) have been facing complex and interrelated political and economic problems. The dissolution of Yugoslavia combined with market losses, war in Bosnia and Herzegovina and Croatia, sanctions finally culminating in the Kosovo conflict were the main causes of political and economic instability in the whole region. Taking into account these factors, output recovery has been much slower in SEE than in the Central European countries. Measured in purchasing power standards, Croatia is the best performer in the region, with its GDP at about 38% of the EU average. Next comes Bulgaria (32%), whereas the respective values for Serbia and Montenegro and Albania range between 15-17%. Looking at the economic performance in the 1990-2002 period, Croatia and Romania reached almost 94% of their pre-transitional level in 2002, followed by Bulgaria and Macedonia (about 88% each). Serbia and Montenegro, the worst-affected, reached only about half of what it was in 1990. The cumulative output decline there was one of the largest among all the Central and East European countries.
- Topic:
- NATO, Diplomacy, Economics, Political Economy, and Regional Cooperation
- Political Geography:
- Europe, Bosnia, Herzegovina, Kosovo, Yugoslavia, Bulgaria, Balkans, and Romania
1021. War Economies in a Regional Context: Overcoming the Challenges of Transformation
- Author:
- Kaysie Studdard
- Publication Date:
- 03-2004
- Content Type:
- Working Paper
- Institution:
- International Peace Institute
- Abstract:
- This policy report distills key findings from research commissioned by the International Peace Academy's program on Economic Agendas in Civil Wars (EACW) on the regional dimensions of war economies and the challenges they pose for peacemaking and peacebuilding. Drawing from analytical research as well as case studies of Afghanistan in Central Asia, Sierra Leone in West Africa, and Bosnia and Herzegovina in Southeast Europe, a number of key issues concerning the political economy of regional war economies and lessons for more effective peacebuilding were identified: The notion that internal conflicts have economic "spill over" or "spill into" effects on neighboring states needs to be extended and deepened. Policymakers should work to develop a more comprehensive understanding of the interstate impacts of civil conflict that gives greater weight to systemic cross-border networks and less to potentially 'one-off' transborder phenomena.
- Topic:
- Economics, Peace Studies, Regional Cooperation, and War
- Political Geography:
- Afghanistan, Europe, Central Asia, Bosnia, Herzegovina, and West Africa
1022. Is The Corporate Loan Market Globally Integrated? A Pricing Puzzle
- Author:
- Mark Carey and Gregory P. Nini
- Publication Date:
- 08-2004
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- We offer evidence that interest rate spreads on syndicated loans to corporate borrowers are economically significantly smaller in Europe than in the U.S., other things equal. Differences in borrower, loan and lender characteristics associated with equilibrium mechanisms suggested in the literature do not appear to explain the phenomenon. Borrowers overwhelmingly issue in their natural home market, and bank portfolios display significant home “bias.” This may explain why pricing discrepancies are not competed away, but the fundamental causes of the discrepancies remain a puzzle. Thus, important determinants of loan origination market outcomes remain to be identified, home “bias” appears to be material for pricing, and corporate financing costs differ in Europe and the U.S.
- Topic:
- Economics, Government, and International Trade and Finance
- Political Geography:
- United States and Europe
1023. Benefits and Spillovers of Greater Competition in Europe: A Macroeconomic Assessment
- Author:
- Tamim Bayoumi, Douglas Laxton, and Paolo Pesenti
- Publication Date:
- 04-2004
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- Using a general-equilibrium simulation model featuring nominal rigidities and monopolistic competition in product and labor markets, this paper estimates the macroeconomic benefits and international spillovers of an increase in competition. After calibrating the model to the euro area vs. the rest of the industrial world, the paper draws three conclusions. First, greater competition produces large effects on macroeconomic performance, as measured by standard indicators. In particular, we show that differences in competition can account for over half of the current gap in GDP per capita between the euro area and the US. Second, it may improve macroeconomic management by increasing the responsiveness of wages and prices to market conditions. Third, greater competition can generate positive spillovers to the rest of the world through its impact on the terms of trade.
- Topic:
- Economics, Government, and International Trade and Finance
- Political Geography:
- Europe
1024. The Optimal Degree of Discretion in Monetary Policy
- Author:
- Susan Athey, Andrew Atkeson, and Patrick J. Kehoe
- Publication Date:
- 04-2004
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- How much discretion should the monetary authority have in setting its policy? This question is analyzed in an economy with an agreed-upon social welfare function that depends on the randomly fluctuating state of the economy. The monetary authority has private information about that state. In the model, well-designed rules trade off society's desire to give the monetary authority discretion to react to its private information against society's need to guard against the time inconsistency problem arising from the temptation to stimulate the economy with unexpected inflation. Although this dynamic mechanism design problem seems complex, society can implement the optimal policy simply by legislating an inflation cap that specifies the highest allowable inflation rate. The more severe the time inconsistency problem, the more tightly the cap constrains policy and the smaller is the degree of discretion. As this problem becomes sufficiently severe, the optimal degree of discretion is none.
- Topic:
- Civil Society, Economics, Government, and International Trade and Finance
- Political Geography:
- Europe
1025. Peace-building and Development in Guatemala and Northern Ireland
- Author:
- Charles A. Reilly
- Publication Date:
- 10-2004
- Content Type:
- Working Paper
- Institution:
- Kroc Institute for International Peace Studies, University of Notre Dame
- Abstract:
- Guatemala and Northern Ireland signed historic peace accords in 1996 and 1998 respectively. This paper, part of a longer term project comparing lessons learned from implementation in the two cases, focuses especially on Guatemala, making some middle range peace/development policy recommendations for that country's recently elected government and civil society organizations. Despite very different economic development levels, both countries are divided, find peace implementation difficult, and are heavily influenced by outside actors - including their own diaspora. Guatemala is deeply divided internally along class, race and ethnic lines, with more than 15% of its population in the U.S. (and close affinity with Mayan peoples who live across the Mexican border). Ireland too is divided along religious and ethnic lines, a border crosses the island. The North is linked politically to the United Kingdom, with social ties to emigrant populations there, in the south and in the United States. Guatemala, like its Central American neighbor El Salvador, embarked on peace-building with UN oversight, while the Northern Irish had United Kingdom and Irish Republic support for making peace. (Without pre-judging an eventual political resolution of the two Irelands, I'll refer to both Northern Ireland and the Irish Republic, since that peace process, like Guatemala's, necessarily transcends borders). When compared to Northern Ireland, Guatemalan religious differences are minor, and religious leaders, Catholic, Protestant and Mayan played key roles in the peace process. Emigration figures large in both settings, as do many centuries of colonial or imperial domination. Both countries have struggled with post-accord violence which has reached alarming levels in Guatemala. Peace and development are inseparable - hence I emphasize growth with equity issues that are cause and consequence of both conflicts.
- Topic:
- Development, Economics, and Peace Studies
- Political Geography:
- United States, United Kingdom, Europe, Central America, Mexico, and North Ireland
1026. The Challenge of Poor Governance and Corruption
- Author:
- Jens Chr.1 Andvig
- Publication Date:
- 04-2004
- Content Type:
- Working Paper
- Institution:
- Norwegian Institute of International Affairs
- Abstract:
- The paper is the author's so-called “Opponent paper” to Susan Rose-Ackerman's proposals for good governance and anti-corruption policies at the Copenhagen Consensus 2004 meeting 24–28 May. There the most promising anti-corruption policies had to compete with other best policies at other fields such as fight against AIDS, malaria, hunger prevention, and so on. He argues that while corruption and governance problems are important and may prevent any other kind of policy to succeed, no really effective anti-corruption policy has so far been proposed, and if it was, we wouldn't know that it did. Hence, it would be unreasonable to make a strong claim for anti-corruption projects against their competitors.
- Topic:
- Economics, Human Welfare, and Politics
- Political Geography:
- Europe
1027. Economic Survey of the Czech Republic, 2004
- Publication Date:
- 11-2004
- Content Type:
- Policy Brief
- Institution:
- The Organisation for Economic Co-operation and Development
- Abstract:
- Following accession to the European Union the big issue for the Czech Republic is to strengthen growth prospects. Growth potential at present is somewhat above 3 per cent, implying a moderate pace of catch-up to living standards in the EU and elsewhere. There is room for greater ambition in growth performance, and it is welcome to see this reflected in the programme of the new Czech government. This Survey underscores four main challenges. Fiscal consolidation is the dominant challenge for macroeconomic policy, and is not only necessary to cope with ageing and to bring down the tax burden but is also needed to fulfil euro-area entry conditions. A welcome programme of fiscal reform has begun, including proposals for a system of multi-year aggregate spending ceilings and significant expenditure cuts. However, to date, mainly revenue-raising measures have been implemented while the full impact of expenditure measures is yet to be realised. The attempt to secure broad political consensus on pension reform is commendable, but it must be underscored that whatever reform is finally implemented, it will have to bring considerable fiscal savings. Health-care reform also has to deliver savings, but concrete proposals have yet to be made. To facilitate assessment of the true fiscal position, extra-budgetary funds need to be more fully integrated in mainstream government budgeting procedures. Also, with the further decentralisation of public services, the need for good budgeting practices and accountability in regional and municipal governments is all the more important. The Central Bank and the Ministry of Finance have formulated a transparent strategy for entering the euro area, that foresees minimising the time spent in ERM II. Annual reports will assess the economic conditions in relation to the Maastricht Criteria and a request to enter ERM II will only being made if the probability of a positive first assessment by the EU authorities is high. The choice of a 3 per cent inflation target for the run-up to euro entry is justifiable on medium-term grounds. However there may be some difficulty communicating the consistency of this target with the Maastricht criterion for price stability. The Czech authorities should therefore pay close attention to how the Maastricht criteria are interpreted and applied by the European Commission and the ECB and adjust their communication strategy accordingly. Most of the catch-up in living standards will have to come from boosting productivity growth. This means swifter re-allocation of resources across firms as well as stronger in-firm productivity growth. While the Czech Republic is a strong competitor for attracting foreign direct investment, policy towards poorly performing firms and business start-ups has problems, slowing down the exit and entry of firms. Bankruptcy procedures are cumbersome, often long and usually end up in liquidation, with asset stripping not uncommon. Reforms have long-since been planned, and it is welcome that new legislation looks finally set to go ahead. The legislation aims at strengthening the role of creditors, speeding up proceedings and allowing composition to play a bigger role. Likewise, efforts to streamline business registration are welcome and should be implemented as soon as possible. The general business climate is also damaged by issues in network industry competition, as some services, notably internet, are expensive in international comparison. Mobility between jobs and regions is weak. Administrative extensions of collective wage agreements, strict employment protection legislation (EPL) on individual dismissals, rent control, severe poverty traps (particularly for families) and a high tax wedge have contributed to considerable long-term unemployment. The Roma population is hit especially hard in this respect. Migration is to some extent mitigating the labour-market rigidities with Slovaks filling skilled vacancies and other eastern Europeans (mainly Ukrainians) taking up unskilled jobs that are unattractive for locals. Tackling the unemployment problem requires measures across a wide front, but most notably social benefit reform is needed along with reduction in the tax wedge as well as easing of EPL. The widespread social and economic exclusion of the Roma needs more attention, particularly in the education system. A more open immigration policy is needed to address immediate issues such as the inconsistency between granting work permits as well as for better alignment of immigrants' skills with those needed on the Czech labour market.
- Topic:
- Economics and International Trade and Finance
- Political Geography:
- Europe, Ukraine, and Czech Republic
1028. Economic Survey of Finland, 2004
- Publication Date:
- 10-2004
- Content Type:
- Policy Brief
- Institution:
- The Organisation for Economic Co-operation and Development
- Abstract:
- The transformation of the Finnish economy over the last decade represents one of the few examples of the "new economy" taking hold in Europe. Output and productivity growth over the second half of the 1990s was among the highest in the OECD, and the recovery from the global downturn has been much stronger than for the euro area as a whole. However, imminent population ageing threatens to expose weaknesses in the labour market. Demographic developments, which over past decades have been broadly neutral, could reduce the growth rate of GDP per capita by 1/4 of a percentage point per annum over the remainder of this decade and by almost 1 percentage point over the next decade. This, combined with the likelihood of smaller productivity gains in the information and communication technology (ICT) sector, a continuation of falling ICT prices as well as the mediocre performance in the sheltered sectors, threatens the future growth of living standards. Within a decade, and in the absence of further policy changes, these developments together could imply that Finland not only loses its top performer status but could face a protracted period of slow growth, as illustrated in the following scenario.
- Topic:
- Development, Economics, and International Trade and Finance
- Political Geography:
- Europe
1029. Employment Protection: Costs and Benefits of Greater Job Security
- Publication Date:
- 09-2004
- Content Type:
- Policy Brief
- Institution:
- The Organisation for Economic Co-operation and Development
- Abstract:
- Deregulating labour markets – for example making it easier for firms to hire and fire employees – is at the heart of the employment debate in many OECD countries. Laws on firing or layoffs and other employment protection regulations are thought by many to be a key factor in generating labour market "rigidity", as well as one reason for the large differences in labour market performance among OECD countries, notably between the United States and some of the larger European countries.
- Topic:
- Civil Society, Development, Economics, and Government
- Political Geography:
- Europe
1030. Economic Survey of Portugal, 2004
- Publication Date:
- 09-2004
- Content Type:
- Policy Brief
- Institution:
- The Organisation for Economic Co-operation and Development
- Abstract:
- Convergence of the Portuguese economy toward the more advanced OECD economies seems to have halted in recent years, leaving a significant gap in per capita incomes. The proximate cause is low labour productivity, as employment rates across the board are substantially higher than the EU average. Nor is there a shortage of capital goods in aggregate. But capital equipment in the business sector is not always efficiently used or allocated, and new technologies are not readily adopted. Furthermore, the Portuguese labour force – even its younger members – have had less formal education than workers in other EU countries, including among the new entrants from Central and Eastern Europe, and workers in Portugal also have less access to training than in many other countries. Traditional Portuguese low value-added highly labourintensive products now face increasing competition from developing countries and from the new EU entrants.
- Topic:
- Development, Economics, and Government
- Political Geography:
- Europe and Eastern Europe
1031. Economic Survey of Germany, 2004
- Publication Date:
- 08-2004
- Content Type:
- Policy Brief
- Institution:
- The Organisation for Economic Co-operation and Development
- Abstract:
- With the effects of adverse external shocks diminishing, a strong and competitive export industry is helping the German economy out of a three-year period of near stagnation. Domestic demand has been declining over the last couple of years, as poor labour market performance has weighed on consumer sentiment and business confidence. The labour market still suffers from weak economic growth and distorted incentives, with both contributing to problems in taking up work and providing employment. Productivity growth is not high enough to compensate for the adverse effect of low labour utilization on economic growth. Fiscal targets have been missed on account of both cyclical and structural factors. The government has launched a major reform initiative to reinvigorate economic growth. These reforms are welcome, have to be continued and need to be broadened further to reduce government debt, remove fiscal distortions, and improve incentives to supply and demand labour. Furthermore, there remains considerable scope to foster the creation of new enterprises and widen product market competition, thereby also maintaining the strong innovative capacity of the economy. The major challenges are to link fiscal consolidation to public sector reform and to increase the capacity of the economy to create employment and increase productivity growth. To create confidence and to restore Germany's traditional economic strength it is necessary that reforms reflect a coherent vision about the reorientation of economic policy – combining a growth and stability oriented macroeconomic policy with structural reforms – and are implemented according to a transparent and predictable roadmap.
- Topic:
- Development, Economics, and Industrial Policy
- Political Geography:
- Europe and Germany
1032. Economic Survey of Poland, 2004
- Publication Date:
- 06-2004
- Content Type:
- Policy Brief
- Institution:
- The Organisation for Economic Co-operation and Development
- Abstract:
- Poland has made impressive progress in the transformation of its economy and the accession to the European Union on 1st May 2004 marks another historical event. It follows 15 years of profound change and accomplishment. More than 75 per cent of GDP is now produced in the private sector, the economy is well integrated with those of western European nations and inflation has been brought down to low levels. After an initial fall, output has been growing continuously for more than 10 years and, on average, Poles are much better off now than they were then. However, the striking drop in employment since 1998 is suggestive of serious remaining problems. To address these, much more needs to be done, notably in terms of raising productivity, expanding employment and increasing per capita income, which is 41 per cent of OECD levels.
- Topic:
- Development and Economics
- Political Geography:
- Europe and Poland
1033. Economic Survey of the Netherlands, 2004
- Publication Date:
- 05-2004
- Content Type:
- Policy Brief
- Institution:
- The Organisation for Economic Co-operation and Development
- Abstract:
- The economic downturn in the Netherlands, like the boom that preceded it, has been more marked than in most other European countries. This is partly attributable to greater exposure to international trade, especially with the US, and to greater sensitivity to international stock price movements. But there are also some structural policies – pension fund regulation, housing and wage setting institutions – that have undermined economic efficiency and contributed to the amplitude of the cycle. Furthermore there has been a marked deterioration in public finances, part of which is structural. Longer term growth trends too are unfavourable. In view of these developments, the main challenges are to reform those policies that have reduced efficiency and increased volatility, put public finances on a sustainable path, and, most importantly, increase trend growth by increasing both employment and productivity.
- Topic:
- Agriculture, Economics, Environment, Human Rights, International Organization, and Political Economy
- Political Geography:
- Europe and Netherlands
1034. Well Being and Unemployment in Russian in the 1990's: Can Society's Suffering Be Individuals' Solace?
- Author:
- Andrew; Gaddy Eggers
- Publication Date:
- 04-2004
- Content Type:
- Working Paper
- Institution:
- The Brookings Institution
- Abstract:
- This paper studies the effect of regional unemployment rates on subjective well-being in post-Soviet Russia. Research conducted in Europe and the United States has documented that higher unemployment rates lead to lower reported life-satisfaction. By contrast, our Russian study finds a small but significant effect in the other direction. We estimate that du ring the period of our study (1995-2001), each percentage point increase in the local unemployment rate was correlated with the average well-being of people in the region increasing by an amount equivalent to moving 2% of the population up one level in life satisfaction measured on a five-point scale. Our intuition is that the so-called comparison effect drives this result: when individuals observe their peers suffering in a troubled economy, they lower their standards of what is good enough. All else equal, they thus perceive themselves to be better off in worse times. In highlighting the dependence of subjective well-being scores on expectations and reference groups, we sound a note of caution against using happiness data from economies in crisis to draw macroeconomic policy conclusions.
- Topic:
- Economics and Human Welfare
- Political Geography:
- Russia, United States, Europe, Asia, and Soviet Union
1035. Transforming Competitiveness in European Transition Economies: The Role of Foreign Direct Investment
- Author:
- Jasminka Sohinger
- Publication Date:
- 05-2004
- Content Type:
- Working Paper
- Institution:
- Institute of European Studies (IES), UC Berkeley
- Abstract:
- Foreign direct investment (FDI) has become one of the main drivers of globalization and integration of the European transition economies into the world economy, especially the European Union. Its growth enhancing capacity has played a significant role in transforming their competitiveness, both locally and on international markets, and its propensity to stimulate institution buliding is changing both economic and political landscapes in the region. The economic conditionality of FDI and the EU access-driven reforms are working hand in hand in helping the goals of transition and the convergence process. The achievement of both goals is seen as the best guarantor of peace and security in the region.
- Topic:
- Security, Economics, Emerging Markets, Globalization, International Trade and Finance, and Foreign Direct Investment
- Political Geography:
- Europe
1036. Copying the Nasdaq Stock Market in Europe: Supranational Politics and the Convergence-Divergence Debate
- Author:
- Elliot Posner
- Publication Date:
- 04-2004
- Content Type:
- Working Paper
- Institution:
- Institute of European Studies (IES), UC Berkeley
- Abstract:
- Financial arrangements reflect political bargains. Like national labor regimes, the formal and informal rules and relationships governing the allocation of financial resources distinguish one type of capitalist society from another. How firms are financed shapes companies and industries and affects the risks citizens must bear, how they save for retirement, where they work, their job security and ability to buy homes, and the disparity between rich and poor. Leading theories provide increasingly inadequate explanations for changing institutional arrangements in western European finance. They emphasize convergence to global standards and the causal effects of either increased levels of mobile capital or the diffusion of ideas. Or else they describe change within a national trajectory and attribute it primarily to domestic politics, national historical institutions and path dependency. They exclude the possibility of independent regional-level causes. My empirical study of changing financial arrangements for smaller European companies between 1977 and 2003 reveals causes rooted firmly in European Union politics. Neither global forces nor national institutions were primarily responsible for drawing the stock exchanges of Europe into cross-border competition and prompting them to create new US-style markets. Instead, supranational political entrepreneurs, acting with relative autonomy, largely drove this pattern of institutional change. In pushing beyond the international-domestic dichotomy and emphasizing the independent effects of European-level politics, my argument contributes to a growing body of detailed empirical research on the national and global impact of the EU. It also provides more sustained analysis of the causes, mechanisms and effects of adopting US institutional forms outside American borders.
- Topic:
- Conflict Resolution, Economics, and Politics
- Political Geography:
- America and Europe
1037. Industrialization and Urbanization: Did the Steam Engine Contribute to the Growth of Cities in the United States?
- Author:
- Sukkoo Kim
- Publication Date:
- 09-2004
- Content Type:
- Working Paper
- Institution:
- Institute of European Studies (IES), UC Berkeley
- Abstract:
- Industrialization and urbanization are seen as twin processes of economic development. However, the exact nature of their causal relationship is still open to considerable debate. This paper uses firm-level data from the manuscripts of the decennial censuses between 1850 and 1880 to examine whether the adoption of the steam engine as the primary power source by manufacturers during industrialization contributed to urbanization. While the data indicate that steam-powered firms were more likely to locate in urban areas than water-powered firms, the adoption of the steam engine did not contribute substantially to urbanization.
- Topic:
- Development, Economics, and Industrial Policy
- Political Geography:
- United States and Europe
1038. A New Form of Governance? Comparing the Open Method of Coordination to Multilateral Surveillance by the IMF and the OECD
- Author:
- Armin Schäfer
- Publication Date:
- 09-2004
- Content Type:
- Working Paper
- Institution:
- Max Planck Institute for the Study of Societies
- Abstract:
- The Open Method of Coordination (OMC) has received much attention in the recent EU-literature. The predominant view claims that the OMC is not only a new but also an effective policy-making instrument. This paper raises doubts about both claims by offering a comparison of soft law policy coordination in three international organizations. More specifically, this paper compares the European Employment Strategy – which was the first use of the OMC – to the Broad Economic Policy Guidelines of the EU, the OECD Economic Surveys, and the IMF Article IV Consultations. Based on expert interviews, it seeks to demonstrate that these procedures are forms of multilateral surveillance that do not differ in kind. Such a comparative analysis of the OMC refutes claims to its novelty. Having compared the four procedures, a more general model of multilateral surveillance consisting of six elements is generated that facilitates further comparisons. This paper concludes that governments select voluntarist procedures mainly to secure their own competencies rather than to realize common goals. Effective problem-solving is therefore not necessarily the dominant objective of soft law.
- Topic:
- Economics, International Law, and International Organization
- Political Geography:
- Europe
1039. Political Conditionality of Economic Interactions in the Middle East; Turkey's Relations with Iran, Iraq, and Syria
- Author:
- Mustafa Aydin and Damla Aras
- Publication Date:
- 06-2004
- Content Type:
- Journal Article
- Journal:
- Uluslararasi Iliskiler
- Institution:
- Uluslararasi Iliskiler
- Abstract:
- The political logic (i.e., political perceptions of the ruling elite in a given country and nature of the political relations with other countries) determines economic activity, not the other way around, among the proto-capitalist states of the Middle East. As the political ties has primacy in the region in determining the course of economic relations, even market oriented democratic (or quasi-democratic) countries have to accept the prominence of political-strategic relations when dealing with such states. This paper will examine the interrelated fluctuation of trade and political tensions between Turkey and its immediate Middle Eastern neighbours - Iran, Iraq, and Syria. It will highlight the political determinants of the relationship between these countries; will discuss the role of the US as the independent variable; and will assess the possible effects of the emergence of Justice and Development Party government in Turkey on country's political and economic relations with its Middle Eastern neighbours.
- Topic:
- International Relations, Economics, and International Political Economy
- Political Geography:
- United States, Iraq, Europe, Iran, Turkey, Middle East, and Syria
1040. A Matter of Degree: The Role of Journalists as Activists in Journalism Business and Policy
- Author:
- Neil Shister
- Publication Date:
- 04-2004
- Content Type:
- Working Paper
- Institution:
- Aspen Institute
- Abstract:
- The prevailing view of journalism today draws on strands from a diverse portfolio of political, legal, and commercial theories. Some of the propositions underlying the way we regard the practice of the craft date back to the 18th-century “age of reason;” others are as current as yesterday's Wall Street media deal. “Journalism” is a historical hybrid— more an evolving social construct than a fixed point of reference. As such, it conveys contradictory associations: on one hand a band of swashbuckling iconoclasts daring to “speak truth to power;” on the other hand considerably more temperate, disinterested professionals gathering content to distribute through the “information division” of giant corporations. Each image is exaggerated; neither is wholly wrong
- Topic:
- Economics, Government, and Politics
- Political Geography:
- United States and Europe
1041. Welfare and the Labour Market in the EU
- Author:
- Marie-Laure Michaud
- Publication Date:
- 09-2004
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- Over the last two decades, EU institutions have been increasingly concerned with the issues of unemployment reduction and job creation. The EU has recommended that member states develop welfare systems that moderate the negative effects of market relationships on the one hand, and enhance the efficiency of market performance on the other.
- Topic:
- Economics and Human Welfare
- Political Geography:
- Europe
1042. Are the Balance of Payments Deficits in the Baltic Countries Sustainable?
- Author:
- Jorgen Drud Hansen and Morten Hansen
- Publication Date:
- 07-2004
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- For almost a decade all three Baltic countries have witnessed substantial deficits on the current accounts of the balance of payments. This paper discusses whether this situation should be a matter of concern. Recent literature on the sustainability of balance of payments deficits is reviewed and put into a Baltic context. The main conclusion is that the recurrent large deficits in the Baltic countries pose a risk for the fixed exchange-rate policies until the countries adopt the euro. In the longer term, large deficits will influence the time path of convergence of living standards between the Baltic countries and the EU as a whole.
- Topic:
- Development and Economics
- Political Geography:
- Europe and Eastern Europe
1043. Measuring the Economic Impact of an EU–GCC Free Trade Agreement
- Author:
- David Kernohan and Dean A. DeRosa
- Publication Date:
- 07-2004
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- Economic growth rates in the Gulf region have languished in recent years and need to be raised to accommodate the rapidly growing populations and social aspirations of the region. Using a simple model of world trade, this report investigates the economic impacts of the new customs union of the Gulf Cooperation Council (GCC) and the proposed free trade agreement (FTA) between the GCC and European Union. The quantitative results suggest that the new customs union and proposed EU-GCC free trade agreement both appreciably expand trade and improve economic welfare in the GCC countries, with little significant economic impact on the EU. As expected, the FTA results in larger GCC economic gains than the customs union because it affords GCC consumers greater opportunity to enjoy imports at internationally competitive prices. Although welfare gains under the proposed FTA closely approximate those under open regionalism (concerted trade liberalisation on a most favoured nation basis), reducing the 5% GCC common external tariff to about 3% as part of the FTA negotiations would not only ensure near-maximum trade performance and welfare gains but also add further to the attractiveness of the GCC countries as a location for foreign direct investment.
- Topic:
- Development, Economics, Treaties and Agreements, and Population
- Political Geography:
- Europe
1044. Why Is There a Productivity Problem in the EU?
- Author:
- Francesco Daveri
- Publication Date:
- 07-2004
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- Magazines and newspapers often refer to or even take for granted the economic decline of the EU, particularly when contrasting the EU data with US data. The first part of this paper poses the question of whether IT – as often alleged – is really the only cause for the EU's productivity slowdown. The conclusion is that it is not. The non-IT part of the economy has not only contributed to the slowdown but appears to have crucially contributed to the EU-US growth gap as well. There is thus little reason for the EU to target IT-diffusion as an intermediate goal, as implied by the Lisbon strategy. The second part of the paper, after showing that the growth slowdown comes from the reduction of non-IT capital deepening and the lack of acceleration in total factor productivity growth, argues that the slowdown of capital deepening will continue. The scarce resources available for enhancing growth should concentrate on providing incentives to R and innovation at large, rather than financing traditional infrastructures. This is at odds with the goals pursued by the EU within the framework of the European Growth Initiative.
- Topic:
- Development, Economics, and Treaties and Agreements
- Political Geography:
- Europe
1045. The Impact of Unemployment on Individual Well-Being in the EU
- Author:
- Namkee Ahn, Juan Ramón García, and Juan Francisco Jimeno
- Publication Date:
- 07-2004
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- Among the working-age population, one of the most damaging individual experiences is unemployment. Many previous studies have confirmed the devastating effects of unemployment on individual well-being, both pecuniary and non-pecuniary. Using the data from the European Community Household Panel survey, we examine the factors that affect unemployed workers' well-being with respect to their situations in their main vocational activity, income, housing, leisure time and health in Europe.
- Topic:
- Conflict Resolution, Economics, and Human Welfare
- Political Geography:
- Europe
1046. Economic Policy Coordination in EMU: What Role for the SGP?
- Author:
- Jørgen Mortensen
- Publication Date:
- 06-2004
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- The present paper discusses the implications of the recent institutional crisis in the EU provoked by the failure of the Economic and Financial Affairs Council (ECOFIN) to impose the sanction on Germany and France provided for in the Stability and Growth Pact, along with Article 104 and the associated protocol of the Maastricht Treaty. The paper situates the debate concerning the application of the Stability and Growth Pact (SGP) in a broader evolution of the struggle between two schools of thought concerning macroeconomic policy–making in the European Union: the school calling for a strengthening of competences at the EU level (federal economic government) and the school arguing for preserving national competences for budgetary policy even in the face of the transfer of competence for monetary policy to the European Central Bank (ECB). The paper argues that the SGP represents an acceptable comprise between the two views of the schools in so far as it establishes rules to be respected without actually transferring competence to the Council in the field of budgetary policy. Consequently, the SGP has not and does not add to the 'democratic deficit' within the EU institutional framework. The paper argues, nevertheless, that the excessive deficit procedure (EDP) puts too strong an emphasis on the government budget deficit and suggests that emphasis on the sustainable level of public debt would ensure a stronger basis for assessing whether a given budget deficit may be considered excessive or not.
- Topic:
- Defense Policy, Economics, and Treaties and Agreements
- Political Geography:
- Europe, France, and Germany
1047. Theorising European Strategic Culture: Between Convergence and the Persistence of National Diversity
- Author:
- Christoph O. Meyer
- Publication Date:
- 06-2004
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- This working document focuses on the dynamics and scope of strategic culture–building in the context of the European Union's aspirations to develop a European security and defence policy (ESDP). It argues that the notion of strategic culture can be useful in assessing the context in which the ESDP will develop further as well as its performance in matters of conflict prevention, management and resolution. Nevertheless, in order to be conceptually and empirically useful, strategic culture needs to be disaggregated into collective norms about the means and ends of security policy, as well as its different carriers such as political elites, societies and armed forces. The paper examines the convergence thesis and suggests three theories to explain convergence informed by realist, constructivist and regional theories of political change. Yet the paper also argues that these forces can affect national strategic cultures differently, depending on the countries' geopolitical positions, the institutional stickiness of domestic ideas, values and norms, and the degree to which such norms are subject to partisan or societal contention. On this basis, the paper advances some hypotheses about the actual extension of the convergence process, which will need to be validated by further empirical study.
- Topic:
- Defense Policy, Economics, and International Trade and Finance
- Political Geography:
- Europe
1048. Economic Prospects for Kaliningrad: Between EU Enlargement and Russia's Integration into the World Economy
- Author:
- Evgeny Vinokurov
- Publication Date:
- 06-2004
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- The Kaliningrad oblast of Russia is currently an important focal point of discussions between the European Union and Russia. Although small in terms of geography and population, Kaliningrad has grown in importance due to the EU enlargement process. Since the break–up of the Soviet Union, the oblast has become an exclave of Russia, and it is now set to also become an enclave within the EU. This paper examines the state of Kaliningrad's economy and trade. The economic crisis that took place in Russia in the 1990s had severe consequences for Kaliningrad, as old patterns of production and trade were disrupted. Since 1999, however, the regional economy has grown with impressive speed. Kaliningrad's Special Economic Zone (SEZ) status has played a crucial role in determining its new patterns of production and trade specialisation. The paper argues that the SEZ regime has made the region's economic growth faster but also vulnerable.
- Topic:
- Economics and International Trade and Finance
- Political Geography:
- Russia, Europe, and Asia
1049. Can Labour Market Institutions Explain Unemployment Rates in New EU Member States?
- Author:
- Sjef Ederveen and Laura Thissen
- Publication Date:
- 07-2004
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- This study poses the question about whether labour market institutions can explain unemployment rates in the ten new European Union member states. In five out of the ten new member states, unemployment rates lie above the average in the 15 member states of the European Union (EU-15) that comprised the EU prior to May 2004. The study finds that labour market institutions in the acceding countries are less rigid than in the EU-15. Moreover, labour market institutions explain only a minor part of unemployment in the new EU member states. This does not mean that these countries have no labour market problems. Just as in the EU-15, a great deal of heterogeneity exists among the acceding countries. In some of them, labour market reforms could prove a key issue in improving employment performance. The main worry is the poor labour market performance in Poland and the Slovak Republic, where unemployment has risen to almost 20%. The main reasons for this growth are i) postponed restructuring in combination with tight monetary policy; ii) poor governance; and iii) an increasing labour force.
- Topic:
- Economics and Human Welfare
- Political Geography:
- Europe
1050. Business Cycle Synchronisation in the Enlarged EU: Co-Movements in the New and Old Members
- Author:
- Zsolt Darvas and Gyorgy Szapary
- Publication Date:
- 03-2004
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- It is generally recognised that countries wanting to join a monetary union should display the optimal currency area properties. One such property is the similarity of business cycles. We therefore undertook to analyse the synchronisation of business cycles between the EMU-12 and the eight new EU members from Central and Eastern Europe (CEECs), for which the next step to be considered in the integration process is entry into the EMU. In contrast to the usually analysed GDP and industrial production data, we extend our analysis to the major expenditure and sectoral components of GDP and use several measures of synchronisation. The main findings of the paper are that Hungary, Poland and Slovenia have achieved a high degree of synchronisation with EMU for GDP, industrial production and exports, but not for consumption and services. The other CEECs have achieved less or no synchronisation. There has been a significant increase in the synchronisation of GDP and also its major components in the EMU members since the start of the run-up to EMU. While this lends support for the existence of OCA endogeneity, it cannot be unambiguously attributed to it because there is also evidence of a world business cycle. Another finding is that the consumption-correlation puzzle remains, but its magnitude has greatly diminished in the EMU members, which is good news for common monetary policy.
- Topic:
- Economics, International Cooperation, and International Trade and Finance
- Political Geography:
- Europe