IS THE VIEW FROM THE EUROTOWER PURELY EUROPEAN? – NATIONAL DIVERGENCE AND ECB INTEREST RATE POLICY

The official view on ECB monetary policy claims that decisions are based on euro zone data and that diverging regional developments are disregarded. To test empirically whether regional developments have an impact on ECB decisions we develop a generalised monetary policy reaction function which allows for an influence of regional divergence. Reaction function estimations and a probit model of interest rate decisions for the first years of the euro area offer some first support for an impact of regional divergence. The results clarify that ignoring a potential national perspective may lead to biased estimates for the ECB reaction function.     

Efficiency and profitability: An inverse relationship according to the size of Austrian firm?

This paper tries to shed some light on the Austrian situation of the efficiency of firms according to their size class. For total Austria we find that large firms seem to be more efficient with respect to value-added per employee, but small firms are more efficient with respect to the gross residual quota and to profitability (= (value added — wages)/(value added)). On the other side a similar analysis for Upper Austria does not show this result. Here firms with the size of 500 employees or more seem to be the most efficient with respect to efficiency and profitability, and only the employment cost efficiency criteria reveals the picture, the smaller the firm, the more cost effective it seems to be. Hence, the result obtained from most studies in Europe, that at least the biggest firms are not the most efficient, can only be confirmed to a limited extent for (Upper) Austria.     

Consensus,dissension and ideology among economists in various European countries and in the United States

The paper analyzes consensus and dissension among economists on the basis of surveys conducted in Belgium, France, Germany, Switzerland and the United States. The outcome of the analysis is that there exists a considerable amount of consensus, but substantial differences across countries. In Europe, and especially in Belgium and France, the views of ‘left’ and ‘right’ economists differ, these differences are strong, as expected, on propositions which have a clear ideological content. However, it also appears that economists are not always willing to distinguish ‘technical’ and ‘political’ aspects of an economic issue.     

Patrick Rössler,Universität Erfurt

Ohne Zusammenfassung     

After the death of inflation: will fiscal drag survive?

Declining inflation rates might have negative consequences for tax revenues. Phenomena such as the inflationary bracket creep in a progressive income tax system do not work any longer. With this background, the paper analyses the extent of fiscal drag for OECD countries since 1965. Some consideration of the role of money illusion and indexation in this context lays the theoretical base. A framework is presented that allows for the classification of fiscal structures with regard to the type of fiscal drag. The subsequent econometric panel analysis is performed for total and disaggregated government revenues. The results back theoretical considerations of inflation's impact on different kinds of taxes, which tends to be positive for individual income taxes and social security contributions and is negative for corporate income taxation. The paper concludes that both declining inflation and changing tax structures limit the potential for future fiscal drag.     

Food costs for the current and recommended diet of German infants,children and adolescents

Abstract Higher food costs of a recommended diet may be a barrier to the improvement of unhealthy dietary habits. For the assessment of food costs for children, age-specific dietary intakes as well as average food prices must be known. This study is based on the measured food intake from a total of 1668 3-day weighed diet records of children aged from 5 months to 18 years and on recommended dietary intakes for these age groups. Based on the food costs related to the energy intake (Deutschmarks per megajoule; DM per MJ), the recommended diet using common food products does not incur higher costs than the current diet in all age groups. For infants, a diet using commercial infant food conforming to the restrictive German pesticide regulations incurs 50–150% higher food costs than the use of home-made meals. For children and adolescents, the nutritionally inferior quality of the current diet can be improved by a price-balanced interchange of foods, mainly by favouring plant foods instead of meat and confectionery.     

A positive theory of optimal personal income distribution and growth

The core of this paper (in a microeconomic foundation on three levels—income generation, income spending, and social climate of the society) consists of a concave relationship between the (in) equality of personal income and the per capita growth rate. The results mentioned are derived in conjunction with a social welfare function which is bounded by the concave function. Furthermore, ample empirical evidence is shown for the suggestions made in this paper.