http://hdl.handle.net/10993/74 Search this channel search https://orbilu.uni.lu/simple-search http://hdl.handle.net/10993/55683 Title: Endogenous Working Hours, Overlapping Generations and Balanced Neoclassical Growth <br/> <br/>Author, co-author: Irmen, Andreas <br/> <br/>Abstract: A balanced growth path that accounts for a decline in hours worked per worker approximates the evolution of today’s industrialized countries since 1870. This stylized fact is explained in an OLG-model featuring two-period lived individuals equipped with per-period utility functions of the generalized loglog type proposed by Boppart and Krusell (2020) and a neoclassical production sector. Technological progress drives real wages up and expands the amount of consumption goods. The value of leisure increases, and the supply of hours worked declines. Technological progress moves a poor economy out of a regime with low wages and an inelastic supply of hours worked into a regime with high wages and a declining supply of hours worked. The balanced growth path is unique and stable. In the high wage regime, the equilibrium difference equation is available in closed form. A balanced growth path with declining hours worked may also be obtained with endogenous technological progress as in Romer (1986). Tue, 25 Jul 2023 10:01:25 GMT http://hdl.handle.net/10993/54585 Title: Making Next Generation EU a permanent tool <br/> <br/>Author, co-author: Allemand, Frederic; Creel, Jérôme; Saraceno, Francesco; Levasseur, Sandrine; Leron, Nicolas <br/> <br/>Abstract: The policy study assesses the possible scope and the technical and legal difficulties in implementing a "permanent Next-Generation EU (NGEU)", a central fiscal capacity for the EU, without ever losing sight of the democratic requirement. The implementation of NGEU has raised coordination issues between the member states as to the allocation of funds across structural priorities (e.g. ecological transition vs digitalisation) and across countries. To these coordination difficulties, Section 2 adds the issue of the democratic legitimacy of EU policies when supranational priorities constrain the autonomy of national parliaments. The problem of accountability is not new when one thinks that supranational rules, such as the Stability and Growth Pact, impose limits on the power of parliaments to "tax and spend"; in fact, the intrinsic logic of coordination is to force (political) discretionary power to comply with (macroeconomic) functional imperatives; this inevitably produces a form of depoliticisation of fiscal policy. Throughout this policy study, we constantly keep in mind that transforming NGEU into a permanent programme offers an opportunity to fix this depoliticisation of EU policies and open a window for a breakthrough to a "political Europe". Thu, 16 Mar 2023 13:53:38 GMT http://hdl.handle.net/10993/54566 Title: Intragenerational inequality aversion and intergenerational equity <br/> <br/>Author, co-author: Martinet, Vincent; Del Campo, Stellio; Cairns, Robert D. Fri, 10 Mar 2023 14:05:01 GMT http://hdl.handle.net/10993/54565 Title: Sustainability of an economy relying on two reproducible assets <br/> <br/>Author, co-author: Cairns, Robert D.; Del Campo, Stellio; Martinet, Vincent Fri, 10 Mar 2023 14:04:23 GMT http://hdl.handle.net/10993/54271 Title: La manne des ressources naturelles, l’investissement public optimal et la redistribution : le rôle de la productivité totale des facteurs et de la capacité de l’État <br/> <br/>Author, co-author: Dupuy, Arnaud; Arezki, Rabah; Gelb, Alan Tue, 31 Jan 2023 06:59:18 GMT http://hdl.handle.net/10993/53358 Title: Explaining the Decline in the US Labor Share: Taxation and Automation <br/> <br/>Author, co-author: Heer, Burkhard; Süssmuth, Bernd; Irmen, Andreas <br/> <br/>Abstract: This study provides evidence for the USA that the secular decline in the labor share is not only explained by technical change or globalization, but also by the dynamics of factor taxation, automation capital (robots), and population growth. First, we empirically find indications of co-integration for the period from the last quarter of the 20th to the first decade of the twenty-first century. Permanent effects on factor shares emanate from relative factor taxation. The latter also have a lasting effect on the use of robots. Variance decompositions reveal that taxing contributes to changes in the two income shares and in automation capital. Second, we analyze and calibrate a neoclassical growth model extended to include factor taxation, automation capital, and capital adjustment costs. Labor and automation capital are perfect substitutes, whereas labor and traditional capital are complements. The model replicates the dynamics of the observed functional income distribution in the USA during the 1965–2015 period. Counterfactual experiments suggest that the fall in the labor share would have been significantly smaller if labor and capital income tax rates had remained at their respective level of the 1960s. Fri, 23 Dec 2022 04:30:22 GMT http://hdl.handle.net/10993/52923 Title: Zentralbank auf Gratwanderung – Zinserhöhungen sollen die Inflation eindämmen – das birgt Risiken <br/> <br/>Author, co-author: Irmen, Andreas Wed, 30 Nov 2022 14:49:08 GMT http://hdl.handle.net/10993/52845 Title: Endogenous Task-Based Technical Change - Factor Scarcity and Factor Prices <br/> <br/>Author, co-author: Irmen, Andreas <br/> <br/>Abstract: This paper develops a static model of endogenous task-based technical progress to study how factor scarcity induces technological progress and changes in factor prices. The equilibrium technology is multi-dimensional and not strongly factorsaving in the sense of Acemoglu (2010). Nevertheless, labour scarcity induces labour productivity growth. There is a weak but no strong absolute equilibrium bias. This model provides a plausible interpretation of the famous contention of Hicks (1932) about the role of factor prices and factor endowments for induced innovations. It may serve as a microfoundation for canonical macro-economic models. Moreover, it accommodates features like endogenous factor supplies and a binding minimum wage. . Tue, 22 Nov 2022 11:26:37 GMT http://hdl.handle.net/10993/52844 Title: Tasks, Technology, and Factor Prices in the Neoclassical Production Sector <br/> <br/>Author, co-author: Irmen, Andreas <br/> <br/>Abstract: This paper introduces tasks into the neoclassical production sector. Competitive firms choose the profit-maximizing amounts of factor-specific tasks that determine their factor demands and output supplies. We show that the effect of factor-augmenting technical change on relative and absolute factor prices can be decomposed into a productivity effect and a task-demand effect of opposite sign. These effects appear since the novel task-based approach distinguishes between the demands for tasks and the demands for factors. This perspective provides a new intuition for the emergence of relative and absolute factor biases and the role of the elasticity of substitution. Tue, 22 Nov 2022 11:22:45 GMT http://hdl.handle.net/10993/52843 Title: Population Aging and Inventive Activity <br/> <br/>Author, co-author: Irmen, Andreas; Litina, Anastasia <br/> <br/>Abstract: This research empirically establishes and interprets the hypothesis that the relationship between population aging and inventive activity is hump-shaped. We estimate a reduced form, hump-shaped relationship in a panel of 33 OECD countries over the period 1960–2012, as well as in a panel of 248 NUTS 2 regions in Europe over the period 2001–2012. The increasing part of the hump may be associated with various channels including the acknowledgement that population aging requires inventive activity to guarantee current and future standards of living, or the observation that older educated workers are more innovative than their young peers. The decreasing part may reflect the tendency of aging societies to lose dynamism and the willingness to take risks. Tue, 22 Nov 2022 11:19:55 GMT http://hdl.handle.net/10993/52842 Title: Automation, Growth, and Factor Shares in the Era of Population Aging <br/> <br/>Author, co-author: Irmen, Andreas <br/> <br/>Abstract: How does population aging affect economic growth and factor shares in times of increasingly automatable production processes? The present paper addresses this question in a new macroeconomic model of automation where competitive firms perform tasks to produce output. Tasks require labor and machines as inputs. New machines embody superior technological knowledge and substitute for labor in the performance of tasks. Automation is labor-augmenting in the reduced-form aggregate production function. If wages increase then the incentive to automate becomes stronger. Moreover, the labor share declines even though the aggregate production function is Cobb–Douglas. Population aging due to a higher longevity reduces automation in the short and promotes it in the long run. It boosts the growth rate of absolute and per-capita GDP in the short and the long run, lifts the labor share in the short and reduces it in the long run. Population aging due to a decline in fertility increases automation, reduces the growth rate of GDP, and lowers the labor share in the short and the long run. In the short run, it may or may not increase the growth rate of per-capita GDP, in the long run it unequivocally accelerates per-capita GDP growth. Tue, 22 Nov 2022 11:12:00 GMT http://hdl.handle.net/10993/52841 Title: Editorial Introduction <br/> <br/>Author, co-author: Irmen, Andreas Tue, 22 Nov 2022 11:09:32 GMT http://hdl.handle.net/10993/52769 Title: The effects of IMF conditional programs on the unemployment rate <br/> <br/>Author, co-author: Chletsos, Michael; Sintos, Andreas <br/> <br/>Abstract: The fundamental mission of the International Monetary Fund (IMF) is to ensure global financial stability and to assist countries in economic turmoil. Although there is a consensus that IMF-supported programs can have a direct effect on the labor market of recipient countries, it remains unclear how IMF participation decision and conditionalities attached to IMF loans can affect the unemployment rate of borrowing countries. Using a world sample of countries from 1980 to 2014, we investigate how lending conditional programs of the IMF affect the unemployment rate. Our analyses account for the selection bias related to, first, the IMF participation decision and, second, the conditions included within the program. We show that IMF program participation significantly increases the unemployment rate of recipient countries. Once we control for the number of conditions, however, we find that only IMF conditions have a detrimental and highly significant effect on the unemployment rate. There is evidence that the adverse short-run effect of IMF conditions holds robust in the long-run. Disaggregating IMF conditionality by issue area, we find adverse effects on the unemployment rate for four policy areas: labor market deregulation, reforms requiring privatization of state-owned enterprises, external sector reforms stipulating trade and capital account liberalization, and fiscal policy reforms that restrain government expenditure. Our initial results are found to be robust across alternative empirical specifications. Tue, 15 Nov 2022 07:23:45 GMT http://hdl.handle.net/10993/52768 Title: Financial development and income inequality: A meta-analysis <br/> <br/>Author, co-author: Chletsos, Michael; Sintos, Andreas <br/> <br/>Abstract: The voluminous empirical research on the effect of financial development on income inequality has yielded mixed results. In this paper, we collect 2127 estimates reported in 116 published studies that investigate the effect of financial development on income inequality. Although our initial tests for publication bias (which do not account for moderator variables) show that the current literature does not suffer from publication selectivity, once we control for a set of moderator variables, we find evidence of mild publication bias in favor of positive estimates (i.e., the current literature favors the publication of studies that find that financial development increases income inequality). In addition, our results suggest that the overall effect of financial development on income inequality is on average zero, but that its sign and magnitude depend systematically on various study characteristics. The characteristics of data and estimation methods, whether endogeneity is taken into account, the different measures of financial development and the inclusion of financial openness, inflation and income variables in the regressions matter significantly for the effect of financial development on inequality. Tue, 15 Nov 2022 07:19:20 GMT http://hdl.handle.net/10993/52767 Title: The effects of IMF programs on income inequality: a semi-parametric treatment effects approach <br/> <br/>Author, co-author: Chletsos, Michael; Sintos, Andreas <br/> <br/>Abstract: Purpose This paper aims to provide new insights regarding the impact of International Monetary Fund (IMF) programs on income inequality. Design/methodology/approach The paper uses a novel methodological approach proposed by Acemoglu et al. (2019), using (1) the regression adjustment, (2) the inverse probability weighting and (3) the doubly robust estimator, which combines (1) and (2), and a sample of annual data for 135 developing countries over the time period 1970 to 2015. Findings The findings show that IMF programs are associated with greater income inequality for up to five years. By differentiating the effect of IMF programs, the authors find that only IMF non-concessional programs have a significant detrimental effect on income inequality, while IMF concessional programs do not have a consistent effect on income inequality. In addition, the authors find that only IMF programs with a higher number of conditions have a detrimental and statistically significant effect on income inequality, compared to IMF programs with a smaller number of conditions, where their effect on income inequality is found to be insignificant. Originality/value To the best of the authors’ knowledge, the analysis developed in this paper contributes to the existing literature by applying the most methodologically sound identification strategy, which does not rely on the linearity assumption, the selection of instruments or matching variables and additionally takes into account the selection bias related to IMF program participation. Tue, 15 Nov 2022 07:13:53 GMT http://hdl.handle.net/10993/52766 Title: Hide and seek: IMF intervention and the shadow economy <br/> <br/>Author, co-author: Chletsos, Michael; Sintos, Andreas <br/> <br/>Abstract: By explicating the mechanisms through which International Monetary Fund (IMF) programs operate, this study investigates the effect of IMF intervention on the shadow economy. Using a sample of 141 countries from 1991 to 2014, we examine the impact of both IMF participation and conditionality on the informal economy. Our analyses address sources of endogeneity related to, first, the IMF participation decision and, second, the conditions included within the program. The empirical findings suggest that both IMF program participation and conditionality increase the size of the shadow economy. Disaggregating IMF conditions into structural and quantitative shows that only structural conditions are significantly related to a larger shadow economy both in the short- and long-term. Financial development can reduce the size of the shadow economy, yet it cannot reverse the detrimental effect of IMF conditions. Our initial results are found to be robust across alternative empirical specifications. Tue, 15 Nov 2022 07:03:43 GMT http://hdl.handle.net/10993/52765 Title: The effect of financial fragility on employment <br/> <br/>Author, co-author: Chletsos, Michael; Sintos, Andreas <br/> <br/>Abstract: Financial fragility increases economic uncertainty and restricts credit to firms, leading to lower economic growth and employment. Despite voluminous research on the relation between financial fragility and growth, the effect of financial fragility on employment is understudied. Using a global panel for the period 1998–2017, we identify a negative effect of financial fragility on employment, even after accounting for unobserved country heterogeneity. The impact of financial fragility is stronger in the post-crisis period and in more rigid labor markets, and the magnitude of the effect is higher in developing/emerging economies than in developed countries. Nevertheless, this negative effect can be mitigated in countries with a higher level of financial market development. Our results are robust to the use of several robustness tests, including different measures of financial fragility and an instrumental variables approach. Tue, 15 Nov 2022 06:57:15 GMT http://hdl.handle.net/10993/51569 Title: Freins et perspectives d’une union budgétaire européenne <br/> <br/>Author, co-author: Allemand, Frederic; Creel, Jérôme Wed, 06 Jul 2022 20:25:19 GMT http://hdl.handle.net/10993/51154 Title: Economic Ideas and Political Action in Shaping Economic and Monetary Union: Pierre Werner and Luxembourg <br/> <br/>Author, co-author: Danescu, Elena <br/> <br/>Abstract: The international financial centre in Luxembourg grew considerably in the 1960s, driven by proactive government policy, flexible regulation, a willingness to harness external opportunities and the establishment of Community institutions and European funding institutions in the country. As Luxembourg was in a currency union with Belgium within the Belgium-Luxembourg Economic Union and did not have its own Central Bank, these developments were all the more meaningful. When the European integration process experienced a series of major crises – including the failure of the European Defence Community and European Political Community in 1954, the empty chair crisis in 1966 and General de Gaulle’s veto on British accession in 1962 and 1967 –, Luxembourg set out on the path of European monetary integration, under the impetus of Finance Minister and Prime Minister Pierre Werner. In October 1970, the Werner Report provided a detailed blueprint for Economic and Monetary Union and laid the foundations for the euro. The Luxembourg financial centre would serve as a “laboratory” for the future single currency. This paper makes extensive use of relevant European and international archives and original interviews, adopting an interdisciplinary approach to analyse Luxembourg’s leading role in reconciling different views on EMU and fostering political commitment to a European currency among the Member States. Thu, 02 Jun 2022 04:29:48 GMT http://hdl.handle.net/10993/50832 Title: Luxembourg and the creation of the European single currency - Lessons from the History <br/> <br/>Author, co-author: Danescu, Elena <br/> <br/>Abstract: In political terms, European integration and multilateral cooperation enabled Luxembourg to become an equal partner in the decision-making processes and leadership of European organizations. In economic terms, these features gave the country the tools it needed to forge a development model that could underpin the creative growth of its social market economy, while preserving the majority of its vital interests—particularly the steel industry and the financial centre—over the long term. Focusing primarily on the 1970 Werner Report, which served as a blueprint for the European single currency - the euro - the presentation examines a key period in European integration history and one of the major European achievements of Luxembourg and of Pierre Werner (29 December 1913– 24 June 2002), former Prime Minister, Finance Minister and Foreign Minister of Luxembourg, who left his mark on the future of his country and is unanimously recognised as one of the architects of Economic and Monetary Union. <br/> <br/>Commentary: The workshop” Building European Administrative Area. Key Features and Boundaries” focused on the role of Luxembourg in shaping and implementing the single European currency and the vision of Pierre Werner (1913–2022) that exceed the boundaries of economic, historical, and political arguments and inspired the new dimensions of Europe through economic and monetary integration. The role of Pierre Werner in building a united Europe with a strong monetary union and defining this as the long-term goal is remarkable. In this regard, the invited speaker, Dr Elena Dănescu (Research Scientist at the Luxembourg Centre for Contemporary and Digital History, University of Luxembourg) will give a presentation about Luxembourg and Pierre Werner’s contribution to economic and monetary integration in the EU. Mon, 18 Apr 2022 06:09:41 GMT