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fileadmin/Documents/Publikationen/Working_Paper/N_010-badinger.pdf

Abstract: This paper provides a comprehensive assessment of the relation between inflation and globalization, measured in terms of trade and financial openness. Using a large crosssection of 91 countries covering the period 1985-2004, we establish two main empirical regularities. Both higher trade and financial openness i) reduce central bank’s inflation bias,yielding lower average inflation, and ii) are associated with a larger output-inflation tradeoff. This evidence is at odds with the standard Barro-Gordon framework, which would require globalization to have a negative effect on the output-inflation tradeoff to yield lower equilibrium inflation, but it is consistent with a recent strand of new Keynesian models emphasizing the role of imperfect competition and wage rigidities. Moreover, our findings do not hold up for the OECD subsample, which suggests that a group of highly developed countries has been successful in creating an institutional framework for central banks that eliminates distortions due to the time inconsistency problem.

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fileadmin/Documents/Publikationen/Working_Paper/N_013-beijnen.pdf

Abstract: This paper investigates the existence and extent of economies of scale in the European payment processing industry. It is expected that the creation of a Single European Payments Area (SEPA) will spur consolidations and mergers among European payment processors to more fully realize payment economies of scale. We find evidence for the existence of significant economies of scale using data of eight European payment processors during the years 1990-2005. The analysis also reveals that ownership structure is an important factor to explain cost differences across European ACHs.

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fileadmin/Documents/Publikationen/Working_Paper/N_008-breuss.pdf

Abstract: Advanced industrial countries have been exhibiting a steady decline of the labor income shares in the last two decades. We explain this phenomenon by resorting to the old Stolper-Samuelson theorem. The conclusions concerning the impact of free trade on the income distribution are unambiguous in a Heckscher-Ohlin world with two countries, two goods and two factors of production (capital and labor). In contrast, the consequences of FDI from the capital abundant country (EU) to the labor abundant CEEC are ambiguous. Both scenarios are investigated theoretically and then simulated with a hypothetical two country CGE model, including the EU and the CEEC. A panel regression for both regions separately, helps to decide empirically which influences on the development of the labor income shares are at work. Globalization, measured by revealed comparative advantage (increase in global net trade) has contributed to a decline in the labor income shares in the EU. Additionally, those countries which are engaged more in trade with the CEEC can expect a sharper decline in the wage share. Global net FDI outflow also exerts a negative influence on the labor income share in the EU. In the CEEC the increase in global net trade had a positive influence on the labor income share, trade with the EU, however, dampened the labor income share. FDI inflow increased the labor income share in the CEEC.

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fileadmin/Documents/Publikationen/Working_Paper/N_007-breuss.pdf

Abstract: EU's 2007 enlargement by Bulgaria and Romania is evaluated by applying a simple macroeconomic integration model able to encompass as many of the theoretically predicted integration effects possible. The direct integration effects of Bulgaria and Romania spill-over to EU15, including Austria and the 10 new member states of the 2004 EU enlargement. The pattern of the integration effects is qualitatively similar to those of EU’s 2004 enlargement by 10 new member states. Bulgaria and Romania gain much more from EU accession than the incumbents in the proportion of 20:1. In the medium-run up to 2020, Bulgaria and Romania can expect a sizable overall integration gain, amounting to additional ½ percentage point real GDP growth per annum. Within the incumbent EU member states Austria will gain somewhat more (+0.05%) than the average of EU15 (+0.02%) and the 10 new EU member states (+0.01%), which joined the EU in 2004.

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fileadmin/Documents/Publikationen/Working_Paper/N_004-breinbauer.pdf

Abstract: The article provides a general introductory overview of the (spatial) mobility of highly skilled/qualified persons and discusses the different terms of the mobility of the Highly Skilled, especially those of scientists. It outlines theoretical and empirical aspects of these movements and delineates the drain of European talent to the U.S., especially the outflow of scientists and researchers who contribute considerably to the U.S. innovation system. Further, it takes a closer look at outward mobility in the former socialist countries in Europe, especially in South Eastern Europe, in the period before and after the fall of the Iron Curtain. Finally, the article outlines general policy options in dealing with the mobility of the Highly Qualified.

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fileadmin/Documents/Publikationen/Working_Paper/N_005-keuschnigg.pdf

Abstract: This paper develops a model of a monopolistically competitive industry with extensive and intensive business investment and shows how these margins respond to changes in average and marginal corporate tax rates. Intensive investment refers to the size of a firm's capital stock. Extensive investment refers to the firm's production location and reflects the trade-off between exports and foreign direct investment as alternative modes of foreign market access. The paper derives comparative static effects of the corporate tax and shows how the cost of public funds depends on the measures of effective marginal and average tax rates and on the behavioral elasticities of extensive and intensive investment.

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fileadmin/Documents/Publikationen/Working_Paper/N_006-stehrer.pdf

Abstract: In the trade-technology-wage debate, the effects of the various forms of technical progress on relative factor prices have been addressed in a number of contributions over the past decade. However, the existing literature is far from conclusive. The various contributions have either relied on specific assumptions, such as Leontief technologies or Cobb-Douglas demand, that have been decisive for the respective conclusions, or they used a more general framework, arriving at ambiguous results in many cases. In this paper we analyse a general equilibrium framework with CES production and CES demand functions, which allows for any discrete number of sectors and countries integrated via trade flows. Technologies are country- and sector-specific and endowment structures differ across countries. The necessary and sufficient conditions under which the relative wage rates are rising or falling in the domestic and foreign economies are derived. This is done for various types of factor- and sector-biased technical change taking place in a particular sector in either the home or foreign country. The conditions - depending on the relative skill intensity of the innovating sector, the elasticities of substitution in demand and supply, the relative factor endowment and the prevailing (equilibrium) relative wage rate - allow for straightforward economic interpretations. This permits to solve the cases classified as ambiguous in the existing literature and provides clear-cut conditions which are important for modelling and empirical research. Furthermore, the results are interpreted with respect to recent empirical studies where special emphasis is given to the sector-biased versus factor-biased hypothesis.

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fileadmin/Documents/Publikationen/Working_Paper/N_002-francois_woerz.pdf

Abstract: Working with a mix of panel data on goods and services trade for the OECD for 1994-2004, combined with social accounts data (i.e. data on intermediate linkages) for 78 countries benchmarked to 2001, we examine the role of services as inputs in manufacturing, with a particular focus on indirect exports of services through merchandise exports, and also on the related interaction between service sector openness and the overall pattern of manufacturing exports. From the crosssection, we also develop a set of stylized facts linking services to level of development and the density of intermediate linkages. We find significant and strong positive effects from increased business service openness (i.e. greater levels of imports) on industries like machinery, motor vehicles, chemicals and electric equipment, supporting the notion that off-shoring of business services may promote the competitiveness of the most skill and technology intensive industries in the OECD. Conversely, we find evidence of negative general equilibrium effects for sectors that are less service intensive.

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fileadmin/Documents/Publikationen/Working_Paper/N_003-havlik1.pdf

Abstract: This paper investigates the process of trade integration between the enlarged European Union and the Newly Independent States (NIS), focusing on the new EU member states (NMS) and selected NIS (Russia, Ukraine, Belarus, Moldova and Kazakhstan). The paper analyses the evolution of the regional and commodity composition of trade in the countries concerned. A detailed market share analysis reveals the emerging trade specialization patterns. There has been a general trade reorientation of both NMS and (less so) the NIS towards the West. The recent trade developments on EU-NIS borders indicate a closer trade integration among the NMS, a declining trade integration among the NIS, as well contradictory shifts in NMS-NIS exports and imports. The importance of the NIS as export markets for the NMS is growing, in particular for the NIS neighbours. The bulk of EU exports is made up of manufacturing products. By contrast, EU imports from the NMS and NIS display a much more distinct //? OR: diversified?// pattern. The key NMS manufacturing export commodities to the NIS are chemicals, machinery & equipment, motor vehicles and food products, whereas NMS manufacturing imports from the NIS are dominated by basic metals, refined petroleum, chemicals and fabricated metal products, and there is a high concentration on just a few basic manufactures. The NMS increasingly specialize on high-tech and medium-high-tech products. The wide-ranging modernization and industrial restructuring in the NMS has been facilitated by the process of EU integration and by massive inflows of FDI whereas in the NIS the resource specialization generally increased as reforms and restructuring were delayed. It is questionable whether the NIS will be able to revamp their industrial structure without significantly stepping up reform efforts, trade integration and attracting more FDI.

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fileadmin/Documents/Publikationen/Working_Paper/N_001-breuss.pdf

Abstract: Since its inception in 1995, more than 330 disputes have been raised under the WTO Dispute Settlement System. The major players in world trade - the EU and the USA - are also the busiest users of this instrument. After looking at links between economic integration and WTO involvement and a survey of the actual transatlantic WTO trade disputes, the welfare implications of the four most prominent trade disputes between the EU and the USA ("mini trade wars") are analyzed with GTAP5: the Hormones, the Bananas, the FSC and the Steel cases. The economic analysis reveals that the level of suspension of concessions hardly coincides with the level of nullification or impairment (expressed in lost trade effects) if one considers the overall welfare implications of retaliation with tariffs. The idea of "rebalancing" retaliation is a myth. Tariffs are a very bad instrument of retaliation. Maybe a mechanism of direct transfers or financial compensation would be better.