Recent Developments at DG Competition: 2020/2021

Review of Industrial Organization - The Directorate General for Competition at the European Commission enforces competition law in the areas of antitrust, merger control, and State aid. After...     

Financial Frictions and the Fiscal Theory of Price Level Determination

The fiscal theory of the price level represents a significant departure from the quantity theory of money, as it implies that active (non-Ricardian) fiscal policy provides the nominal anchor and determines the price level. In this paper we take a first pass at integrating discussion of financial frictions and the fiscal theory of the price level. We first present empirical evidence in support of non-Ricardian fiscal policy, and then discuss the fiscal theory of the price level in a world with financial frictions. After illustrating how the financial friction influences the price level, we provide a theoretical explanation to our empirical findings. We also argue that the financial friction, which is related to fiscal policy, provides an additional instrument tool to the fiscal authority and an advantage over the monetary authority in choosing the equilibrium.     

Openness in the Canadian economy: 1870–1988

The causal relation between openness and GDP and between exports and imports are examined. Causality test carried out in growth rates showed that over the period 1870–1988 openness, both narrowly and broadly defined, Granger-causes GDP growth; tests for the inverse causality produced mixed results, validating causality from GDP growth to export plus import growth, but rejecting causlaity from GDP growth to export growth; it was also found that export growth causes import growth, but not the opposite. Causality tests over four subperiods indicated the importance of openness for only the earliest phase of Canadian economic development. While the absence of causality in the later subperiods is largely compatible with the experience of the industrial countries, no meaningful comparison can be made between the experience of Canada and that of developing countries owing to causality variations of openness and to large differences in resource endowments.     

Estimating the demand for ADSL and ISDN services in Greece

The aim of this paper is to investigate the demand for broadband services in Greece and to estimate the price elasticity of the demand for ADSL and ISDN services as well as the cross-price elasticity between the two services. The empirical analysis uses the 384 kbps connections since for the period examined, over 85% of the total ADSL customers in Greece are connected at this bandwidth. The empirical analysis is based on an ad-hoc specification of the demand equation, with no reference to the utility maximization problem of the representative consumer. The results of the analysis show that both demands are inelastic. In addition, cross-price elasticity for ADSL is negative, indicating that ISDN is a complement to ADSL, whereas the demand for ISDN is almost neutral to ADSL.     

BREXIT referendum’s impact on the financial markets in the UK

Review of World Economics - BREXIT might be considered the most paramount event of the past 40 years in modern English history. The present research attempts to examine the impact of...     

THE DEMAND FOR GASOLINE: EVIDENCE FROM HOUSEHOLD SURVEY DATA

In this paper we investigate the demand for gasoline in Canada using recent annual expenditure data from the Canadian Survey of Household Spending, over a 13‐year period from 1997 to 2009, on three expenditure categories in the transportation sector: gasoline, local transportation, and intercity transportation. In doing so, we use three of the most widely used locally flexible functional forms, the Almost Ideal Demand System (AIDS) of Deaton and Muellbauer (1980), the quadratic AIDS (QUAIDS) of Banks et al. (1997)—an extension of the simple AIDS model that can generate quadratic Engel curves—and the Minflex Laurent model of Barnett (1983), which can also generate quadratic Engel curves. We pay explicit attention to economic regularity, argue that unless regularity is attained by luck, flexible functional forms should always be estimated subject to regularity as suggested by Barnett (2002), and impose local curvature to produce inference consistent with neoclassical microeconomic theory. Our findings indicate that the curvature‐constrained Minflex Laurent model is the only model that is able to provide theoretically consistent estimates of the Canadian demand for gasoline. Our estimates show that the own‐price elasticity for gasoline demand in Canada is between ? 0.738 and ? 0.570 —less elastic than previously reported in the literature. Copyright © 2013 John Wiley & Sons, Ltd.     

Exploring the variability of patient costs in disease management programs: a hierarchical modelling approach

Disease management programs include a wide variation of patients with different chronic diseases and different health care utilization. The aim of this article was to identify factors on patient-level and organizational-level that explain the variability in costs of patients with different chronic diseases enrolled in a DMP by employing a rigorous analytical model. A generalized linear mixed model (GLMM) was specified to perform a multi-level analysis of cross-sectional hierarchical data from 16 DMPs in the Netherlands. Multiple imputation, sub-group analysis per disease and analysis from both the health care and the societal perspectives were also performed. Our model showed that age, the presence of cardiovascular disease, multi-morbidity and payments on top of the payment for the usual care had positive relation with costs, while better quality of life was associated with lower health care costs. In the COPD sample, physical activity and employment were associated with health care costs. Our study showed that there is great variability in health care costs among patients included in DMPs and identified patient and organizational explanatory factors. The findings are relevant to the design of future DMPs and their payment schemes.