http://repub.eur.nl/res/aut/2608/ List of Publications en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/26409/ 2011-04-01T00:00:00Z In this article the relation between religion and income is investigated using a micro-dataset for the Netherlands. Religion is measured by religious membership and by participation. Instead of estimating a religion equation and an income equation separately, joint regression is preferred since this generally yields more efficient estimates. Following the single-equation approach, both religious measures are found to decrease income significantly and income is found to affect religion negatively. However, these cross-effects become insignificant once the equations are estimated simultaneously. In contrast, the effects of socio-economic characteristics on religion and income hardly differ between the approaches. http://repub.eur.nl/res/pub/11080/ 2008-01-28T00:00:00Z This paper tests whether the behaviour of households in different countries is homogeneous with respect to the influence of religion on income. The violation of the homogeneity assumption would have two consequences. First, results based on country studies might not be applicable to other countries. Second, one should be careful when pooling cross-country data in this type of research. Data at household level of the European and World Values Survey are pooled for 25 Western countries. We estimate simultaneously an income and a religion equation to correct for the endogeneity of religiosity. We find that estimation outcomes are different between low and high-income countries. Whereas church membership is found to have a positive effect on income for high-income countries, this effect is negative for low-income countries. This result is robust to denominational distribution, participation effects and alternative measures of religiosity. http://repub.eur.nl/res/pub/10677/ 2007-09-24T00:00:00Z The European Commission favours the introduction of a consolidated corporate tax base to overcome the distortions arising from the existing system of separate accounting. The blueprints for consolidation are simulated with the applied general equilibrium model CORTAX. We show that the benefits of a common consolidated tax base are limited due to two weaknesses. Formula apportionment, which is needed to allocate the consolidated taxable profits across jurisdictions, creates for MNEs new tax planning possibilities to exploit tax rate differentials in the European Union. In addition, it triggers tax competition as the incentives for member states to attract foreign investment by reducing their tax rates are enforced. The second weakness arises from the unlevel playing field, which is introduced if only part of the firms chooses to participate in the consolidation. The gains from consolidation can be fully grasped if it is obliged for all firms and accompanied by harmonisation of the tax rate. http://repub.eur.nl/res/pub/10481/ 2007-07-24T00:00:00Z In this paper we identify the effects of ageing on the relative price of nontradeables versus tradeables. We consider two cases. In a first specification, age effects only account for short-run dynamics. An alternative case allows for permanent age effects. Estimating the respective cases by means of an ECM on a panel of OECD countries we find significant effects of demographic composition on the relative prices, even after correcting for the standard explanatory variables. Simulations based on population projections of the UN show that ageing might substantially contribute to inflationary pressures in the near future. http://repub.eur.nl/res/pub/10441/ 2007-05-30T00:00:00Z This paper analyzes the impact of corporate taxes on structural unemployment, using an applied general equilibrium model for the European Union. We find that the unemployment and welfare effects of corporate taxes differ considerably among European countries. The magnitude of these effects rise in particular in the broadness of the corporate tax base of a country, and the strength of international spillover effects through foreign direct investment. The effect on unemployment is smaller if the substitution elasticity between labour and capital is large, if international spillover effects operate primarily via multinational profit shifting, and if equilibrium forces on the labour market are strong. Although the effect of corporate taxes on unemployment may be smaller than the effect of labour and value-added taxes (e.g. under relatively strong real wage resistance), the welfare costs of corporate taxation are typically larger for most European countries under plausible parameters, especially under strong international spillovers. http://repub.eur.nl/res/pub/10898/ 2006-12-01T00:00:00Z In this paper we study the implications of population ageing in an economy with a sizeable non-traded goods sector. To this effect a highly stylized micro-founded macro model is constructed in which the age structure of the population plays a non-trivial role. The model distinguishes separate birth and death probabilities (thus allowing for net population change), allows for age-dependent labour productivity (thus mimicing life-cycle saving), and includes a rudimentary pension system (thus allowing for intergenerational redistribution). The model is used to analytically study demographic and pension shocks. http://repub.eur.nl/res/pub/10903/ 2006-08-22T00:00:00Z This memo documents version 7 of the model, which is used in in Bettendorf et al. (2006). The first chapter documents the derivation of the equations. The calibration of the model is described in chapter 2. Section 1.1 derives the first-order conditions for consumption and labour supply from utility-maximising households. Section 1.2 derives from profit maximisation, the demand for labour, capital, location specific capital, intermediate inputs and financial assets for domestic and multinational firms. Taxes on corporate income, labour income, consumption and wealth are introduced when appropriate. The tax revenues have to meet the government expenditures on consumption, transfers and debt, see section 1.3. The market equilibria and the linkages with the Rest of the World are presented in section 1.4. Section 1.5 presents the solution procedure. Notation follows some simple rules. Upper case symbols are used for aggregated values whereas lower case characters are reserved for per capita variables (in terms of the young generation in the country of origin). In the case of variables with two dimensions, the first index refers to the country which owns the resource (residence), whereas the second index denotes the using country (destination). Time subscripts and country indices are dropped in the exposition whenever this is possible. The rates of return on bonds ( ˆ rwb) and equities ( ˆ rwe) are assumed fixed. The considered countries are small in the sense that they can import (or export) capital from the Rest of the World (ROW) without affecting the world interest rates. In other words, the net supply of capital by the ROW is perfectly elastic. Multinationals are assumed to operate only in the other ‘small’ countries, but not in the ROW (and vice versa). The ROW block does not need to be fully modelled. International capital and good flows are restricted by the current account for each country. http://repub.eur.nl/res/pub/7233/ 2005-11-11T00:00:00Z In this paper the relation between religion and income is investigated using a micro-dataset for the Netherlands. Religiosity is measured by religious membership and by participation. Instead of estimating separately a religion and an income equation, joint regression is preferred since this generally yields more efficient estimates. Following the single equation approach, both religious measures are found to decrease significantly income and income is found to affect negatively religion. However, these cross-effects get insignificant once the equations are simultaneously estimated. In contrast, the effects of socio-economic characteristics on religion and income hardly differ between both approaches. http://repub.eur.nl/res/pub/6585/ 2005-04-01T00:00:00Z This paper analyzes adjustments in the Dutch retail gasoline prices. We estimate an error correction model on changes in the daily retail price for gasoline (taxes excluded) for the period 1996-2004 taking care of volatility clustering by estimating an EGARCH model. It turns out the volatility process is asymmetrical: an unexpected increase in the producer price has a larger effect on the variance of the producer price than an unexpected decrease. We do not find strong evidence for amount asymmetry. However, there is a faster reaction to upward changes in spot prices than to downward changes in spot prices. This implies timing or pattern asymmetry. This asymmetry starts three days after the change in the spot price and lasts for four days. http://repub.eur.nl/res/pub/6597/ 2004-04-01T00:00:00Z In this paper we study the implications of population ageing in an economy with a sizeable non-traded goods sector. To this effect a highly stylized micro-founded macro model is constructed in which the age structure of the population plays a non-trivial role. The model distinguishes separate birth and death probabilities (thus allowing for net population change), allows for age-dependent labour productivity (thus mimicing life-cycle saving), and includes a rudimentary pension system (thus allowing for intergenerational redistribution). The model is used to analytically study demographic and pension shocks. http://repub.eur.nl/res/pub/1091/ 2004-01-06T00:00:00Z This paper investigates the age-dependency of participation and unemployment by integrating job search with intertemporal optimizing behavior of finitely-lived households. We find that search frictions and tax rates distort the decisions of older workers to a much larger extent than that of young workers. This finding provides an explanation of the observed fall of participation rates of elder workers as a result of the post-war increase in tax rates and replacement rates. We show that the age pattern of search unemployment does not match observed unemployment and we propose a new concept of ‘voluntary’ unemployment that agrees well with observations. http://repub.eur.nl/res/pub/10899/ 2003-11-01T00:00:00Z Abstract This article analyses the retail price adjustments in the Dutch gasoline market. We estimate an asymmetric error correction model on weekly price changes for the years 1996–2001. We construct five datasets, one for each working day. The conclusions on asymmetric pricing are shown to differ over these datasets, suggesting that the choice of the day for which the prices are observed matters more than commonly believed. In our view, the insufficient robustness of the outcomes might explain the mixed conclusions found in the literature. Using these two approaches, we also show that the effect of asymmetry on the Dutch consumer costs is negligible. http://repub.eur.nl/res/pub/893/ 2003-09-16T00:00:00Z The ageing baby-boom generations in the OECD economies will have an impact on the global supply and demand of capital over the next decades. The size and direction of this impact have been the subject of much research, which we survey. We study the effects of alternative interest rate paths for the Dutch economy with the IMAGE general equilibrium model, emphasizing developments of the current account. Further simulations explore the sensitivity of the outcomes to alternative demographic projections, tax smoothing and exogenous participation increases. We find that tax smoothing is not the appropriate policy to generate a more equitable intergenerational distribution when changes in the world interest rate are taken into consideration. http://repub.eur.nl/res/pub/838/ 2003-09-08T00:00:00Z The Netherlands will be confronted with an almost doubling of the old-age dependency ratio over the next forty years. The costs of the ageing population are primarily reflected in larger expenditures on pensions and health care. This paper explores the consequences of ageing in a baseline scenario simulated with a dynamic general equilibrium model. The sensitivity of the results are discussed under alternative scenarios for the interest rate and population projections. Finally, the effects of two types of reform measures in the pay-as-you-go social security system are explored. http://repub.eur.nl/res/pub/833/ 2003-09-05T00:00:00Z A dynamic overlapping-generations model of a semi-small open economy with monopolistic competition in the goods market is constructed. A tariff increase reduces real output and employment and improves the terms of trade, both in the impact period and in the new steady state. The tariff shock has significant intergenerational distribution effects which are different for creditor and debtor nations. Bond policy neutralizes the intergenerational inequities and allows the computation of first-best and second-best optimal tariff rates. The first-best tariff exploits national market power, but the second-best tariff contains a correction to account for the existence of a potentially suboptimal product subsidy. http://repub.eur.nl/res/pub/810/ 2003-09-02T00:00:00Z This paper analyses retail price adjustments in the Dutch gasoline market. We estimate an asymmetric error correction model on weekly price changes for the years 1996 to 2001. We construct five datasets, one for each working day. The conclusions on asymmetric pricing are shown to differ over these datasets, suggesting that the choice of the day for which prices are observed matters more than commonly believed. In our view, the insufficient robustness of outcomes might explain the mixed conclusions found in the literature. Using two approaches, we also show that the effect of asymmetry on Dutch consumer costs is negligible. http://repub.eur.nl/res/pub/10901/ 2003-09-01T00:00:00Z The costs of population ageing are primarily reflected in larger expenditures on pensions and health care. This paper explores the consequences of ageing for the Netherlands in a baseline scenario simulated with a dynamic general equilibrium model. We discuss the sensitivity of the results under alternative projections for population ageing. We explore also the effects of three types of social security reform: a reduction in benefits, an increase in the retirement age and smoothing of the public pension premium over time. We find that the welfare effects of ageing and the reforms are substantial. http://repub.eur.nl/res/pub/6712/ 2003-03-31T00:00:00Z This paper investigates the age-dependency of participation and unemployment by integrating job search with intertemporal optimizing behavior of finitely-lived households. We find that search frictions and tax rates distort the decisions of older workers to a much larger extent than that of young workers. This finding provides an explanation of the observed fall of participation rates of elder workers as a result of the post-war increase in tax rates and replacement rates. We show that the age pattern of search unemployment does not match observed unemployment and we propose a new concept of 'voluntary' unemployment that agrees well with observations. http://repub.eur.nl/res/pub/10902/ 2003-01-01T00:00:00Z Avinash Dixit and Joseph Stiglitz revolutionized the modelling of imperfectly competitive markets and launched "the second monopolistic competition revolution". Experts in the areas of macroeconomics, international trade theory, economic geography, and international growth theory examine the success of the second revolution in this collection of papers. They reveal what appears to be "missing" and look forward to the next step in the modelling of imperfectly competitive markets. The text includes a comprehensive survey of the two monopolistic competition revolutions, and previously unpublished working papers by Dixit and Stiglitz that led to their famous 1977 paper. Contributors: Steven Brakman, Ben J. Heijdra, Joseph E. Stiglitz, Avinash K. Dixit, Wilfred J. Ethier, J. Peter Neary, Joseph Francois, Douglas Nelson, Richard E. Baldwin, Rikard Forslid, Philippe Martin, Gianmarco I. P. Ottaviano, Frederic Robert-Nicoud, Jolanda J. W. Peeters, Harry Garretsen, Charles van Marrewijk, Marc Schramm, J. Vernon Henderson, Sjak Smulders, Theo van de Klundert, Henri L. F. de Groot, Marjan W. Hofkes, Peter Mulder, Russell W. Cooper, Jan Boone, Christian Keuschnigg, Leon J. H. Bettendorf. http://repub.eur.nl/res/pub/10948/ 2003-01-01T00:00:00Z De vergrijzingsproblematiek betreft alle Westerse landen. De gecombineerde effecten van een lager geboortecijfer, een lager sterftecijfer en de naoorlogse geboortegolf leiden ertoe dat de bevolkingsopbouw aan het veranderen is. Volgens het CBS zal het bevolkingsaandeel van ouderen (met een leeftijd van 65 jaar of hoger) de komende jaren stijgen van 13% naar ruim 22%. Deze verandering zal zijn weerslag hebben in de hele economie, en bijzonder gevoeld worden in de pensioensector. http://repub.eur.nl/res/pub/10923/ 2001-01-01T00:00:00Z A dynamic overlapping-generations model of a semi-small open economy with monopolistic competition in the goods market is constructed. A tariff increase reduces real output and employment and improves the terms of trade, both in the impact period and in the new steady state. The tariff shock has significant intergenerational distribution effects which are different for creditor and debtor nations. Bond policy neutralizes the intergenerational inequities and allows the computation of first-best and second-best optimal tariff rates. The first-best tariff exploits national market power, but the second- best tariff contains a correction to account for the existence of a potentially suboptimal product subsidy. http://repub.eur.nl/res/pub/10941/ 2001-01-01T00:00:00Z A dynamic overlapping-generations model of a small open economy with monopolistic competition in the goods market is constructed. Lump-sum tax-financed product subsidization boosts output and employment both in the impact period and in the new steady state. The real exchange rate depreciates in the long run but the impact effect is ambiguous. If the labour supply effect is weak and the economy is not very open, the exchange rate appreciates at impact. The policy has important intergenerational distribution effects. Old existing generations gain more than younger existing generations as well as future generations. The bond policy which neutralizes the intergenerational inequities allows the computation of an optimal product subsidy which depends positively on the extent of the domestic scale economies and negatively on the degree of openness of the economy. http://repub.eur.nl/res/pub/10922/ 2000-01-01T00:00:00Z This paper seeks to explain the incomplete transmission of coffee bean prices to consumer prices. We adopt and estimate an aggregate model of oligopolistic interaction. We obtain demand and cost parameter estimates that are consistent with conventional wisdom in the industry. Conduct is estimated to be relatively competitive. Our results imply that the relatively large share of costs other than bean costs accounts for the greater part of the incomplete price transmission. The remaining part is due to mark-up absorption, but is less important as oligopolistic interdependence is relatively competitive. http://repub.eur.nl/res/pub/10946/ 2000-01-01T00:00:00Z http://repub.eur.nl/res/pub/10945/ 1999-01-01T00:00:00Z http://repub.eur.nl/res/pub/10920/ 1998-01-01T00:00:00Z The budgetary consequences of the reform proposals in Agenda 2000 have stimulated the debate on the financial costs and benefits of EU-membership. This article analyses the implications of the proposed agricultural reform for the net contributions by simulating three scenarios. The inclusion of implicit trade subsidies is vital in the discussion on net positions. Agenda 2000 is projected to affect substantially the net positions of member states. http://repub.eur.nl/res/pub/10921/ 1998-01-01T00:00:00Z Investment-promoting policies in a small open economy are analyzed by means of a dynamic applied general equilibrium model with overlapping generations. Simulations of a decrease of the corporate income tax rate and an increase of the investment tax credit rate are discussed and compared. This paper examines in particular the extent to which international trade and capital flows interfere in both tax policies. The modeling of overlapping generations allows moreover to identify the winners and losers of these reforms. It is shown that the subsidy policy is preferred to the profit tax policy when a small open economy seeks to stimulate capital formation. http://repub.eur.nl/res/pub/10917/ 1997-01-01T00:00:00Z After World War I rent control became a cornerstone of housing policy in many European countries, resulting in quantity constraints on the demand for housing. The theory on complete demand systems provides a framework for analyzing the effects of these policies on consumption. As a test case, a demand model is estimated to calculate virtual rent prices for interwar Belgium. The results are well in line with historical evidence, providing insight into the extent of rationing. Simulations with the demand model show that the severe rent restrictions especially favored expenditures on food. http://repub.eur.nl/res/pub/10919/ 1997-01-01T00:00:00Z World coffee bean prices have shown large fluctuations during the past years. Consumer prices for roasted coffee, in contrast, have varied considerably less. This article investigates whether the weak relationship between coffee bean and consumer prices can be explained by a lack of competition on the Dutch coffee market. http://repub.eur.nl/res/pub/10911/ 1989-01-01T00:00:00Z Inverse demand systems explain price variations as functions of quantity variations. They have properties analogous to those of regular demand systems. There are very few examples of their empirical application. In part this is due to lack of data for which price is the decision variable and the quantity given. The case of fish landed at Belgian sea ports appears to suit an inverse demand system well. A Rotterdam variant of such a system in estimated. Allais interaction intensities have been derived and show a reasonable pattern.