Unemployment compensation and aggregate fluctuations

This paper focuses on a theoretical and empirical analysis of the effects of discretionary changes of unemployment compensation payments on aggregate fluctuations. By means of a dynamic stochastic general equilibrium model, it is shown that unemployment compensation can stabilize consumption on the one hand; however, on the other one, it has adverse effects on unemployment and output. These theoretical results are confirmed by the empirical structural vector autoregressive model. Moreover, the results highlight the importance of real wages in transmitting unemployment benefit shocks on to the macroeconomy. In particular, discretionary changes lead to an increase in real wages, unemployment and consumption while inducing a small decline in outpu

Regional Measures of Human Capital in the European Union

The accumulation of the human capital stock plays a key role to explain the macroeconomic performance across regions. However, despite the strong theoretical support for this claim, empirical evidence has been not very convincing, probably because of the low quality of the data. This paper provides a robustness analysis of alternative measures of human capital available at the level of EU NUTS1 and NUTS2 regions. In addition to the univariate measures, composite indicators based on different construction principles are proposed. The analysis shows a significant impact of construction techniques on the quality of indicators. While composite indicators and labour income measures point to the same direction of impact, their correlation is not overwhelmingly high. Moreover, popular indicators should be applied with caution. Although schooling and human resources in science and technology explain some part of the regional human capital stock, they cannot explain the bulk of the experience.human capital indicators, regional growth

A time-stepping method for non-smooth mechanical systems

International audienceTime-stepping algorithms allow a robust simulation of dynamical problems with many unilateral constraints and friction. Its idea is to calculate velocity updates instead of accelerations. As a consequence, contact behaviour and impact can be treated by the same equations

Formulation and Preparation for Numerical Evaluation of Linear Complementarity Systems in Dynamics

In this paper, we provide a full instruction on how to formulate and evaluate planar frictional contact problems in the spirit of non-smooth dynamics. By stating the equations of motion as an equality of measures, frictional contact reactions are taken into account by Lagrangian multipliers. Contact kinematics is formulated in terms of gap functions, and normal and tangential relative velocities. Associated frictional contact laws are stated as inclusions, incorporating impact behavior in form of Newtonian kinematic impacts. Based on this inequality formulation, a linear complementarity problem in standard form is presented, combined with Moreau's time stepping method for numerical integration. This approach has been applied to the woodpecker toy, of which a complete parameter list and numerical results are given in the pape

Regional measures of human capital in the European Union

The accumulation of the human capital stock plays a key role to explain the macroeconomic performance across regions. However, despite the strong theoretical support for this claim, empirical evidence has been not very convincing, probably because of the low quality of the data. This paper provides a robustness analysis of alternative measures of human capital available at the level of EU NUTS1 and NUTS2 regions. In addition to the univariate measures, composite indicators based on different construction principles are proposed. The analysis shows a significant impact of construction techniques on the quality of indicators. While composite indicators and labour income measures point to the same direction of impact, their correlation is not overwhelmingly high. Moreover, popular indicators should be applied with caution. Although schooling and human resources in science and technology explain some part of the regional human capital stock, they cannot explain the bulk of the experience

Regional measures of human capital in the European Union

The accumulation of the human capital stock plays a key role to explain the macroeconomic performance across regions. However, despite the strong theoretical support for this claim, empirical evidence has been not very convincing, probably because of the low quality of the data. This paper provides a robustness analysis of alternative measures of human capital available at the level of EU NUTS1 and NUTS2 regions. In addition to the univariate measures, composite indicators based on different construction principles are proposed. The analysis shows a significant impact of construction techniques on the quality of indicators. While composite indicators and labour income measures point to the same direction of impact, their correlation is not overwhelmingly high. Moreover, popular indicators should be applied with caution. Although schooling and human resources in science and technology explain some part of the regional human capital stock, they cannot explain the bulk of the experience

Step size adjustment and extrapolation for time-stepping schemes in non-smooth dynamics

International audienceIn this paper we use step size adjustment and extrapolation methods to improve Moreau's time-stepping scheme for the numerical integration of non-smooth mechanical systems, i.e. systems with impact and friction. The scheme yields a system of inclusions, which is transformed into a system of projective equations. These equations are solved iteratively. Switching points are time instants for which the structure of the mechanical system changes, for example, time instants for which a sticking friction element begins to slide. We show how switching points can be localized and how these points can be resolved by choosing a minimal step size. In order to improve the integration of non-smooth systems in the smooth parts, we show how the time-stepping method can be used as a base integration scheme for extrapolation methods, which allow for an increase in the integration order. Switching points are processed by a small time step, while time intervals during which the structure of the system does not change are computed with a larger step size and improved integration order. The overall algorithm, which consists of a time-stepping module, an extrapolation module and a step size adjustment module, is discussed in detail and some examples are given

Do reserve requirements reduce the risk of bank failure?

There is an increasing literature proposing reserve requirements for financial stability. This study assesses their effects on the probability of bank failure and compares them to those of capital requirements. To this purpose a banking model is considered that is subject to legal reserve requirements. In general, higher reserve requirements promote risk-taking as either borrowers or banks have an incentive to choose riskier assets, so banks' probability of failure rises. Borrowers' moral hazard problem augments the adverse effects. They are mitigated when allowing for imperfectly correlated loan-default as higher interest revenues from non-defaulting loans curb losses from defaulting loans

A Bayesian Markov-switching SAR model for time-varying cross-price spillovers

The spatial autoregressive (SAR) model is extended by introducing a Markov switching dynamics for the weight matrix and spatial autoregressive parameter. The framework enables the identification of regime-specific connectivity patterns and strengths and the study of the spatiotemporal propagation of shocks in a system with a time-varying spatial multiplier matrix. The proposed model is applied to disaggregated CPI data from 15 EU countries to examine cross-price dependencies. The analysis identifies distinct connectivity structures and spatial weights across the states, which capture shifts in consumer behaviour, with marked cross-country differences in the spillover from one price category to another