Ricardian selection

We analyze the foundations of the relationship between trade and total factor productivity (TFP) in the Ricardian model. Under general assumptions about the autarky distributions of industry productivities, trade openness raises TFP. This is due to the selection effect of international competition – driven by comparative advantages – which makes "some" high- and "many" low-productivity industries exit the market. We derive a model-based measure of this effect that requires only production and trade data. In a sample of 41 countries, we find that Ricardian selection raised manufacturing TFP by 11% above the autarky level in 2005 (as against 6% in 1985), with a neat positive time trend and large cross-country differences.selection effect, Eaton-Kortum model, international competition

A comparison of structural reform scenarios across the EU member states - Simulation-based analysis using the QUEST model with endogenous growth

This paper calibrates the Roeger-Varga-Veld (2008) micro-founded DSGE model with endogenous growth for all EU member states using country specific structural characteristics and employs the individual country models to analyse the macroeconomic impact of various structural reforms. We analyse the costs and benefits of reforms in terms of fiscal policy instruments such as taxes, benefits, subsidies and administrative costs faced by firms. We find that less R&D intensive countries would benefit the most from R&D promoting and skill-upgrading policies. We also find that shifting from labour to consumption taxes, reducing the benefit replacement rate and relieving administrative entry barriers are the most effective measures in those countries which have high labour taxes and entry barriers.Structural reforms, endogenous growth, DSGE modelling, EU member states, tax credits, tax shifts, entry barriers, human capital, D'Auria, Pagano, Ratto, Varga

Trade-Revealed TFP

We introduce a novel methodology to measure the relative TFP of the tradeable sector across countries, based on the relationship between trade and TFP in the model of Eaton and Kortum (2002). The logic of our approach is to measure TFP not from its "primitive" (the production function) but from its observed implications. In particular, we estimate TFPs as the productivities that best fit data on trade, production, and wages. Applying this methodology to a sample of 19 OECD countries, we estimate the TFP of each country's manufacturing sector from 1985 to 2002. Our measures are easy to compute and, with respect to the standard development-accounting approach, are no longer mere residuals. Nor do they yield common "anomalies", such as the higher TFP of Italy relative to the US.Multi-factor productivity, TFP measurement, Eaton-Kortum model

Ricardian selection

We analyze the foundations of the relationship between trade and TFP in the Ricardian model. Under general assumptions about the autarky distributions of industry productivities, trade openness raises TFP. This is due to the selection effect of international competition --- driven by comparative advantages --- which makes "some" high- and "many" low-productivity industries exit the market. We derive a model-based measure of this effect that requires only production and trade data. For a sample of 41 countries, we find that Ricardian selection raised manufacturing TFP by 11% above the autarky level in 2005 (6% in 1985), with a neat positive time trend and large cross-country differences.selection effect, Eaton-Kortum model, international competition

Constraints on Modified Gravity from ACT and SPT

The Atacama Cosmology Telescope (ACT) and the South Pole Telescope (SPT) have recently provided new and precise measurements of the Cosmic Microwave Background anisotropy damping tail. This region of the CMB angular spectra, thanks to the angular distortions produced by gravitational lensing, can probe the growth of matter perturbations and provide a test for general relativity. Here we make use of the ACT and SPT power spectrum measurements (combined with the recent WMAP9 data) to constrain f(R) gravity theories. Adopting a parametrized approach, we obtain an upper limit on the lengthscale of the theory of B_0 < 0.86 at 95% c.l. from ACT, while we get a significantly stronger bound from SPT with B_0 < 0.14 at 95% c.l..Comment: 6 pages, 4 figures, some sentences correcte

Blue Gravity Waves from BICEP2 ?

We present new constraints on the spectral index n_T of tensor fluctuations from the recent data obtained by the BICEP2 experiment. We found that the BICEP2 data alone slightly prefers a positive, "blue", spectral index with n_T=1.36\pm0.83 at 68 % c.l.. However, when a TT prior on the tensor amplitude coming from temperature anisotropy measurements is assumed we get n_T=1.67\pm0.53 at 68 % c.l., ruling out a scale invariant $n_T=0$ spectrum at more than three standard deviations. These results are at odds with current bounds on the tensor spectral index coming from pulsar timing, Big Bang Nucleosynthesis, and direct measurements from the LIGO experiment. Considering only the possibility of a "red", n_T<0 spectral index we obtain the lower limit n_T > -0.76 at 68 % c.l. (n_T>-0.09 when a TT prior is included).Comment: 3 Pages, 4 Figure

Imputation and outlier detection in banking datasets

Data from the banking balance sheets can be used to analyse the financial stability of the banking sector. Occasionally, it may occur that some data values are either incorrect or missing, which would have an important effect on the results of the analyses. Thus, incorrect values should be detected and removed or corrected, while missing values should be imputed. This contribution addresses the two problems using a robust data analysis approach, known as Forward Search. In particular, the Forward Search is used to address the presence of high data collinearity, which may give rise to many irrelevant outliers. In recent years a MATLAB toolbox, the Forward Search for Data Analysis (FSDA), has been applied to similar problems in official statistics. The contribution extends the application to the banking sector.JRC.G.1 - Financial and Economic Analysi

SYMBOL MODEL DATABASE and ANALYSES for PUBLIC FINANCE SUSTAINABILITY

In the present report, we describe the main steps we have taken in order to create a sound database for the European Union Member States banking system. The final goal is to use this database as source for input variables of SYMBOL (SYstemic Model of Banking Originated Losses) model, developed by the Join Research Centre of Ispra in cooperation with the European Commission Direcotrate General for Internal Market and Services and experts from academia, for monitoring financial crises. SYMBOL simulates potential crises in the banking sector under various assumptions, and it allows assessing the cumulative effects of different regulatory measures (e.g. higher capital requirements, strengthened deposit insurance and introduction of resolution funds) and their most effective combinations. It uses items in bank's balance sheet to estimate the potential losses for a given banking system via a Monte Carlo analysis. The model is flexible and can be deployed either on a single country or on a set of financial institutions sharing common features. The report also shows an application of SYMBOL for assessing the impact on public finance of a crisis in the baning sector and compares the current regulatory framework with a future scenario where the new capital requirements set in Basel III and an effective framework for bank resolution are in place.JRC.G.1-Scientific Support to Financial Analysi

Finflows: database for bilateral financial investment stocks and flows

Bilateral financial investments are not commonly available from a single source. Our database Finflows aims at centralising the information on bilateral capital financial stocks and financial flows in a single place. It provides estimates of external assets and liabilities flows between around 80 countries including those from European Union, the Organisation for Economic Co-operation and Development, Russia, China, Brazil, India and the largest offshore countries. The database contains yearly data from 2000 to the last available year (in general with a 20 months delay). Initially developed by (Hobza & Zeugner, 2014) under the scope of the macroeconomic surveillance work, we provide bilateral financial investment links broken by class of investment such foreign direct investment, banking flows or portfolio investment following the Sixth Edition of the IMF's Balance of Payments and International Investment Position Manual (BPM6, 2009). The specificity of this database lies in the fact that it includes official intermediated links either via European Central Bank’s funding or other official flows which were providing financial assistance to Euro-area countries in distress helping them to refinance their liabilities. We also consider the investment made during the quantitative easing program of the European Central Bank in 2010 and redirect those inter-banking transactions and customer payments that are settled, in real time, within the Euro-zone system when necessary. Another advantage of the database Finflows relies in the resolution of potential mismatch between countries’ declarations.JRC.B.1-Finance and Econom

A comparison of structural reform scenarios across the EU member states - Simulation-based analysis using the QUEST model with endogenous growth

This paper calibrates the Roeger-Varga-Veld (2008) micro-founded DSGE model with endogenous growth for all EU member states using country specific structural characteristics and employs the individual country models to analyse the macroeconomic impact of various structural reforms. We analyse the costs and benefits of reforms in terms of fiscal policy instruments such as taxes, benefits, subsidies and administrative costs faced by firms. We find that less R&D intensive countries would benefit the most from R&D promoting and skill-upgrading policies. We also find that shifting from labour to consumption taxes, reducing the benefit replacement rate and relieving administrative entry barriers are the most effective measures in those countries which have high labour taxes and entry barriers.JRC.G.9-Econometrics and applied statistic