Assessing welfare impacts of some debt-consolidation episodes in the European Union

This paper aims at characterizing debt consolidation processes put forward by some European countries in order to assess welfare and, in particular, the inequality effects involved. For that we built a general equilibrium heterogeneous-agent model capable of exploring the relationship between fiscal policy variables and the endogenous crosssection distribution of income and wealth. Results show that, with the exception of the Belgian case, all consolidation strategies entail positive welfare gains. The transition costs affect all episodes and are determinant in sorting among the welfareenhancing strategies. Our results confirm the superiority of the adjustments based on unproductive expenditures over those based on tax increases or social transfer reductions. Finally, all strategies involve lower welfare inequality costs.fiscal consolidation dynamics, European Union, heterogeneous agent model, inequality, welfare.

Monetary and Fiscal Policy Interactions in a Monetary Union with Country-size Asymmetry

This paper analyses optimal discretionary non-coordinated monetary and fiscal stabilization policies in a micro-founded New-Keynesian model of a two-country monetary union with country-size asymmetry, under two policy scenarios. A balanced-budget policy scenario and a policy scenario where the presence of government debt limits the macroeconomic stabilization effort and enlarges the sources of strategic policy interactions. Numerical results indicate that non-cooperation exacerbates the fiscal policy activism of a small country while moderating that of a large country. In the balanced-budget scenario, non-cooperation improves (reduces) welfare for a small (large) country while, in the high-debt scenario, it produces the opposite results. Cooperation dominates non-cooperation for the union as a whole.Monetary union; optimal fiscal and monetary policies; asymmetric countries.

Welfare-improving Government Behaviour and Inequality - Inspection Using a Heterogeneous-agent Model

Governments behavior is expected to be non-neutral in terms of impacts on both welfare and inequality. In spite of their multivariate form, a tentative assessment of such inequality impacts can be provided by using a general equilibrium model with heterogeneous-agents and where wealth and income distribution is determined endogenously. Using a model capable of exploring the relationship between fiscal policy variables and the endogenous cross-section distribution of income, wealth, consumption and leisure, this paper produces a welfare and inequality analysis of several equilibriums resulting from different combinations of debt levels and of government budget variables. Moreover, such assessment is based on the empirical reality of the EU countries.government budget composition and debt, heterogeneous agent model, idiosyncratic shock, inequality, welfare.

Monetary Policy and the Political Support for a Labor Market Reform

Lagged benefits relative to costs can politically block an efficiency-enhancing labor market reform, lending support to the two-handed approach. An accommodating monetary policy, conducted alongside the reform, could help bringing the positive effects of the reform to the fore. In order to identify the mechanisms through which monetary policy may affect the political sustainability of a reform, we add stylized features of the labor market to a standard New-Keynesian model for monetary policy analysis. A labor market reform is modeled as a structural change inducing a permanent shift in the flexible-price unemployment and output levels. In addition to the permanent gains, the impact of the timing and magnitude of the reform-induced adjustments on the welfare of workers - employed and unemployed - is crucial to the political feasibility of the reform. Since the adjustments depend, on one hand, on the macroeconomic structure and, on the other hand, can be influenced by monetary policy, we simulate various degrees of output persistence across different policy rules. We find that, if inertias are present, monetary policy, even when conducted by an independent central bank, affects the political support for the reform. In general, the more expansionary (or the less contractionary) the policy is, the faster is the recovery to the new steady-state equilibrium and, thus, the stronger is the political support.Monetary policy rules; Labor market reforms; Unemployment benefit; Political economy; New-Keynesian models

A case for including fiscal policies in the Eurostat Labour Market Policy database

In the context of the growing coordination of labour market policies (LMP) implementation within the European Employment Strategy (EES), the Eurostat offers a harmonised database that intends to be a valuable instrument for international comparisons in the field. However, because its tight scope fails to include some important LMP measures, this database has been playing a small role on studies related with the EES as well on those broadly focusing on labour market and employment policies. This paper intends to address, by using meaningful LMP measures - tax credits in the UK, the prime pour l'emploi and general reductions of employers’ social contributions in France -, the importance of having a more comprehensive database, while maintaining its current structure. For that we discuss the aims and the level of targeting defined by the Eurostat and we include, under this framework, an assessment of these measures to illustrate the limits of the database. We conclude that these policies - apparently fitting the broad objectives of the EES - are explicitly targeted to the labour market, aim at improving its efficiency and undoubtedly benefit particular groups. Moreover, they have an important impact in terms of participants and expenditure involved.European Employment Strategy; Eurostat Database; Active Labour Market Policies; Tax Credits; Reductions of Social Security Contributions.

The Impacts of Structural Changes in the Labor Market: a Comparative Statics Analysis Using Heterogeneous-agent Framework

In this paper we aim at analyzing the impacts on welfare and wealth and consumption distribution across different labor market structural features. In particular, we pursue a steady-state analysis to assess the impacts of unit vacancy costs, unemployment replacement ratio or the job destruction rate, when they are changed in order to promote a given reduction in the unemployment rate. We combine a labor market search and matching framework with unions, based on Mortensen and Pissarides (1994) with a heterogeneous-agent framework close to Imrohoroglu (1989) in a closed economy model. Such approach enables the joint assessment of macroeconomic welfare and inequality together with implications derived from institutional changes in labor market. Moreover, the transition matrix between worker's states is endogenous, fully derived from labor market conditions. Using feasible calibration to the Euro Area, we conclude that different institutional changes to promote unemployment reduction have non-neutral and differentiated effects on welfare and inequality. While changing unit vacancy costs and job destruction can be ranked, changes in the unemployment benefit replacement ration involve a trade-off between gains in welfare and in consumption/income distribution.Labor market institutions, search and matching models, heterogeneous-agent models, welfare and inequality.

Residents’ perceptions of tourism activity in a rural North-Eastern Portuguese community: a cluster analysis

The recognition of the role of tourism planners in seeking to contribute to local residents’ well-being by mitigating the potential costs of tourism development has been given more attention in the last decades. Several studies on the perception of positive or negative impacts, based on sustainability (namely the three pillars: economic, sociocultural and environmental) have been developed. However, the studies have been somewhat limited in terms of approaches, namely with respect to the contribution and participation of stakeholders. In this study, we attempted to use a bidirectional analysis of involvement and tourism knowledge to segment the residents and analyse their perception of the impacts. A total of 373 valid surveys were applied in a rural mountainous municipality (Boticas) during 2015 and 2016. In this municipality, tourism (activity) is an emergent activity. The results show that more informed and more involved residents have more positive perceptions of tourism than other groups, while less informed and less involved residents have more negative perceptions of it. The study contributes to increasing the knowledge about residents’ perceptions of tourism, adding the aspects of involvement, especially in rural areas. This type of proposal can be applied to any destination to help manage residents’ opinions and, consequently, their support of tourism development. Keywords: rural tourism; perceptions; segmentation; clusters; rural development; botica