Transatlantic trade and investment partnership: sectoral and macroeconomic perspectives for Germany,the EU and the US

The EU and the US have started negotiations on a Transatlantic Trade and Investment Partnership Agreement (TTIP) which could bring a considerable increase of exports and output as well as changes in the composition of output and employment. Thus export simulation studies in combination with input output analysis and employment analysis is useful. In the analysis presented the focus is mainly on sectoral output and employment effects where the key sectors are the automotive sector, chemical industry, information and communication technology production, pharmaceuticals and machinery and equipment. Backward sector links are analysed and found to be quite important in the automotive sector, the chemical industry, the machinery and equipment sector in both Germany and the US; in Germany also in ICT production. However, most of the observed sectors have weak forward linkage. Input output analysis is also used to identify employment effects in various sectors: the pure employment effect of a 20 % export expansion in Germany amounts to about 800 000 new jobs. Looking only at the US and German perspective turns out to be misleading—the high imports of intermediate inputs of German firms from EU partner countries suggests that a comparison EU-US is analytically required for some key issues and that considering the effects on EU partners is also useful. There is a host of key policy issues, including the issue of extended sustainability reporting.     

Restrictive immigration policy in Germany: pains and gains foregone?

Many European countries restrict immigration from new EU member countries. The rationale is to avoid adverse wage and employment effects. We quantify these effects for Germany. Following Borjas (in Q J Econ CXVIII(4):1335–1374, 2003), we estimate a structural model of labor demand, based on elasticities of substitution between workers with different experience levels and education. We allow for unemployment which we model in a price-wage-setting framework. Simulating a counterfactual scenario without restrictions for migration from new EU members countries in Germany, we find moderate negative wage and employment effects for incumbent foreigners, but positive effects for natives. Our results indicate that for the native German population as a whole the immigration restrictions are not welfare enhancing.     

New Evidence on Export Price Elasticity from China and Six OECD Countries

This paper provides new evidence on export price elasticities by analyzing the cases of China, France, Germany, Italy, Japan, UK and the USA over the period 1990–2012. Estimates have been made using panel data techniques for non‐stationary data. After demonstrating that long‐run relationships are stable to any structural break, it is found that exports are significantly determined by foreign demand, with long‐run income elasticity significantly higher than unity for China, Japan, Germany, the UK and the USA. Conversely, exports are price inelastic for most of the countries in the sample, in both the long run and the short run. The exception is France, whose export price elasticity is lower (higher) than unity in the short run (long run).     

The enlargement of the euro area: what lessons can be learned from EMU?

This paper investigates what lessons may be learned from EMU for the enlargement of the euro area. It examines the situation of present and prospective EU countries in respect of nominal and real convergence. It suggests that fulfilling the EMU criteria consistently over the next few years will require huge efforts by prospective EU countries, with important output and employment losses. The possibility that present EU countries would have to bear part of these costs cannot be ruled out, with the risk of provoking tensions within the EU, in particular as regards the ‘one-size-fits-all’ monetary policy decisions of the ECB.     

A Small Macroeconomic Model of the EU-Accession Countries

This paper develops a small macro-economic model of the CEECs to analyze various aspects of integration with the current EU and the role of monetary and exchange rate strategies during the (pre-) accession phase. The model gives insight into both the adjustment of the internal balance (as for output and employment) and the external balance (as for exports and competitiveness) in the accession countries. The model provides more insight into the basic macroeconomic relationships governing macroeconomic adjustment in the accession countries and also the role of the integration with the EU in that adjustment. We perform empirical simulations of different scenarios and analyze the resulting macroeconomic adjustment. In particular, we compare how a macroeconomic shock in the current EU is transmitted to the accession countries under flexible and fixed euro exchange rates, respectively.     

Money,inflation, and output growth: Does the aggregate demand-aggregate supply model explain the international evidence?

Money, Inflation, and Output Growth: Does the Aggregate Demand-Aggregate Supply Model Explain the International Evidence? - Using annual post-war data for 32 countries, it is shown that output and the price level are positively related along the aggregate supply and negatively related along the aggregate demand curve. This implies that the negative correlation between inflation and growth simply means that the price level has been countercyclical as aggregate supply shocks domi-nated aggregate demand shocks. It is also shown that money growth has positive and permanent effects on inflation, but may affect output only in the short run: in the long run, money is probably neutral.     

以德日两国为例谈后起国工业化的四个要点

经验表明，农业、技术创新、金融体系以及政府干预是工业化过程的重要环节，尤其对于后发展的国家而言，在这四个方面进行的制度设计将影响其工业化的进程。本文以德国、日本为例对这一问题进行考察，并在此基础上分析发展中国家的未来前景。     

Deflation,Productivity Shocks and Gold: Evidence from the 1880–1914 Period

In this paper we examine the sources and impact of deflation on the growth experiences of the four dominant countries on the gold standard in the period 1880–1913: the United States, The United Kingdom, France and Germany. We distinguish between good deflation, (driven by positive aggregate supply shocks) and bad deflation (driven by aggregate demand shocks). We use an empirical Blanchard/Quah model which decomposes the behaviour of prices, output and the money stock into the impact of shocks such as a world price level shock, a domestic supply shock, and domestic demand shocks including a shock to the domestic gold stock. Our key finding is that the European economies were essentially classic in the sense that output was mainly supply driven and that money was neutral even when country specific gold stocks are included. In the United States, however, we observe both good and bad deflation.     

Offshoring and the Skill Structure of Labour Demand in Belgium

A major concern regarding the consequences of offshoring is the worsening of the labour market position of low-skilled workers. This paper addresses this issue by providing evidence on the impact of offshoring on the skill structure of manufacturing employment in Belgium between 1995 and 2007. Offshoring is found to significantly lower the employment share of low-skilled workers. Its contribution to the fall in the employment share of low-skilled workers amounts to 35 %. This is mainly driven by offshoring to Central and Eastern European countries. While most of the previous papers on this subject focus on materials offshoring, we show that offshoring of business services also contributes significantly to the fall in the low-skilled employment share. As a complement to the existing literature, we compare the widely used current price measure of offshoring with a constant price measure that is based on a deflation with separate price indices for domestic output and imports. This reveals that the former underestimate the extent of offshoring and its impact on low-skilled employment. Finally, we also find that the impact of offshoring on low-skilled employment is significantly smaller in industries with a higher ICT capital intensity.     

Analytical methods for environmental and energy policies

Summary The article focuses on new techniques for effective decision making in the field of energy use and environmental quality. Special attention is paid to the solution of conflicts between different options for economic development. A multi-sector model is constructed which links the use of different energy inputs to production and consumption. This model is further extended with a pollution model which describes the waste discharges associated with a given pattern of energy consumption. Next, substitution between various energy alternatives (induced by price changes resulting from scarcity) are analysed. The conflicts between different options are further analysed by means of learning strategies for conflicting objectives based on the concept of displaced ideals. Finally, the model is applied to Dutch economic-environmental-energy interactions by means of a structural model describing environmental pollution and energy use in relation to production and employment. Some empirical results concerning price reactions from producers induced by external conditions are presented as well.     

Telecommunications Investment in Africa: Implications of US Reform of the International Settlement Rate System*

Abstract: This paper investigates the possible effects of the US reform of the international settlement rate system on telecommunications investment in Africa. We estimate a telecommunications investment equation using a panel data of 51 African countries during the 1991–2003 period and find that settlement payments have significantly positive effects on telecommunications investment in African countries. A 10 percent increase in settlement payment, on average, increases the telecommunications investment expenditure to GDP ratio by 3.4 percent over a three‐year period. Using previously calculated revenue loss from the US reform, our estimates suggest that African countries stand to lose between 4.4 to 11 percentage points of their telecommunications investment in the medium run and with it, possible decreases in income growth rate. However, we argue that African countries can counter the effects of this revenue loss by increasing the efficiency of telecommunications investment through appropriate market restructuring, including the promotion of competition and privatization.     

The Balassa-Samuelson Hypothesis and Oil Price Shocks in a Small Open Economy: Evidence from Cyprus

Focusing on a small open economy, this paper provides very supportive evidence for the Balassa-Samuelson productivity-bias proposition. Using a battery of tests we show that a positive and significant long run relationship exists between the relative price of nontraded goods and real income per capita. An implication of this result is that the prices of services in Cyprus will rise, if EU membership leads to income convergence with the rest of the EU. We have, furthermore, demonstrated that Rogoff's hypothesis, that real oil price changes negatively affect the price of nontradables, is supported by the empirical results.     

电信运营业的价格歧视分析

电信运营业传统上被视为自然垄断行业,再加上电信自身的运营特点,使得价格歧视成为电信运营商常用的一种定价手段。通过价格歧视电信运营商夺取消费者剩余,严重损害了消费者的利益。由于技术的进步,电信运营业的自然垄断性质发生了很大的改变,电信运营业中的价格歧视已经失去了存在的必要。价格是企业重要的竞争手段,对电信运营业的自然垄断的规治首先应加强对其价格歧视的管制。     

Is Belgium ready for EMU? A look at national, sectoral and regional developments

In EMU the question arises how countries will respond to adverse economic shocks. A statistical decomposition of output shocks in Belgium identifies the sectoral level as the main source of turbulence. This sectoral focus reduces the need for monetary, exchange rate and budgetary policies as macro-economic adjustment mechanisms but raises the issue of labour market flexibility. We show that wages fail to respond to sectoral and regional shocks. Similarly to the other EU countries, this absence of wage adjustments tends to amplify the regional divergence in production and employment performance, and can thus threaten political cohesion.     

On the choice of an anchor for the GCC currency: does the symmetry of shocks extend to both the oil and the non-oil sectors?

This paper assesses the costs of forming a monetary union among the Gulf Cooperation Council (GCC) countries by looking at economic linkages within the GCC, and between the GCC and the potential anchors (the US, and major European countries such as France, Germany and Italy) for their proposed new currency. We investigate the importance of the US dollar compared to the Euro by focusing on aggregate demand (AD) and aggregate supply (AS) shock symmetry across these countries. We differentiated between oil and non-oil sector by estimating structural vector autoregression (SVAR) models with a combination of variables: oil output, non-oil output, total output, nominal/real price of oil and overall price level. One set of models was identified with the long-run restrictions of Blanchard and Quah (Am Econ Rev 79(4):655–673, 1989), whereas the set that assesses the robustness of the findings was estimated with the short-run restrictions of Sims (Eur Econ Rev 36(5):975–1000, 1992). We find overwhelming support for AD shock symmetry across the GCC countries and between the GCC and the US, but none for the major European countries with the GCC. Non-oil AS shocks are mostly asymmetric, but oil AS shocks are mostly symmetric when the real price of oil is included. This agrees with the view that GCC countries are subjected to common oil shocks. It also suggests that previous VAR models estimated to pass judgment on the feasibility of monetary union across GCC countries may have suffered from problems of mis-specification if the real price of oil was not considered. We surmise that the US dollar is a better anchor candidate for anchoring the new GCC currency than the Euro, since US monetary policy can at least help smooth demand shocks in these countries.     

International oil price changes: impact of oil prices on growth and inflation in the EU/OECD

This paper uses an open economy DSGE model to analyse the short and long run quantitative impact of a permanent oil price increase for output and inflation in the euro area and compares the results to the predictions of other models currently in use. Special emphasis is devoted to the issue of stagflation. It is found that with standard monetary feedback rules as currently estimated for the euro area, there is no severe inflation risk. The paper also addresses the issue to what extent there is a short run trade off between inflation and output with an adverse supply shock.The views expressed in this paper are entirely those of the author and should not be attributed to the European Commission.     

Fishing in the same pool: Export strengths and competitiveness of China and Central,Eastern and Southeastern Europe at the EU-15 market

We investigate the impact of the emergence of China as a global competitor on the trade performance of Central, Eastern and Southeastern European (CESEE) countries at the EU-15 market, i.e. the fifteen EU members as of 1995. The main aim of the paper is thus to challenge the common view that China crowds out exporters from European markets. The paper takes a comprehensive approach in terms of empirical methods and data. We analyze export growth, export market shares, extensive and intensive margins and the dynamics in the number of joint trade links (Dynamic Trade Link Analysis), applying highly disaggregated data at the 6-digit HS level over the period 1995–2010. We show that the most contested markets are those for capital goods and transport equipment, product categories where both regions have gained market shares and comparative advantage. We show that the number of trade links at the product level where both regions are active has increased substantially, indicating intensified competition. At the same time hardly any trade links were lost, which points against cut-throat competition between CESEE and China. The decomposition of export growth along the extensive versus the intensive margin shows that in line with the literature, the deepening of already existing trade relationships (i.e. the intensive margin) contributed most strongly to export growth in both regions, whereas the contribution of new trade links (i.e. the extensive margin) had only a minor contribution, apart from the instance of EU accession, which boosted the extensive margin considerably. We further decompose intensive margin growth into demand related structural effects and a supplier related competitiveness effect. Both the CESEE region and China successfully intensified their trade linkages above all as a result of their outstanding competitiveness as shown by the econometric shift-share analysis. While this suggests that both regions pursue a suitable export strategy, further diversification of production towards promising new industries and markets will become increasingly crucial for both, especially in face of projected slower EU-15 market growth in the longer run.     

Fragmentation and trade: US inward processing trade in the EU

Fragmentation and Trade: US Inward Processing Trade in the EU. — Fragmentation, which refers to the splitting up of a previously integrated production process into separate components, is seen as one of the reasons for the increasing globalization of the world economy. This paper undertakes an empirical study of the extent of US inward processing trade (IPT) in the EU, which we use as a proxy for fragmentation in trade. We also provide empirical evidence on the determinants of the distribution of US IPT across manufacturing sectors in the twelve EU member states. Our results give support to the importance of comparative advantage for the sectoral distribution of US IPT. Also, we find that the labour costs and the level of US FDI stocks affect US IPT in EU peripheral countries, while they do not seem to have any impact on EU core countries.     

Export-Oriented Industrialization, Female Employment and Demographic Trends: A Long-term Comparative Perspective of Japan and the Four NIEs- 1950 to 1988.

In the long run there is a virtuous circle of export-oriented industrialization which may be described in a few words: facing a demographic boom, the major challenge was to create employments in large numbers, to achieve productivity gains and to improve income and education levels, which in turn will allow these countries to raise their savings rate and reduce their demographic growth¹.
1. Priority was to be given to employment creations in the modern sector.
2. The Export-Promotion policy drives to develop light and low technology industries employing a large majority of young, low-paid women.
3. Growth in the export sector leads to general growth and in particular generates a dynamic demand for domestic as well as for imported heavy industrial products. A bridge between light and heavy industry was created through Backward-Integration policies.
4. In spite of large surplus in manpower supply, real wages rose from the beginning of Export-Promotion policy implementation. Then rise in real wages accelerated progressively. The productivity growth made wage increases sustainable in the long run. The wage gap was so high that there is still an important price advantage of manpower for East-Asian countries.
5. Improving standards of living and adequate family planning policies resulted in a declining demographic growth.
6. The high growth rate of income was accompanied by a very fast rising household's savings ratio.     

The aggregate supply of output and a constant price level

Summary When they are treating the case of an economy operating at less than full employment macro theorists commonly assume that the aggregate supply function for output is perfectly elastic with respect to the price level. In this paper we demonstrate that an aggregate supply of output which is perfectly elastic at some price level cannot be derived from the interaction of the demand for and supply of labor in a competitive market even when the labor supply conditions are Keynesian in nature - e.g., rigid money wage rates.