The willingness to migrate in the CEECs evidence from the Czech Republic

Given the low levels of migration in the CEEC found in the literature, this paper raises the issue of who is willing to migrate in these countries. Using data on the willingness to migrate in the Czech Republic we show that variables measuring regional labour market conditions and amenities contribute little to explaining willingness to migrate, but that personal and household characteristics are more important. The least willing to migrate are the family-house owners, the less educated and the elderly as well as persons residing in regions with above-average unemployment rates. Improving the efficiency of the housing market and focusing on the problems of peripheral regions should thus be primary foci of a policy aimed at improving labour-market adjustment through migration. These policies are, however, unlikely to yield rapid results, since the willingness to migrate of all subgroups analysed (except for the less educated) reacts only weakly to regional labour market incentives and amenities.

The prices of silver and exchange rates in a metallic monetary system—the cases of India and Iran

Using the notion of co-integration theory and a vector error correction modelling approach, this paper examines in retrospect the long-run relationship between the exchange rate of silver-based currencies and the intrinsic value of silver in India and Iran in a bivariate model. The results based on unit root and co-integration tests indicate a reliable long-run relationship between the price of silver and the exchange rate of silver-based currencies. Our findings also suggest a bi-directional relationship between the price of silver and exchange rate of pound per rupee in the case of India and a feedback relationship between the intrinsic value of qiran and the exchange rate of pound per qiran in the case of Iran.

Inflation adjustment in the open economy: an I(2) analysis of UK prices

This paper estimates a cointegrated vector autoregressive (VAR) model for UK data on consumer prices, unit labour costs, import prices and real consumption growth. The estimated VAR indicates that the nominal variables are characterised by I(2) trends, and that a linear combination of these processes cointegrate to I(1). This supports an analysis in which I(1) and I(2) restrictions are imposed. A key finding is that an increase in real import prices reduces productivity adjusted real wages, such that the change in domestic inflation is moderated. This may explain why the depreciation of sterling in 1992 left inflation unchanged.

Monetary policy as bad medicine: The volatile relationship between business cycles and asset prices

Austrian business cycle theory has become an important point of focus in controversial mainstream discussions regarding the role of asset prices in monetary policy. In this article, the relation between asset prices and the Austrian business cycle theory is examined. The analysis focuses on how central banking supports optimism, resulting in the redirection of entrepreneurial activity and knowledge via asset price bubbles. The crucial role of credit expansion for asset price booms is also analyzed. Following this analysis, the implications for monetary policy are deduced.

Financial Development and Income in North Africa

We explore the short-run dynamics and long-run relationship between income and financial development in Algeria, Egypt, and Morocco. We use co-integration and VECM models and four indicators of financial development. The empirical results indicate that there is a long-run relationship between income and each financial development indicator, except credit to the private sector in Algeria. On the other hand, Granger-causality test results indicate that the evidence on the direction of causality is mixed.

Unemployment disparities and regional wage flexibility: comparing EU members and EU-accession countries

This paper provides empirical evidence on regional labor market flexibility in Europe and, in particular, in the EU-accession countries in Central and Eastern Europe. Whereas substantial regional disparities in unemployment are found for pre-accession EU member countries as well as for accession countries, an empirical analysis taking account of spatial effects shows that regional wage flexibility is significantly higher for accession countries. Moreover, unemployment disparities are found to be less persistent in the accession countries.

Stylised features of consumer price setting behaviour in Portugal: 1992–2001

This paper identifies the empirical stylized features of consumer price setting behavior in Portugal using two micro-datasets underlying the consumer price index. The main conclusions are: one in every four prices change each month; there is a considerable degree of heterogeneity in price setting practices; prices of goods change more often than prices of services; price reductions are common, as they account to around 40% of total price changes; price changes are, in general, sizeable; finally, the price setting patterns seem to depend on the level of inflation as well as on the type of outlet.

Entrepreneurial culture,regional innovativeness and economic growth

In this paper, we empirically study the relationship between entrepreneurial culture and economic growth. Based on a micro based comparison of entrepreneurs and non-entrepreneurs, we develop a measure reflecting entrepreneurial attitude at the regional level. We subsequently relate this newly developed variable, ‘entrepreneurial culture,’ to innovativeness and economic growth in 54 European regions. Extensive robustness analysis suggests that differences in economic growth in Europe can be explained by differences in entrepreneurial culture, albeit mostly in an indirect way.

Between European integration and regional autonomy: the case of Italy from an economic perspective

Italy has experienced a double political phenomenon over the last few decades: a transfer of powers to a supranational entity (the EU) and a move towards regional autonomy. This paper aims to evaluate how policy competences are attributed to and exercised by the European, national and regional institutions. It develops a set of quantitative indicators analysing the legislative production of the EU, the Italian parliament and the Italian regions in various policy areas. The main findings indicate a certain substitutability between European and national legislation and that different levels of government share competences in a larger number of sectors than suggested by the economic theory.

An econometric analysis of the effects of market liberalization on price dynamics and price volatility

The paper investigates price dynamics under market liberalization, with a focus on the effects of lowering price floors. We analyze price dynamics by specifying and estimating a dynamic Tobit model under time-varying volatility, where the market price is censored by a government-set support price. The model is applied to the U.S. butter market over the last three decades. The econometric results show how the price support program affects both expected prices and the volatility of prices. It is found that the censoring effects of a price support program can be significant and large even if the price support is set relatively low.

Identifying development blocks—a new methodology

The paper specifies a quantitative methodology for exploring development blocks. The concept of ‘development block’ was a major contribution to the historical analysis of industrial transformation by the late Erik Dahmén, but development blocks have mainly been analyzed by qualitative methods and indirect indicators and not statistically identified. In this paper, development blocks are identified by means of a combination of co-integration analysis and Granger causality. Using these techniques, we are able to identify two partially overlapping development blocks in the Swedish economy, formed around the electricity generating sector: one with metal, metal goods, machinery and railways; and another with pulp and paper, chemicals, and machinery.

The persistence of regional new business formation-activity over time – assessing the potential of policy promotion programs

We investigate regional differences in the level and the development of regional new business formation activity. There is a pronounced variance of start-up rates across the regions. The level of regional new business formation is rather path-dependent so that changes are relatively small. The main factors determining the level of regional start-ups are innovation and an entrepreneurial climate. These factors also seem to be responsible for changes in the level of regional new business formation. In addition, unemployment plays a role. Steering innovation and creating an entrepreneurial atmosphere could be an appropriate starting point for policy measures that try to promote start-ups. Our empirical evidence strongly suggests that such measures may have significant effect only in the long run.

Deregulated Wholesale Electricity Prices in Italy: An Empirical Analysis

In this paper we analyze a time series of daily average prices in the Italian electricity market, which started to operate as a Pool in April 2004. Our objective is to model the high degree of autocorrelation and the multiple seasonalities in electricity prices. We use periodic time series models with GARCH disturbances and leptokurtic distributions and compare their performance with more classical ARMA-GARCH processes. The within-year seasonal variation is modelled using the low-frequency components of physical quantities, which are very regular throughout the sample. Our results reveal that much of the variability in the price series is explained by the interactions between deterministic multiple seasonalities. Periodic AR-GARCH models seem to perform quite well in mimicking the features of the stochastic part of the price process.

Product variety and price strategy in the ski manufacturing industry

The present paper aims at examining the role of variety in the ski manufacturing industry and its relevance in firms’ price setting strategies. In particular, it intends to investigate and to empirically test three hypotheses concerning the relations between: product quality and prices; variety in technical characteristics and prices; variety in service characteristics and prices. Our empirical investigation finds that prices are positively affected by product quality and positively affected by variety in service characteristics. This means that a high degree of product variety allows firms to charge a premium price on consumers, who are able to find the product that best meets their needs and are therefore willing to pay a higher price. By contrast, variety in technical characteristics negatively impacts prices. In a context where a dominant design has emerged and new varieties are not radically different from each other, the gains in economies of scale and scope outweigh the costs of the increased flexibility in the equipment required to produce variety.

Transaction tax and stock market behavior: evidence from an emerging market

This study examines the impact of a stamp tax rate increase on market behavior, using data from two stock exchanges in China. We find that when the tax rate increases from 0.3 to 0.5% (which implies that the transaction cost increases by about 1/3) trading volume decreases by 1/3. This implies an elasticity of turnover with respect to a stamp tax of −50% and an elasticity of turnover with respect to transaction cost of −100%. The markets’ volatility significantly increases after the increase in the tax rate. Furthermore, the change in the volatility structure indicates that the markets become less efficient in the sense that shocks are less quickly assimilated in the markets.

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Locational choice and price competition: some empirical results for the austrian retail gasoline market

Using data from the Austrian retail gasoline market we find that a higher station density reduces average prices. Market (i.e. ownership) concentration does not significantly affect average price, however is negatively related to the density of stations. Estimation of the pricing and entry equations as simultaneous equations does not alter our conclusions, and suggests causality running from station density to price. We argue that the spatial dimension of markets allows the identification of market conduct, which is particularly relevant for competition policy.

Imperfect competition and the modelling of expectations in macroeconomics

We show that when a model of the macroeconomy is based on imperfect, rather than perfect, competition, this may increase the problem of how to model agents’ expectations. We provide a simple example using an overlapping-generations economy with the potential for unemployment. Under certain assumptions about how consumers migrate between locations between the first and second periods of their lives, this extra issue regarding expectations arises. Imperfect competition may increase agents’ forecasting difficulties because they have to forecast not only future equilibrium prices, but also future out-of-equilibrium prices, and by definition the latter are never actually observed.

A spatial econometric analysis of the regional growth and volatility in Europe

Based on a sample of 1,084 European regions (EU15) from 1995 to 2004, we estimate the relationship between the average growth rate of GDP per capita and the volatility of the growth rate allowing for spatial effects. The spatial lag and spatial error models show that the regional per capita growth rate and volatility are significantly positively related on average. However, the inclusion of country interaction terms reveals that the volatility impact is not uniform across countries. In particular, the relationship between growth and volatility is significantly positive for the majority of countries but significantly negative for three countries (namely Finland, Italy, and Ireland).

Information Disclosure Policies: When Do They Bring Environmental Improvements?

There has been a growing interest among policy makers on the use of information disclosure policies for pollution control. This paper theoretically assesses the consequences of information disclosure policies and identifies the conditions under which such policies are likely to bring environmental improvements. Based on a dynamic game framework, the paper shows that both eco-labeling and more general full information disclosure policies may not always result in pollution reduction. Full information disclosure policies are likely to be effective if the product is not heavily polluting and if the minimum quality standard is set quite low. The paper also identifies the conditions under which all consumers are strictly better off with information disclosure policies.

Special issue: imperfect competition and contemporary macroeconomics. Editor’s introduction

This paper introduces the special issue by tracing out the history of imperfect competition in macroeconomics, particularly since 1980. It argues that in the search for a micro-foundation for nominal rigidity it was necessary to abandon the assumption of competitive equilibrium where all agents are price-takers. This led to models where firms and other optimising agents set wages and prices which were part of the new Keynesian economics of the 1980s. When these were combined with quantitative dynamic equilibrium methods it gave rise to the new neoclassical synthesis models which dominate macroeconomics today. The assumption of imperfect competition provides an equilibrium with different properties to the competitive, and one particular focus is on the relationship between the markup and the fiscal multiplier.