Fiscal Harmonization and Portfolio Choice

In this paper, we consider a two-country model based on Svensson (1989) in order to analyze how fiscal harmonization impacts on economic growth and welfare through its effects on agents portfolio decisions in an uncertain world. We derive the conditions under which fiscal harmonization proves to be welfare enhancing and analyse how the set of initial tax rates leading to a welfare improving harmonization is affected by uncertainty and assets returns correlation. In particular, the results obtained suggest that the probability for tax harmonization to be welfare improving is first increasing and then decreasing with uncertainty while it monotonically decreases with the correlation between the assets returns shocks.fiscal harmonization; growth; uncertainty

Skill-upgrading in European textiles resulting from trade with China: firm-level evidence.

In this paper we study the effect of import competition from China on the Belgian textiles sector. Our analysis comprises both trade data and firm-level data. We study the evolution of the unit values in textiles exported from China into the EU versus textiles exported from Belgium to the rest of the EU over the past ten years. We clearly find evidence of a widening price gap between Chinese and Belgian textiles export prices. Chinese textiles seem to become relatively cheaper over time. These findings are in line with Schott (2004; 2007) who argues that capital abundant countries in the US and Europe use their endowment advantage to produce product varieties that are superior in quality compared to labour intensive countries like China. Next we use firm-level data on Belgian textiles firms in search of evidence of quality and skill upgrading in Belgian textiles exports. We study the evolution of firm-level variables such as R&D outlays, the proportion of skilled and unskilled labour used in production and capital intensity. Both China’s entry into the WTO and the end of the Multi-Fibre Agreement significantly seem to cause important shifts in firm level production processes. A very robust result that emerges from the analysis is the one of skill upgrading. While over the past ten years total employment in the Belgian textiles sector has substantially decreased, the ratio of skilled versus unskilled workers has gone up significantly. The evidence is indicative that the Belgian textile sector has been undergoing substantial changes. It is becoming smaller but at the same time seems to be responding to the competition from a low-wage country like China by increasing the skill-content of its products and moving up the quality ladder.skill upgrading; textiles;

Chinese Import Competition and Skill Upgrading in European Textiles.

In this paper we study the effect of import competition from China on the Belgian textiles sector. Our analysis comprises both trade data and firm-level data. We study the evolution of the unit values in textiles exported from China into the EU versus textiles exported from Belgium to the rest of the EU over the past ten years. We clearly find evidence of a widening price gap between Chinese and Belgian textiles export prices. Chinese textiles seem to become relatively cheaper over time. These findings are in line with Schott (2004; 2007) who argues that capital abundant countries in the US and Europe use their endowment advantage to produce product varieties that are superior in quality compared to labour intensive countries like China. Next we use firm-level data on Belgian textiles firms in search of evidence of quality and skill upgrading in Belgian textiles exports. We study the evolution of firm-level variables such as R&D outlays, the proportion of skilled and unskilled labour used in production and capital intensity. Both Chinaâs entry into the WTO and the end of the Multi- Fibre Agreement significantly seem to cause important shifts in firm level production processes. A very robust result that emerges from the analysis is the one of skill upgrading. While over the past ten years total employment in the Belgian textiles sector has substantially decreased, the ratio of skilled versus unskilled workers has gone up significantly. The evidence is indicative that the Belgian textile sector has been undergoing substantial changes. It is becoming smaller but at the same time seems to be responding to the competition from a low-wage country like China by increasing the skill-content of its products and moving up the quality ladder.textiles; import competition;

Education Funding and Regional Convergence

The aim of this paper is to discuss the process of regional convergence within the framework of an overlapping generations model in which the engine of growth is the accumulation of human capital. In particular, we consider different education funding systems and compare their performance in terms of growth rates and pace of convergence between two heterogeneous regions. The analysis suggests that the choice of a particular education system incorporates a possible trade-off between long run growth rate and short run convergence. In such choice, the initial capital stock and the extent of regional human capital discrepancy appear as central variables.Altruism; education; growth; convergence; capital mobility

Rhomolo: A Dynamic Spatial General Equilibrium Model for Assessing the Impact of Cohesion Policy

The present paper presents the newly developed dynamic spatial general equilibrium model of European Commission - RHOMOLO, in which the interplay of agglomeration and dispersion forces can be analysed in a novel and theoretically consistent way. A particular attention is paid to income, migration flows and capital movements within and between regions that are generated by the stimulus to the regions. This will allow an assessment of the feedback to the Member States and regions and the possibility that in the longer run they will all benefit from the additional growth that is generated. The paper analyses the implications of different assumptions on capital and labour mobility within and between Member States on the spatial equilibrium in terms of income and employment. In doing so, it sheds new light on how the success of cohesion policy can be measured.JRC.J.2-Knowledge for Growt

A new experimental set-up for the study of the formation and dissociation of methane hydrate in sediments

methane hydrates ; sediments ; kinetics ; modelling ; heat transfer ; mass transfer ;International audienceIn this paper, we give a short presentation of the project ForDiMHyS which consists of experimental studies and model establishment (or development) of the kinetics of FORmation and Dissociation of Methane Hydrates in Sediments. We focus on the details of the experimental set-up which is newly, specially designed for this study in the preliminary step of the project. The four French academic teams and two PhD thesis are involved in the ForDiMHyS project on the period 2000-2004. The financial support is given by the five French Partners. The project consists of two-step programs; firstly the data acquisition from the laboratory experimental set-up and secondly simulation of methane production from methane hydrate fields

Trait-anxiety dependence of movement time performance in a bimodal choice task in subjects exposed to moderate anxiogenic conditions

International audienceRecent studies have provided insight into the interdependence between state-anxiety, trait-anxiety and motor performances. In the present study, we investigated in very low trait-anxiety (VLTA) and normal trait-anxiety (NTA) subjects, the effects of moderate state-anxiety induced by the video-recorded Stroop color word interference test, on reaction time and movement time in bimodal choice response time task providing either visual or auditory modality. We found that in anxiogenic condition, movement time performances were improved in visual modality in NTA subjects, and in auditory modality in VLTA subjects. Our results show that depending on their trait-anxiety level, individuals exposed to anxiogenic condition would allocate attentional resources towards a specific relevant modality. Such attentional resources would influence movement time, but not reaction time

Regional general equilibrium modelling with forward-looking agents: an application to the 2014-2020 European structural regional investments

We investigate the macroeconomic effects of the investments of the European Regional Development Fund and the Cohesion Fund financed by the 2014-2020 cohesion policy. We use a general equilibrium model calibrated on the NUTS 1 regions of the EU with forward-looking agents in order to take into account expectations and potential long-lasting effects of the policy. We show that the almost €260 billion of investments lead the European GDP to be 0.3% higher in 2022 than it would be in the absence of the policy. Interestingly, this effect is lower than what a model with myopic agents would suggest. The regional distribution of the differences in the GDP impacts between the two settings indicates that the largest deviations are recorded for the net recipient regions, with interesting implications regarding the policy credibility, the nature of the interventions and their duration. These findings suggest that it would be worth investing in developing spatial models capable of dealing with alternative assumptions regarding the economic agents’ expectation formation.JRC.B.7 - Innovation Policies and Economic Impac

A cohesion policy analysis for Romania towards the 2021-2027 programming period

We present an analysis on cohesion policy investments in the regions of Romania using the spatial dynamic general equilibrium model RHOMOLO in order to provide useful insights on the 2021-2027 programmes and their implications for growth and development. The analysis is based on a hypothetical distribution of the funding across the following fields of intervention: aid to the private sector, research and development, transport infrastructure, other infrastructure, and human capital. These interventions are modelled using a mix of demand and supply side shocks. We find that a projected €31.3 billion of cohesion policy funding would increase Romanian GDP by 3.8% at the end of the 10-years implementation period with respect to the no policy scenario. Our results suggest that there seems to be an equity-efficiency trade-off in Romania: in most cases, the returns of the policy in terms of GDP are maximised by investing in the capital city region, at the expense of worsening regional disparities. For some fields of intervention, though, the spillovers generated in the less developed regions are so large that the national GDP impact is similar when investing there rather than in the capital city region.JRC.B.7 - Innovation Policies and Economic Impac