Higher Price,Lower Costs? Minimum Prices in the EU Emissions Trading Scheme

In this paper, we examine the introduction of a price floor in an emissions trading system (ETS) when some emissions are regulated outside the ETS. We theoretically characterize the conditions under which a price floor enhances welfare. Using a numerical simulation model of the European Union (EU), we find that moderate minimum prices in the EU ETS can reduce the costs of EU climate policy by up to 30 percent. We also find that, because of tax‐interaction effects, the optimal minimum price in the EU ETS should be about four times higher than the average marginal abatement cost in non‐ETS sectors.     

Shipping the good fish out? An empirical study on the EU seafood imports under the EU’s Generalized System of Preferences

The impact of the EU (European Union) Generalized System of Preference (GSP) on the relative EU’s demand for seafood quality was evaluated in the study. We first explored the theoretical Alchian–Allen result of change in ad valorem tariffs in an n–good world, and then tested this result in the empirical study. The theoretical analysis suggests that whether a reduced ad valorem tariff in an n–good case raises the relative demand for high-value goods depends not only on the substitutability between high-value and low-value goods but also on the substitutability between these similar goods with their weak substitutes. In the empirical sections, we first estimated the elasticities of the substitutions and then used these elasticities to evaluate the quality composition of the EU’s seafood imports from the beneficiary countries. The empirical results in general confirm the occurrence of ‘shipping the good fish out’ due to the reduced tariff rates under the EU’s GSP arrangements.     

Operationalising active involvement in the EU Water Framework Directive: Why, when and how?

We identify two key stages in the river basin planning process under the Water Framework Directive: the selection of instruments for a programme of measures to achieve the environmental targets, and disproportionate cost analysis to determine whether selected measures involve high costs. Some EU member states such as Denmark are operationalising these two key stages using cost effectiveness analysis and cost-benefit analysis. However, implementation guidelines encourage the active involvement of all interested parties in the implementation of the Directive. We discuss the potential benefits of actively involving non-state actors, which can be summarised as increasing the effectiveness of policy and improving its implementation. Criticising the emerging economic decision-making approach, we argue that economic analyses could result in a missed opportunity to capitalise on the potential benefits of involvement. The article discusses the appropriateness of actively involving the public during the two aforementioned decision-making stages and suggests concrete ways in which active involvement may be operationalised. We conclude that member states should not implement a minimum form of participation to comply with the statutory requirements of the Directive, but should strive for active involvement due to the potential for increasing the effectiveness of the Water Framework Directive and improving its implementation.     

The Impossible Split? A Study of the Creation of a Market Actor

Quasi-markets have been created within the health care sector in many countries. One commonly used market model is the purchaser–provider split, which implies that purchasers use contracts to control the providers. A hierarchical organizational solution is replaced by a contractual relation. This article shows that creating quasi-markets in public organizations is complicated by the need to balance the market actors’ (the sub-units) autonomy and the efficiency of the entire public organization. The market actors have limited opportunities to work as autonomous units. The initial aim when creating market actors is to reduce their complexity by giving them distinct responsibilities and authorities. Reducing complexity in some parts of the organization, however, seems to cause problems in other parts. In the article, this effect is called quasi-market externalities or “overflows.” The overflows result in less autonomy for the market actor because the market frame has to be changed. Fiscal pressures, volatile political actors and strong professions are sources of overflow and subsequent changes in the market frame. The conclusion is that it is difficult, perhaps impossible, to create and maintain contractual relationships when both parties are dependent on the same principal.      

Turning the page? EU fiscal consolidation in the wake of the crisis

The fiscal cost of the financial and economic crisis in Europe is huge. The paper provides provisional estimates of this cost and looks at its implications for the sustainability of public finances, taking into account also the impact of aging populations. The historical experience suggests that economic growth is persistently lowered in the aftermath of financial crisis, making fiscal consolidation more difficult yet all the more essential. Meanwhile the timing of the exit from fiscal stimulus and subsequent fiscal consolidation must reconcile sustainability and stabilisation goals—a delicate balancing act. The paper will argue in favour of structural reform to boost the economic growth potential alongside fiscal consolidation. The fiscal coordination framework in the EU, together with the Europe 2020 strategy, is seen to underpin this approach.     

Do food standards affect the quality of EU imports?

This paper investigates the relationship between the diffusion of EU standards and product quality upgrading using highly disaggregated import data to the EU in the food industry. Results show that, on average, the diffusion of EU voluntary standards boosts the rate of quality upgrading. However, the results are heterogeneous when moving from primary to processed foods, and from ISO to non-ISO standards.     

Which sanctions matter? analysis of the EU/russian sanctions of 2014

We use a quasi-natural experiment of reciprocal imposition of trade sanctions by Russia and the EU since 2014. Using UNCTAD/BACI bilateral flows data we take this unique opportunity to analyse both sanctions. In particular, we study the effectiveness of narrow versus broadly defined sanctions, and differences in the effectiveness of sanctions imposed on exports and imports. We show that the Russian sanctions imposed on European and American food imports resulted in about an 8 times stronger decline in trade flows than those imposed by the EU and the US on exports of extraction equipment. These results do not appear to be driven by diversion of trade flows via non-sanctioning countries. Hence the difference in sanctions’ effectiveness can be attributed to the limited retroactivity of Western sanctions, which allowed exemptions for exports made pursuant to contracts made prior to 2014.     

Self-serving legislators? An analysis of the salary-setting institutions of 27 EU parliaments

It is often criticized in public debates that politicians in many jurisdictions have the power to set their own salaries. This paper scrutinizes this practice from a constitutional political economy perspective. A novel dataset is presented which provides an empirical overview of the methods used to set the pay for members of parliament (MPs) in the national parliaments of 27 member states of the European Union. There is considerable cross-country variation in this respect. While in the majority of national legislatures MPs to some degree decide on their own salaries (i.e., ‘self-service’ model), in some systems MP pay is set by bodies independent from MPs. A multiple regression analysis provides empirical support for the self-serving-legislators prediction derived from Public Choice theory: controlling for population size and living costs, salaries are systematically higher in legislatures in which MPs have some say in their own salaries. However, this result has to be interpreted with caution as (1) independent wage-setting bodies exist only in five parliaments, and (2) this study could only include MPs’ basic salaries.     

Trading Out of the Global Food Crisis? The World Trade Organization and the Geopolitics of Food Security

The geopolitics of the Global Food Crisis and international trade has received limited scholarly attention, a significant omission given the major roles of the World Trade Organization (WTO) in structuring world food production and trade flows and as a principal inter-state governing mechanism of the global agro-food system. Analysing recent international policy actions framing the WTO as a ‘fix’ to the Global Food Crisis, this article points to the value of a critical geopolitics of agro-power sensitive to the spatial reconfiguration of production and power in the global agro-food system, problematising geospatial categories such as ‘North’ and ‘South’, and that takes seriously contests for control of geopolitical agents such as the WTO.     

Sound taxation? On the use of self-declared value

In the 16th century, foreign ships passing through the Sound had to pay ad valorem taxes, known as the Sound Dues. To give skippers an incentive to declare the true value of their cargo, the Danish Crown reserved the right to purchase it at the declared value. We show that this rule does not induce truth-telling, but does allow the authorities to effectively implement a given tax rate.     

Does the Law of One Price Hold within the EU? A Panel Analysis

This paper empirically tests the law of one price by applying unit root tests to three panels consisting of data on 90 consumer price indices for the EU-25, the EU-15 and the 10 new EU member countries that joined the EU in 2004. The four major findings of this paper are: (1) panel unit root tests find evidence of price convergence for about 70% of all product groups, (2) the results are sensitive to the choice of the numeraire country implying that any conclusions must be based on all bilateral combinations, (3) the average half life across all product groups is 2.0 years, (4) the overall evidence for the law of one price is weaker in the 10 new EU member countries than in the EU-15.

The migration of professionals within the EU: Any barriers left?

As shown by the intense legislative effort at the European Union level, the mutual recognition of professional qualifications represents an important step towards the completion of the single EU labor market. In this paper we provide the first empirical evidence on the link between intra‐EU mobility and mutual recognition of professional qualifications. Our results show that bilateral EU migration is positively affected by the destination country's rate of recognition of professional qualifications obtained in another EU member state.     

On the Linkages of the Stock Markets of the NAFTA Countries: Fundamentals or Speculative Bubbles?

We analyze whether the linkages between the stock markets of the NAFTA member countries (Canada, Mexico, and the United States) reflect movements in fundamentals or speculative bubbles. To this end, we estimate a state-space model to decompose the stock market indexes of the three NAFTA member countries into fundamentals and speculative bubbles. We analyze the linkages of the three stock markets by means of cointegration techniques. Evidence of cointegration linkages between fundamentals is stronger than evidence of cointegration linkages between speculative bubbles.     

On the Fundamentals of a Successful Reform for National Prosperity--An Economic Analysis Based on the Practice of China＇s Reform

This paper discusses the fundamentals required for successful reform, i.e., the necessary institutional changes required to make a nation grow sustainably wealthier. It argues that enriching the people is a prerequisite for a prosperous nation and further reveals the inherent logic behind the statement ＂in order to enrich the people, they must be given private rights, and in order to protect the people＇s private rights, public power must be limited.＂ Based on this argument, we examine and analyze the experience of China＇s reform over the past 30 years and come to the conclusion that it is necessary to transform government functions and further deepen market-oriented reform. We hold that China＇s economic performance bears no special or exceptional economic law, and there does not exist the so-called ＂China Model＂ characterized by government taking the leading role as a relatively mature, stable, and widely applicable development model, but that there does exist a Chinese development path or experience featuring the inherent logic of ＂prospering the nation through enriching its people＂ that can be employed by countries all over the world.     

What Are the Benefits of the Water Framework Directive? Lessons Learned for Policy Design from Preference Revelation

The Water Framework Directive (WFD) seeks to achieve good ecological status of surface waters across the European Union by 2027. The WFD guidelines explicitly recognize the economics of water management by providing exceptions to water areas with disproportionately high restoration costs. This calls indirectly for estimations of benefits lost due to non-attainment. We employ a hedonic property pricing approach on waterfront recreational properties to estimate the welfare impacts of attaining the good ecological status described by the WFD. The empirical challenge is that the quality measure proposed by the WFD specifically denotes ecological quality, whereas economically measurable water quality values are heavily dependent on recreation impacts. Intuitively, the choice of water quality measure should have an effect on estimating the value of water quality. Our data provide a unique chance to compare three alternative indicators of water quality: (1) a usability-based index, (2) subjectively reported measure and (3) the ecological status determined by the WFD. We find that an improvement in water quality is associated with a statistically significant, non-linear change in recreational property values. We show how the ecological status compares with the other two indicators, and discuss the justifiability of using revealed preference methods when the valued good is defined purely on the basis of ecological criteria.     

On the impact of inflation on output growth: Does the level of inflation matter?

This paper investigates the growth effects of inflation on a wide sample of countries, including both industrialized and emerging economies. Relying upon the estimation of smooth transition and dynamic GMM models for panel data, our findings offer strong evidence that inflation non-linearly impacts economic growth. More specifically, there exists a threshold beyond which inflation exerts a negative effect on growth, and below which it is growth enhancing for advanced countries.     

Too much of a good thing? On the growth effects of the EU's regional policy

The European Union (EU) provides grants to disadvantaged regions of member states from two pools, the Structural Funds and the Cohesion Fund. The main goal of the associated transfers is to facilitate convergence of poor regions (in terms of per-capita income) to the EU average. We use data at the NUTS3 level from the last two EU budgetary periods (1994–1999 and 2000–2006) and generalized propensity score estimation to analyze to which extent the goal of fostering growth in the target regions was achieved with the funds provided and whether or not more transfers generated stronger growth effects. We find that, overall, EU transfers enable faster growth in the recipient regions as intended, but we estimate that in 36% of the recipient regions the transfer intensity exceeds the aggregate efficiency maximizing level and in 18% of the regions a reduction of transfers would not even reduce their growth. We conclude that some reallocation of the funds across target regions would lead to higher aggregate growth in the EU and could generate even faster convergence than the current scheme does.