This paper analyses the competitiveness of Austrian manufacturing industries by comparing the performance of Austrian firms
with the Western European firms using recent estimates of total factor productivity (TFP) across Wider Europe (EU 28 plus
Western Balkans) during the period 2007-2015. According to the TFP estimates, Austrian firms with larger turnovers, and less
employment, in regions with less regional-industrial concentration of labour have become more competitive in terms of TFP.
Using firm's TFP and other characteristics aggregated by industries across Wider Europe, a structural gravity model for exports
is estimated. In line with the Ricardian models of trade and new trade theories, results show that larger trade across countries
in the sample is driven by intra-firm trade, and comparative advantages that are measured as better efficiency of industries
in terms of simple average of TFP growth of firms and more allocation of capital to more efficient firms. Comparing the actual
values of exports from Austria to Central, East and Southeast Europe (CESEE) with the counterfactual predicted values of the
structural gravity model, I find that since 2012 excessive exports were directed to Western Europe rather than to CESEE. In
a robustness check using unilateral export values, these interesting findings also confirm that a potential Austrian lock-in
effect in the CESEE region reversed and trade diverged to the more competitive market of Western Europe.
This paper analyses the structure of the European income inequality by a decomposition in a within- and between-component.
It illustrates a replication of the work of Beblo and Knaus (Rev Income Wealth 47(3):301-333, 2001) and decomposes the income
inequality for the EU 28 in 2014 by using data from the European Survey on Income and Living Conditions. The Theil index is
applied to additionally decompose the sources of inequality into a within- and between-component by countries, country groups
and demographic groups. This is done by using equivalised disposable household income and income before transfers and taxes.
The results show that inequality, with regard to disposable income, is highest for households with household heads older than
59 years and lowest for households with children. Moreover, high income countries have lower inequality, higher social expenditures
and show a stronger relative reduction of income inequality after transfers and taxes than low income countries. On country
group level, Social-Democratic countries have the lowest income inequality and redistribute most, while the opposite holds
true for Baltic countries.
By means of stochastic volatility in the mean model to allow for time-varying parameters in the conditional mean and quarterly
data for the G7 countries, this article examines the dynamic nexus between the volatility of output and economic growth for
the G7 countries. This approach allows us to model parameter time-variation so as to reflect changes in the effect of volatility
appearing in both the conditional mean and the conditional variance. The evidence in this article indicates that the effect
of output volatility on output growth is strongly time-varying and quite analogous for all the G7 countries, with a break
around 1973. The effect of output volatility on growth becomes more negative after 1973, with negative and statistically significant
estimates after 1973 or the early 1990s. Our estimates show a reversal of the declining trend and a significant increase in
output volatility in the late 2000s, indicating that the Subprime Crisis brought a temporary break in the Great Moderation.
However, the Great Moderation seems to be generally restored by the mid-2010s. The effect of output growth on output volatility
is insignificant for all countries except for Italy and the USA, for which the estimates are positive and statistically significant.
Our estimates also show that output volatility is counter-cyclical for all countries.
A major goal of the European Commission in the area of direct taxation is the introduction of a common consolidated corporate
tax base in Europe (CCCTB). While hardly discussed in the literature, such a system would limit national discretion over tax
depreciation. In a sample of up to 47 countries, we find that the probability of a tax reform that improves the depreciation
allowances increases, if the macroeconomic situation is weak. This suggests that changes in depreciation allowances are used
as a fiscal instrument for stabilisation. A common consolidated tax base deprives national governments from implementing investment
incentives via accelerated depreciation. This paper discusses the possible implementation of a hybrid system that combines
features of formula apportionment and separate accounting. Such a hybrid system may substantially mitigate transfer pricing
problems and other tax planning issues, whilst preserving national discretion over depreciation allowances.
This study analyses and compares the dynamics of intra-European Monetary Union and intra-non-EMU, EU stock markets' return
spillover during European Sovereign Debt Crisis (2 November 2009 to 30 December 2016). Diebold and Yilmaz's (Int J Forecast
28(1):57-66, 2012) spillover index, Barunik's et al. (J Int Money Finance 77:39-56, 2017) spillover asymmetry measures, and
Barunik and Krehlík's (J Financ Econ 16(2):271-296, 2018) frequency connectedness methodologies are applied for analysis.
The findings of this study indicate that intra-EMU stock market return spillover was higher than the intra-non-EMU EU stock
markets' return spillover during the crisis period. It is also identified that the intra-EMU stock market return spillover
is more responsive to global and domestic economic and financial events than to the intra-non-EMU EU stock markets' return
spillover. France was identified as the most integrated and Slovakia the least integrated among the EMU stock markets. Among
the non-EMU EU stock markets, Sweden was identified as the most integrated and Bulgaria as the least integrated stock market
with other non-EMU EU stock markets. The presence of asymmetry in the return spillover for both EMU and non-EMU, EU stock
markets was also revealed. It was also found that return spillover among the EMU and non-EMU, EU stock market is dominated
over higher frequencies and that stock markets in these economies analyse information rapidly to incorporate it into stock
prices. The findings of the study provide significant implications for researchers, academician and policy-makers. Knowledge
regarding the dynamics of return spillover among the investigated stock markets will allow investors to formulate their portfolio
diversification strategies in a better and informed manner.
Carlos Vacas-Soriano, Enrique Fernández-Macías, Rafael Muñoz de Bustillo
This paper presents an analysis of two processes of convergence between European countries, in wage levels and wage distributions,
and the extent to which they explain recent trends in wage inequality for the EU as a whole. The results show that wage convergence
was the main driver behind wage inequality trends for the EU as a whole in the last decade, which was significantly reduced
prior to the crisis as a result of wage catch-up growth mainly in Eastern Europe, a process which was interrupted during the
crisis but reactivated again in the most recent period. On the other hand, the contribution of within-country wage developments
to explain changes in wage inequality for the EU as whole over the last decade was much more limited, although it is interesting
to note as well a process of convergence in wage distributions between European countries towards intermediate inequality
levels. Policies directed at reducing wage disparities within countries offer the best prospect to tackle wage inequalities
both at the national and EU-wide level, as illustrated by the introduction of the German statutory minimum wage in 2015.
This article assesses the effectiveness of the labour market reforms implemented in Portugal as part of the Troika's structural
reform package. Using an ARDL-bounds test model to perform the econometric estimation, this investigation examines the long-run
relationship between unemployment, capital accumulation and labour market variables for the 1985-2013 period. The econometric
estimation suggests that capital accumulation has been the main driver of long-run unemployment, whilst labour market variables
have played a minor explanatory role. These results suggest that Portuguese NAIRU is endogenous to capital accumulation and
do not support the Troika's emphasis on labour market reforms as a strategy to reduce long-term unemployment.
The paper examines the impact of human capital on the growth of total factor productivity in European countries. Using the
modified Nelson-Phelps framework, we estimate regressions based on panel data for the period 1950-2014, measured as 5-year
averages. The GMM estimates show the positive and statistically significant effects of human capital on technological progress
and diffusion. However, the results do not favour the convergence of all countries in the sample to the technological frontier.
In addition to countries that are not yet members of the EU, our estimates suggest that peripheral EU countries have a weak
convergence rate due to insufficient investment in human capital.
The paper addresses the issue of convergence with the EU for nine countries: Albania, Bosnia and Herzegovina, Georgia, Moldova,
Serbia, the Former Yugoslav Republic of Macedonia, Turkey, Montenegro and Ukraine. They are all at different stages of EU
candidacy which could eventually lead to full membership. Some are officially recognised as candidate countries while others
are at the stage of an association agreement. The presence of convergence is examined in terms of two macroeconomic indices:
GDP per capita and GDP per person employed. Panel unit root tests as well as univariate unit root tests are estimated for
the period 1997-2016. In broad terms, the empirical findings reported herein indicate a lack of convergence with the EU irrespective
of the metric used. However, they indicate a process of in-group convergence mostly in terms of GDP per person employed.