EconPol Working Paper Series

Cover of EconPol Working Paper 31

The Effect of Grandchildren on Grandparental Labour Supply: Evidence from Europe

Andreas Backhaus and Mikkel Barslund

In this working paper, Andreas Backhaus and Mikkel Barslund (Centre for European Policy Studies) find that women of later working age who become grandmothers are more likely to leave the labour market than women without grandchildren, according to new research from EconPol Europe. Male labour supply, however, does not significantly adjust in response to grandparenthood. The probability of women aged between 55 and 64 continuing to participate in the labour market can fall from an average of 45% to 15% after the arrival of grandchildren, according to the research. The negative effect of grandparenthood is particularly pronounced following the arrival of the first grandchild and for grandmothers who live close to their children.

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Cover of EconPol Working Paper 30

Fiscal Episodes in the EMU: Elasticities and Non-Keynesian Effects

António Afonso, Frederico Silva Leal

In this working paper, António Afonso (ISEG – Lisbon School of Economics and Management, Universidade de Lisboa; REM – Research in Economics and Mathematics, UECE) and Frederico Silva Leal (ISEG – Lisbon School of Economics and Management, Universidade de Lisboa; Portuguese Economy Ministry) estimate short- and long-run elasticities of private consumption for fiscal instruments. They find that positive tax revenue elasticities indicate that consumers have a Ricardian behaviour, while social benefits appear to have a non-Keynesian effect on private consumption. Private consumption continues to exhibit a non-Keynesian response to tax increases, and other expenditures have a recessive impact during normal times. After the launch of the EMU, expansionary fiscal consolidations became harder to observe.

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Cover of EconPol Working Paper 29

(Un)Intended Effects of Preferential Tax Regimes: The Case of European Patent Boxes

Marko Koethenbuerger, Federica Liberini, Michael Stimmelmayr

Patent boxes have become an increasingly popular tax instrument in the European Union and the US to attract mobile tax bases of multinational enterprises (MNEs) as well as to foster productivity. This paper shows that MNE affliates that can benefit from the preferential regime report 8.5 percent higher profits. The profit change splits up into a profit shifting and a productivity effect in proportions 2/3 and 1/3. Surprisingly, the profit shifting effect includes an unintended, reversed profit shifting out of the affiliate. Contrary to expectation, the overall tax base adjustment might lower tax revenues collected from MNEs.

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Cover of EconPol Working Paper 28

Balanced-Budget Fiscal Stimuli of Investment and Welfare Value

Cesare Dosi, Michele Moretto, Roberto Tamborini

Is a fiscal stimulus of investment a viable complement to, or substitute for, monetary policy? The authors of this working paper show that, under a balanced-budget stimulus, investment acceleration may come at the expense of decreased total welfare and that where uncertainty is higher about private returns a net efficiency loss is more likely. However, the risk of such negative outcome strongly declines when the government spending is balanced by taxing both private and public returns on investment.

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Cover of EconPol Working Paper 27

Current Account Imbalances and the Euro Area: Alternative Views

Ronny Mazzocchi, Roberto Tamborini

The Euro area is caught in a "maze of peculiar regulations" and referring to current account imbalances (CAI) as a catch-all indicator of financial efficiency may lead to seriously misplaced policies, according to Ronny Mazzocchi (European Parliament) and Roberto Tamborini (University of Trento), the authors of this latest EconPol working paper. The paper examines the controversial points about the causes, meaning and consequences of CAI, and discusses the alternative policy prescriptions that emerge.

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