Posts Tagged ‘European Union’

SCOTTISH INDEPENDENCE: HOW WOULD IT AFFECT THE COUNTRY’S FOREIGN TRADE?

Lucie COUFALOVÁ

Specialist, Faculty of Business and Administration, Masaryk University, Czech Republic

174064@mail.muni.cz

Abstract

The aim of this paper is to identify the main determinants of Scotland’s foreign trade and, above all, the EU’s role in the volume of the country’s exports, as its EU membership is one of the key arguments in the political discourse about independence. The article highlights the results of opinion polls in the country, as well as the relationship between economic integration and political disintegration. The methodological approach adopted is the gravity model of international trade. Given the large number of zero flows present in the data sample, the Tobit model proved to be a more suitable technique for the estimation. The Random effects model estimates are also provided in order to prove the robustness of the estimates. The results of the study allow for more substantiated conclusions about the main determinants of Scotland’s foreign trade, as well as they provide arguments for discussing the implications of Scottish independence.

Keywords: Scotland, independence, European Union, international trade, gravity model

JEL classification: F13, F47, F15, R15

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EFFECTS OF FISCAL CONSOLIDATION ON REGIONAL ECONOMICS RESILIENCE: INSTITUTIONAL DESIGN METTERS?

Christophe FEDER

Professor, University of Aosta Valley, Str. Cappuccini, 2, Aosta, Italy

c.feder1@univda.it

Vinko MUŠTRA

Assistant professor, Faculty of economics, business and tourism, University of Split, Cvite Fiskovića 5, Split, Croatia

vmustra@efst.hr

Abstract

After the Great Recession, in the European Union (EU) emerges an heterogenous level of both national fiscal consolidation and regional economics resilience. The paper uses the EUROSTAT database of EU-27 at NUTS 2 level over the period 2000-2009 to test how fiscal consolidation affects the regional economics resilience. We find that the fiscal consolidation and regional economic resilience are negatively correlated. Moreover, we show that the negative effect of taxation is higher than the positive effect of public spending.

Keywords: Regional economic resilience, Fiscal consolidation, Institutions, European Union

JEL classification: R12, E62, H23, H72
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WHO CARES ABOUT REGIONAL INEQUALITIES? EFFECTS OF FISCAL CONSOLIDATION

Vinko MUSTRA

Assistant professor Faculty of Economics, University of Split, Cvite Fiskovića 5, 21000 Split, Croatia

vmustra@efst.hr

Abstract

The most recent global economic crisis and the concerns about long-term (un)sustainability of public finances has supported the implementation of budgetary consolidation measures. Although there are relatively large number of papers investigating the impact of fiscal consolidation on different aspect of economy this paper represent unique attempt of investigating the effects of fiscal consolidation on regional inequalities. We test the hypothesis that in the period of fiscal consolidation, when some spending cut and/or tax hikes, less developed regions are not in position to protect themselves against undesired redistributive policies which put them in more disadvantaged position and increase regional inequalities. In empirical part of the paper we explore the impact of fiscal consolidation on regional inequalities on national levels among 13 EU member countries for period 1995-2009. Two groups of variables are particularly important for this study: measure of regional inequality and fiscal consolidation. Due to fact that recent literature recognizes problems with using cyclically-adjusted primary budget balance (CAPB) as a measure for fiscal consolidation we extend regional empirical literature by using a new database of fiscal consolidation that successfully tackles all this issues. The results indicate that fiscal consolidation led by tax hikes increases regional inequalities and that fiscal consolidation led by spending cuts doesn’t have significant influence on regional inequalities. Finally, the paper highlights that fiscal consolidation is not only the matter of the public debt levels or economic growth, but also important regional issue.

Keywords: Regional inequalities, Fiscal consolidation, European Union

JEL classification: R12, E62, H23

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