Smuggling Illegal versus Legal Goods across the U.S.-Mexico Border: A Structural Equations Model Approach
A. Buehn, Stefan Eichler
Southern Economic Journal,
No. 2,
2009
Abstract
We study the smuggling of illegal and legal goods across the U.S.-Mexico border from 1975 to 2004. Using a Multiple Indicators Multiple Causes (MIMIC) model we test the microeconomic determinants of both smuggling types and reveal their trends. We find that illegal goods smuggling decreased from $116 billion in 1984 to $27 billion in 2004 as a result of improved labor market conditions in Mexico and intensified U.S. border enforcement. Smuggling legal goods is motivated by tax and tariff evasion. While export misinvoicing fluctuated at low levels, import misinvoicing switched from underinvoicing to overinvoicing after Mexico's accession to the GATT and the North American Free Trade Agreement (NAFTA) induced lower tariffs.
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Changing patterns of employment
Cornelia Lang
Wirtschaft im Wandel,
No. 4,
2009
Abstract
In Germany, the typical pattern of employment is still an employee with open-ended full time contract (standard employment relationship). Nearly three out of four employed persons work in that type of employment. However, during the last years, a number of other employment models expanded in the labour market: part-time, temporary, short-term and marginal workers. Main reasons for that development are the effects of globalization, the structural change in modern economies (the increasing importance of the services sector), and changing preferences on the part of employees to achieve a better work-life-balance. The article deals with the rise of atypical employment relationships. We find that atypical work is a domain of female and young people. During the last years, atypical employment relationship in West and East Germany increased similarly due to globalization. Differences in employment patterns between East and West could be linked to employment behaviour and structural determinants.
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Is the European Monetary Union an Endogenous Currency Area? The Example of the Labor Markets
Herbert S. Buscher, Hubert Gabrisch
IWH Discussion Papers,
No. 7,
2009
Abstract
Our study tries to find out whether wage dynamics between Euro member countries became more synchronized through the adoption of the common currency. We calculate bivarate correlation coefficients of wage and wage cost dynamics and run a model of endogenously induced changes of coefficients, which are explained by other variables being also endogenous: trade intensity, sectoral specialization, financial integration. We used a panel data structure to allow for cross-section weights for country-pair observations. We use instrumental variable regressions in order to disentangle exogenous from endogenous influences. We applied these techniques to real and nominal wage dynamics and to dynamics of unit labor costs. We found evidence for persistent asymmetries in nominal wage formation despite a single currency and monetary policy, responsible for diverging unit labor costs and for emerging trade imbalances among the EMU member countries.
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Cross-Border Bank Contagion in Europe
Reint E. Gropp, M. Lo Duca, Jukka M. Vesala
International Journal of Central Banking,
No. 1,
2009
Abstract
We analyze cross-border contagion among European banks in the period from January 1994 to January 2003. We use a multinomial logit model to estimate, in a given country, the number of banks that experience a large shock on the same day (“coexceedances”) as a function of common shocks and lagged coexceedances in other countries. Large shocks are measured by the bottom 95th percentile of the distribution of the daily percentage change in distance to default of banks.We find evidence of significant cross-border contagion among large European banks, which is consistent with a tiered cross-border interbank structure. The results also suggest that contagion increased after the introduction of the euro.
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Institutions and Clusters
Ulrich Blum
Handbook on Research on Clusters,
2009
Abstract
We show that transaction costs and external economies, which change institutional arrangements heavily, influence cluster structures. Two types of clusters, (i) the vertical cluster where a hub dominates suppliers that have settled in the vicinity and, (ii), the horizontal cluster where firms share a common platform – historically a natural resource, today often knowledge and competences. Furthermore, non-cluster firms exist. We show, in a model, how these types emerge from the interaction found in firms and the interaction of firms within a network system. Changing transaction costs and externalities influence clusters and produce cluster dynamics. The sustainability of a cluster depends on its ability to stabilize the basis of its existence. This is easier for horizontal clusters that can steadily develop their knowledge and competence platform than for a vertical cluster which heavily depends on product life cycles. We give some evidence for clusters in East Germany, which presents an interesting example. The Treuhand atomized the giant combines, so that the rearrangements may be interpreted as results of fundamental market forces. Therefore major influences on the emerging institutional structure should stem from transaction costs and externalities.
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Contestability, Technology and Banking
S. Corvoisier, Reint E. Gropp
ZEW Discussion Papers, No. 09-007,
No. 7,
2009
Abstract
We estimate the effect of internet penetration on retail bank margins in the euro area. Based on an adapted Baumol [1982] type contestability model, we argue that the internet has reduced sunk costs and therefore increased contestability in retail banking. We test this conjecture by estimating the model using semi-aggregated data for a panel of euro area countries. We utilise time series and cross-sectional variation in internet penetration. We find support for an increase in contestability in deposit markets, and no effect for loan markets. The paper suggests that for time and savings deposits, the presence of brick and mortar bank branches may no longer be of first order importance for the assessment of the competitive structure of the market.
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Das makroökonometrische Modell des IWH: Eine angebotsseitige Betrachtung
Rolf Scheufele
IWH Discussion Papers,
No. 9,
2008
Abstract
This paper describes the IWH macroeconometric model, a quarterly structural model for the German Economy. It focuses on the specification and estimation on supply-side aspects of the model. This approach guarantees a theoretical derived long-run model equilibrium. It combines short-run forecasting requirements with a long-run theoretical foundation. For some macroeconomic aggregates short- and long-run effects of supply- and demand shocks are illustrated. Additionally, effects of external shocks are investigated through model simulations to illustrate aggregate model characteristics.
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The Stability of Bank Efficiency Rankings when Risk Preferences and Objectives are Different
Michael Koetter
European Journal of Finance,
No. 2,
2008
Abstract
We analyze the stability of efficiency rankings of German universal banks between 1993 and 2004. First, we estimate traditional efficiency scores with stochastic cost and alternative profit frontier analysis. Then, we explicitly allow for different risk preferences and measure efficiency with a structural model based on utility maximization. Using the almost ideal demand system, we estimate input- and profit-demand functions to obtain proxies for expected return and risk. Efficiency is then measured in this risk-return space. Mean risk-return efficiency is somewhat higher than cost and considerably higher than profit efficiency (PE). More importantly, rank–order correlation between these measures are low or even negative. This suggests that best-practice institutes should not be identified on the basis of traditional efficiency measures alone. Apparently, low cost and/or PE may merely result from alternative yet efficiently chosen risk-return trade-offs.
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Culture as a Base for Efficient Economic Systems
Ulrich Blum
Wirtschaft im Wandel,
No. 2,
2008
Abstract
Globalization puts the German economic model, the so-called social market economy, under pressure. Constituting elements of this model are fundamental social and economic values. Globalization puts some of these values under pressure and creates inefficiencies because the costs of running the social and economic fabric rise. This is an important justification to inquire into the normative foundations of economic efficiency The following article discusses to what extent culture is a base for efficient economic systems. Information theory is regarded as a key element for explaining social change. The arguments are based on institutional economics with a special view on transaction costs and on cooperation structures. It is shown that specific information technologies promote forms of cooperation, which influence institutional arrangements. The related information technologies themselves are part of the cultural system and its value structures. As a consequence, competition among economic systems favours certain combinations of technologies, cultural arrangements and economic systems. In as much as cultural competition precedes economic competition in the sense of a certain way of thinking, the cultural system can be regarded as a strategic competitive parameter for an economy.
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Is a Centralisation of Local Governmental Structures an Appropriate Way to Ensure an Efficient Provision of Local Public Services? Findings from Case Studies in the State of Saxony-Anhalt
Gerhard Heimpold, Martin T. W. Rosenfeld
Wirtschaft im Wandel,
No. 1,
2008
Abstract
Choosing the appropriate organisational model for local government (i. e. centralised vs. federal model) forms an essential challenge for local communities. Against the background of Fiscal Federalism, a trade-off between the two models mentioned can be expected: Though the centralised model may bring up economies of scale and scope, the federal form of local government may have advantages, too, for instance regarding the extent of civil participation. The article has the intention to answer the question how the degree of centralisation/decentralisation of local governmental organisation affects the provision of services of public interest. The article is based on case studies conducted in ten municipalities located in the State of Saxony-Anhalt, Germany. The government of Saxony-Anhalt intends to implement a reform project targeted at the modernisation of local governmental organisation. The basic reform idea is to transform the local governmental structures from a situation (at the beginning of 2008) where a co-existence of centralised and federally organised municipalities is given towards a future situation where the centralised model should be dominating. In line with the expectation derived from theory, the empirical findings do not draw a picture, which is unequivocally in favour either of the centralised or of the federal model. However, the reform of modernisation of local governmental organisation should remain on the agenda, especially due to a shrinking population in the rural parts of Saxony-Anhalt. This could support the state government’s plans of a more centralized organisation of local government. But this would mean to give up the advantages of the existing federal model of local government. Therefore, in addition to the centralised model favoured by the state government, politicians in Saxony-Anhalt should look for the possibility of an alternative “third” model, which tries to combine the advantages of economies of scale with a greater degree of civil participation.
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