EconPol Working Paper Series

Cover of EconPol Working Paper 22

The effects of macroeconomic, fiscal and monetary policy announcements on sovereign bond spreads: an event study from the EMU

António Afonso, João Tovar Jalles, Mina Kazemi

In this EconPol working paper, the authors assess the impact of announcements corresponding to different fiscal and monetary policy measures on 10-year sovereign bond yield spreads. They find that the European Commission’s releases of excessive deficit procedure have a significant impact on the yield spreads. EC releases of higher debt and better budget balance forecasts contribute to the rise and decline of spreads, respectively.

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Cover of EconPol Working Paper 21

On the political feasibility of increasing the legal retirement age

Benjamin Bittschi and Berthold U. Wigger

Increasing the legal retirement age is politically feasible if policy contains the generosity of public pensions, conclude the authors of this EconPol working paper. After establishing three hypotheses within a politico-economic model and employing micro data for Germany, they demonstrate that a one percentage point increase in the share of the elderly increases the legal retirement age by 0.3 to 0.5 years, and that a 10 percentage point increase in the replacement rate reduces the legal retirement age by 0.5 to 3 years.

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Cover of EconPol Working Paper 20

Stock flow adjustments in sovereign debt dynamics: the role of fiscal frameworks

António Afonso and João Tovar Jalles

We assess, via system GMM, how Stock Flow Adjustments (SFA) affect the debt-to-GDP ratio in 65 countries (covering developed and emerging and low-income countries) between1985-2014. We find that SFAs positively contribute to the change in the debt-to-GDP ratio with a coefficient close to one. The existence of fiscal rules with monitor compliance contributes to lower the debt level. The fall in the debt ratio due to fiscal rules before the crisis was between 1.7%-4.2% of GDP while after the crisis, revenue and debt-based rules did not contribute to the reduction of debt, which was reinforced with large SFAs.

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Cover of EconPol Working Paper 19

International Competition and Rent Sharing in French Manufacturing: A Firm-Level Analysis

Lionel Nesta and Stefano Schiavo

This paper investigates the impact of import competition on rent sharing between firms and employees using a large panel of French manufacturing firms. First, by applying recent advances in the estimation of price-costs margins, we are able to classify each firm into labour- and product-market regimes based on the presence/absence of market power and to estimate the degree of rent sharing among firms and workers. Second, we investigate the hypothesis that import penetration acts as a discipline device on the labour market, reducing workers’ bargaining power. We find that competition from OECD countries has a negative effect on bargaining power, whereas imports from low-wage countries have a more muted impact. By providing firm-level evidence for the relationship between international trade and rent sharing, the paper sheds new light on the effect of trade liberalisation on the labour market.

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