Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Terms of use: Documents in EconStor may WO R K I N G PA P E R S E R I E S N O 1736 / S E P T E M B E R 2014 MEASURING THE EFFECTIVENESS OF COST AND PRICE COMPETITIVENESS IN EXTERNAL REBALANCING OF EURO AREA COUNTRIES WHAT DO ALTERNATIVE HCIS TELL US? Styliani Christodoulopoulou and Olegs TkačevsIn 2014 all ECB publications feature a motif taken from the €20 banknote.NOTE: This Working Paper should not be reported as representing the views of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily refl ect those of the ECB. The paper is released in order to make the research of CompNet generally available, in preliminary form, to encourage comments and suggestions prior to fi nal publication. The views expressed in the paper are the ones of the author(s) and do not necessarily refl ect those of the ECB, the ESCB, and of other organisations associated with the Network. THE COMPETITIVENESS RESEARCH NETWORK Styliani Christodoulopoulou Non-technical SummaryThe ECB regularly publishes various indicators of cost and price competitiveness, called Harmonized Competitiveness Indicators (HCIs), of individual euro area member states. These capture both nominal exchange rate fluctuations and developments in various cost or price indices: consumer price index (CPI), domestic sales producer price index (PPI), gross domestic product deflator (GDP), unit labour costs in manufacturing (ULCM) and the total economy (ULCT). There is no agreement on which of these measures better reflects a country's external price competitiveness and is therefore a-priori more effective in driving trade developments. Since restoring price competitiveness is usually regarded as paramount to external rebalancing in the euro area, we conduct an empirical analysis of trade flows seeking to unveil the impact of alternative relative price measures on exports and imports of goods and services of individual euro area countries over the sample period 1995:Q1 -2013:Q1. More specifically we estimate standard exports and imports dynamic equations for goods and services, where each HCI is one of the determinants and compare exports and imports elasticities with respect to alternative HCIs.Estimation of exports equations illustrates that in most countries exports of goods and exports of services are sensitive to changes in at least one indicator of relative prices, and in most cases this sensitivity is relatively small. Estonia, Finland, Spain, ...
This paper investigates the effect of export entry on productivity, employment and wages of Latvian and Estonian firms in the context of global value chain (GVC). Like in many countries, exporting firms in Latvia and Estonia are more productive, larger, pay higher wages and are more capital intensive than non-exporting firms. While this is partly because firms that are originally more productive and have better performances are more likely to enter export, Latvian and Estonian firms also realise more than 23% and 14% higher labour productivity level as the result of export entry. Export entry also increases employment and average wages. Gains in productivity and employment are particularly large when firms enter exports that are related to participation in knowledge-intensive activities found in the upstream of GVC. For instance, Latvian firms that start exporting intermediate goods or non-transport services (which include knowledge intensive services) enjoy significantly higher productivity gains than those starting to export final goods or transport services. These findings underscore the importance of innovation policies that strengthen firms' capabilities to supply highly differentiated knowledge-intensive goods and services to GVC.
Summary This paper studies the impact of government borrowing costs on fiscal discipline against the background of unprecedentedly low interest rates in advanced economies brought about by ultra‐expansionary monetary policies of recent years. Applying the panel data econometric approach for a sample of OECD and 11 early euro area countries over the period 1985–2015, the study suggests a positive and statistically significant impact of government borrowing costs on cyclically adjusted primary balances, indicating that a decrease in borrowing costs leads to a deterioration of fiscal policy stance. The findings herein also suggest that this effect in the euro area seems to be driven by a group of its peripheral rather than core countries and appears to work through the expenditure (more specifically, current expenditure) channel. From the economic policy perspective, these findings imply that monetary policy measures resulting in ultra‐low interest rates may cause negative side effects for fiscal discipline.
Summary This paper investigates the effects of EU regional support on firm productivity, the number of employees and other performance indicators. We use a rich firm-level dataset for Latvia – the country, where investment activities are largely affected by the availability of EU funding. After controlling for the fact that more productive and larger firms are more likely to acquire EU finds, we find that participation in projects co-financed by the European Regional Development Fund (ERDF) increases firms’ employment, turnover and capital stock per employee immediately, while it raises their productivity only two years after the launch of the projects. ERDF beneficiaries that are initially less productive, larger, less capital intensive and more financially leveraged enjoy larger productivity gains.
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