Zentrum für Europäische Wirtschaftsforschung (ZEW)
P.O. Box 103443
L 7, 1
Institutional Affiliation: Ifo Institute for Economic Research
Information about this author at RePEc
NBER Working Papers and Publications
|August 2010||Automatic Stabilizers and Economic Crisis: US vs. Europe|
with Mathias Dolls, Andreas Peichl: w16275
This paper analyzes the effectiveness of the tax and transfer systems in the European Union and the US to act as an automatic stabilizer in the current economic crisis. We find that automatic stabilizers absorb 38 per cent of a proportional income shock in the EU, compared to 32 per cent in the US. In the case of an unemployment shock 47 percent of the shock are absorbed in the EU, compared to 34 per cent in the US. This cushioning of disposable income leads to a demand stabilization of up to 30 per cent in the EU and up to 20 per cent in the US. There is large heterogeneity within the EU. Automatic stabilizers in Eastern and Southern Europe are much lower than in Central and Northern European countries. We also investigate whether countries with weak automatic stabilizers have enacted lar...
Published: Dolls, Mathias & Fuest, Clemens & Peichl, Andreas, 2012. "Automatic stabilizers and economic crisis: US vs. Europe," Journal of Public Economics, Elsevier, vol. 96(3), pages 279-294. citation courtesy of
|August 1998||Why Do Countries Subsidize Investment and Not Employment?|
with Bernd Huber: w6685
The governments of nearly all industrialised countries use subsidies to support the economic development of specific sectors or regions with high rates of unemployment. Conventional economic wisdom would suggest that the most efficient way to support these regions or sectors is to pay employment subsidies. We present evidence showing that capital subsidies are empirically much more important than employment subsidies. We then discuss possible explanations for the dominance of investment subsidies and develop a simple model with unemployment to explain this phenomenon. In our model, unemployment arises due to bargaining between unions and heterogenous firms that differ with respect to their productivity. Union bargaining power raises wage costs and leads to a socially inefficient collapse o...
Published: Fuest, Clemens and Bernd Huber. "Why Do Governments Subsidize Investment And Not Employment?," Journal of Public Economics, 2000, v78(1-2,Oct), 171-192.