Suchergebnisse

There has recently been increased research and policy interest in the divergent macroeconomic performance in the European Economic and Monetary Union (EMU). Understanding the underlying factors of macroeconomic differentials, the source and transmission of shocks and the adjustment process in the euro area is important to appropriate economic policy in the EMU. In a monetary union, the single monetary policy can only address common shocks. In the absence of nominal interest and exchange rates as policy instruments, to adjust to asymmetric shocks - country specific shocks or idiosyncratic effects of common shocks, member countries have to resort to remaining tools of economic policy. In theory, the adjustment to asymmetric shocks and return to equilibrium can take place through four channels: a) market - driven price and output adjustment; b) policy induced fiscal adjustment; c) risk-sharing against country-specific shocks through fiscal transfers and financial integration; d) labour mobility. Temporary inflation and output growth differentials are likely in a common currency area since prices and output adjustment is required to absorb shocks. In the euro area, output growth and inflation differentials are also related to the ongoing catch - up process in some of the member countries. Persistent inflation differentials can have negative effects on incomes and investment and result in divergent competitiveness and monetary conditions in the participating countries. Furthermore, inappropriate use of national fiscal policy and real exchange rate adjustment can lead to poor macroeconomic performance. The objective of this paper is to analyse macroeconomic differentials and the adjustment in the euro area so far with the aim to draw lessons and policy implications for the better functioning of the EMU and euro areaenlargement. The questions we address are the following: What do we know about macroeconomic differentials in the euro area? Are they temporary or persistent? What factors underlie them? What is the likelihood of asymmetric shocks in the euro area and what are their main transmission channels? What policy issues related to the macroeconomic adjustment in the EMU are most important at this stage? The remainder of this study is organised as follows. In Section 2 we analyse the size, evolution, persistence and underlying factors of output growth and inflation differentials. Section 3 discusses the likelihood of asymmetric shocks and their transmission across the euro area countries. In particular, we analyse trade linkages, including intra- and extra-euro area trade, financial integration and business cycle synchronisation. In Section 4 we discuss a number of policy issues related to the macroeconomic adjustment in EMU which have gained increased interest recently. We start with the role and effects of real interest rate and competitiveness differentials as adjustment channels. We discuss next policy issues related to fiscal adjustment and the impact of fiscal shocks in the euro area countries. We then discuss labour mobility as an adjustment mechanism. Finally, Section 5 summarises the main findings and draws policy implications for the EMU and the euro area enlargement.

PUBLISHED ; We analyse 446 location decisions of R&D activities by multinational firms incorporated in the European Union over 1999-2006. Our results suggest that on average, the location probability of a representative R&D foreign affiliate increased with agglomeration economies from foreign R&D activities, human capital, proximity to centres of research excellence and the research and innovation capacity of the region. Further, our evidence suggests that in comparison to European multinational firms, the effects of patents intensity and proximity to centres of research excellence were stronger in the case of North American multinational firms. While government R&D expenditure intensity increased the probability of location of R&D activities by European multinational firms in the region, it did not have a significant effect on the probability of location of R&D activities by North American multinational firms.

This paper examines the speed with which governments introduced lockdown measures to contain the COVID-19 pandemic. We use data on daily confirmed COVID-19 cases and related deaths combined with information on containment measures available for 124 countries as well as a range of annual country-specific data. In terms of methodology, we estimate time-to-event models to analyse the speed of starting government containment measures and the speed with which such measures reached their highest level from the first confirmed COVID-19 case and the first COVID-19 related death. Our results indicate that governments in countries with a weaker health system capacity and in countries with a larger share of elderly populations were more likely to start lockdown measures faster. Smaller and more open economies were more likely to move faster to the highest level of containment measures.

We analyse determinants of an enterprise's decision to offshore R&D activities using a novel data set for enterprises in Ireland over the period 2001-2006. Our results suggest that, on average, other things equal, enterprises integrated in international production and innovation networks, and enterprises which used information and communication technologies (ICT) more intensively were more likely to offshore R&D. Furthermore, characteristics of the import source region had an important influence on enterprise offshoring behaviour, with offshoring to regions outside of the advanced European Union's economies being less likely.

We estimate an augmented gravity model to analyse the effects of FDI into China originating in OECD countries on FDI into EU and other countries over the period 1990-2004. Our results suggest that on average, ceteris paribus, over the analysed period, FDI inflows into China have been complementary to FDI inflows into EU15 countries but they have substituted FDI into the new EU countries in Central and Eastern Europe. In particular, small economies such as Bulgaria and the Baltic countries have been affected negatively by the surge in the FDI into China. This FDI diversion appears in the case of efficiency-seeking FDI.

Using the theoretical framework of global sourcing with firm heterogeneity, we examine determinants of inputs sourcing choices of manufacturing firms established in the EU countries. To this purpose, we combine information on the ownership structure and company accounts from the Orbis data set with input-output data from the World Input-Output Tables (WIOT) and with information on institutional and regulatory factors at country level provided by international organisations. Our research findings indicate that manufacturing firms that source inputs intra-firm via foreign direct investment (FDI) across EU countries are larger, more productive, more intensive in tangible and intangible capital and less intensive in skills than manufacturing firms that source inputs at arm's length. The probability of integrating inputs by manufacturing firms across EU countries is positively linked with the strength of legal systems, flexibility of labour markets and negatively linked to corporate tax rates and financial development in host countries. Less efficient insolvency procedures are associated with a higher probability of sourcing inputs intra-firm via FDI relative to arm's length sourcing. The probability of sourcing inputs via FDI is negatively linked to sectoral restrictions to FDI and positively linked to the impact of service regulations on downstream industries.

The countries of Central and Eastern Europe went from being largely closed to being largely open to international capital flows. This paper discusses their experience with capital account liberalization and coping with large capital inflows. We start with a discussion of basic economic characteristics and the real convergence achieved so far, and then discuss the pace and sequencing of capital account liberalization and the degree of international financial integration over the past decade. We then analyze trends and patterns of capital inflows in these countries in recent years. These stylized facts are useful for understanding the macroeconomic implications and policy challenges of coping with large capital inflows, which we discuss next. Finally we conclude with policy implications for emerging Asian economies.

The countries of Central and Eastern Europe went from being largely closed to being largely open to international capital flows. This paper discusses their experience with capital account liberalization and coping with large capital inflows. We start with a discussion of basic economic characteristics and the real convergence achieved so far, and then discuss the pace and sequencing of capital account liberalization and the degree of international financial integration over the past decade. We then analyze trends and patterns of capital inflows in these countries in recent years. These stylized facts are useful for understanding the macroeconomic implications and policy challenges of coping with large capital inflows, which we discuss next. Finally we conclude with policy implications for emerging Asian economies.

This paper investigates the patterns and determinants of the co-movement of economic activity between regions in the European Union and the Euro Area. Using a panel data of 208 EU-15 regions over the period 1989-2002 we estimate a system of four simultaneous equations to analyse the impact of regional trade integration, specialisation and exchange rate volatility on correlations of regional growth cycles with the Euro area. We find that deeper trade integration with the Euro area had a strong direct positive effect on the synchronisation of regional growth cycles with the Euro area. Industrial specialisation and exchange rate volatility were sources of cyclical divergence. Industrial specialisation had however an indirect positive effect on growth cycles synchronisation via its positive effect on trade integration, while exchange rate volatility had an indirect additional negative effect on growth cycle correlations by reducing trade integration. Industrial specialisation had an indirect negative effect on growth cycle correlations by increasing the exchange rate volatility. The direct impact of trade integration on growth cycle correlations was stronger in the pre-EMU sub-period, while in the EMU sub-period, the negative direct effects of industrial specialisation and exchange rate volatility were stronger than in the pre-EMU sub-period. A distinct result is the positive and significant relationship between exchange rate volatility and growth cycle correlations in the pre-EMU sub-period, suggesting that over this period, country-specific exchange rate fluctuations acted as shock absorbers. Our analysis is relevant in the context of the discussion about the macroeconomic adjustment to region-specific shocks in the European Monetary Union.