Inequality, credit and financial crises Perugini, Cristiano; Hölscher, Jens; Collie, Simon
Cambridge journal of economics,
01/2016, Letnik:
40, Številka:
1
Journal Article
Recenzirano
Odprti dostop
In the three decades leading up to the financial crisis of 2008/09, income inequality rose across much of the developed world. This has led to a vigorous debate as to whether widening inequality was ...somehow to blame for the crisis by driving private sector credit booms. Despite growing interest, empirical evidence on an inequality–fragility relationship is limited. Based on a panel analysis of 18 OECD (Organisation for Economic Co-operation and Development) countries for the years 1970–2007, this study provides evidence of a positive relationship between income concentration and private sector indebtedness, once other traditional drivers are controlled for. If confirmed, the implications of this result are as follows: (i) the view that the distribution of income is irrelevant to macroeconomic stability, as implicit in mainstream approaches, needs further investigation; and (ii) in order to make the financial system more robust, policy makers should cast the net wider than monetary policy and regulatory reforms and consider the effects of changes to distributive patterns.
This paper examines the relationship between the compositions of government expenditure and economic growth. It develops an endogenous growth framework drawing on variables from existing models, and ...separates government expenditure into productive and non-productive forms. Using panel data from 37 high-income and 22 low- to middle-income countries covering 1993–2012, our findings are based on OLS fixed effects and GMM techniques. We challenge much of the existing empirical literature in relation to developing economies by showing that a shift in government expenditure away from non-productive government expenditure and towards productive forms of expenditure are associated with higher levels of growth in both high-income and low- to middle-income economies. Moreover, we identify the differing components of government expenditure that are most associated with increased long-run output levels in both high-income and low- to middle-income economies.
State Aid in the New EU Member States Hölscher, Jens; Nulsch, Nicole; Stephan, Johannes
Journal of common market studies,
July 2017, Letnik:
55, Številka:
4
Journal Article
Recenzirano
Odprti dostop
In the early phase of transition, which began in the 1990s, Central and Eastern European countries (CEECs) pursued economic restructuring that involved massive injections of state support. With ...reference to the history of state aid in centrally planned economies, we investigate state aid practices of CEECs since attaining full EU membership. We analyse whether their state aid policies during and after transition challenged European state aid legislation, and whether these fit into the EU strategy of ‘less but better targeted aid’. The data‐based analysis is complemented with some indicative insights from state aid in the steel industry as well as the financial service sector to suggest that there is today no significant difference in state aid law application between East and West any more – the new EU members have further caught up by better aligning to the objectives of the State Aid Action Plan.
This paper adds to evidence that the forward-discount puzzle is at least in part explained as a compensation for taking crash risk. A number of Central and Eastern European exchange rates are ...compared. A hidden Markov model is used to identify two regimes for most of the exchange rates. These two regimes can be characterised as being either periods of calm or periods of crisis The level of international risk aversion and changes in US interest rates affect the probability of switching from one regime to the other. This model is then used to assess the way that these two factors affect the probability of a currency crisis. While the Czech Republic, Hungary and Bulgaria are very sensitive to international financial conditions, Poland and Romania are relatively immune.
The research question presented in this analysis focuses on national fiscal rules applicable in the Visegrad Group (also called V4) expressed in the European standardised fiscal rules index and on ...their impact on the socio-economic policy. The use of fiscal rules as an instrument of fiscal sustainability is manifested by imposing requirements as regards borrowing and the costs of public debt service. A high level of debt can cause social development expenditure to be crowded out, contributing to growing development disparities in social and economic terms.
In this paper we examine the effects of trade liberalisation on inequality in the small developing country of Nepal. We use a Computable General Equilibrium approach applied to a newly developed ...social accounting matrix, simulating three liberalisation scenarios: (i) import liberalisation; (ii) export liberalisation; and (iii) import and export liberalisations implemented together under different exchange rate regimes. Outcomes reveal that industry reallocation following liberalisation does not respond to classical trade theory expectations about factor intensity and abundance. On the distributive side, liberalisation seems to increase the high-skilled/low-skilled gap and favour rich households relatively more. However, since under fixed exchange rate also the two poorest household groups increase their income levels, liberalisation may also expected to be beneficial for poverty alleviation.
In the last two decades a broad process of labour market reforms towards more flexible and liberal models has been taking place in Europe. For Central and Eastern European countries this evolution ...was an important dimension of the wider process of institutional change which accompanied their transition to market economies. This article presents the complex picture of EU countries at the outset of the recent crisis (2007) in terms of the components of earnings differentials, with particular emphasis on the dimensions of labour market flexibility identifiable with contractual arrangements (temporary versus permanent employment) and self-employment. Our main focus is on Central and Eastern European countries but we keep old EU members as benchmarks. Results highlight that different factors lie behind permanent/temporary and permanent/self-employed earnings gaps in the two regions. The dualism between regular and flexible jobs in the CEE labour market is mainly based on workers' attributes; in the Western EU the dualism is instead mainly driven by discrimination associated with labour positions.
PDF
