European University Institute

About: European University Institute is a education organization based out in Florence, Italy. It is known for research contribution in the topics: Politics & European union. The organization has 2311 authors who have published 6594 publications receiving 168117 citations. The organization is also known as: EUI & Istituto Universitario Europeo.

Estimation of average treatment effects based on propensity scores

Abstract: In this paper, we give a short overview of some propensity score matching estimators suggested in the evaluation literature, and we provide a set of Stata programs, which we illustrate using the Na...

An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output

Abstract: This paper characterizes the dynamic effects of shocks in government spending and taxes on U. S. activity in the postwar period. It does so by using a mixed structural VAR/event study approach. Identiecation is achieved by using institutional information about the tax and transfer systems to identify the automatic response of taxes and spending to activity, and, by implication, to infer escal shocks. The results consistently show positive government spending shocks as having a positive effect on output, and positive tax shocks as having a negative effect. One result has a distinctly nonstandard eavor: both increases in taxes and increases in government spending have a strong negative effect on investment spending. The predominant, Keynesian, view of the effects of escal policy that was embedded in the large-scale macroeconometric models of the seventies and eighties has come under attack. Theoretically, in the neoclassical approach that has developed in the last twenty years, government spending can have drastically different effects than in Keynesian models, particularly on private consumption. Empirically, the response of the economy to several episodes of escal retrenchment in the last efteen years has been at odds with conventional Keynesian wisdom: on several occasions, private consumption and GDP increased signiecantly while government spending was severely cut. Finally, the evidence from large-scale econometric models has been largely dismissed on the grounds that, because of their Keynesian structure, these models assume rather than document a positive effect of escal expansions on output.

Cultural Biases in Economic Exchange

Abstract: How much do cultural biases affect economic exchange? We answer this question by using data on bilateral trust between European countries. We document that this trust is affected not only by the characteristics of the country being trusted, but also by cultural aspects of the match between trusting country and trusted country, such as their history of conflicts and their religious, genetic, and somatic similarities. We then find that lower bilateral trust leads to less trade between two countries, less portfolio investment, and less direct investment, even after controlling for the characteristics of the two countries. This effect is stronger for goods that are more trust intensive. Our results suggest that perceptions rooted in culture are important (and generally omitted) determinants of economic exchange.

Trusting the stock market

Abstract: We study the effect that a general lack of trust can have on stock market participation. In deciding whether to buy stocks, investors factor in the risk of being cheated. The perception of this risk is a function of the objective characteristics of the stocks and the subjective characteristics of the investor. Less trusting individuals are less likely to buy stock and, conditional on buying stock, they will buy less. In Dutch and Italian micro data, as well as in cross-country data, we find evidence consistent with lack of trust being an important factor in explaining the limited participation puzzle. THE DECISION TO INVEST IN stocks requires not only an assessment of the risk‐ return trade-off given the existing data, but also an act of faith (trust) that the data in our possession are reliable and that the overall system is fair. Episodes like the collapse of Enron may change not only the distribution of expected payoffs, but also the fundamental trust in the system that delivers those payoffs. Most of us will not enter a three-card game played on the street, even after observing a lot of rounds (and thus getting an estimate of the “true” distribution of payoffs). The reason is that we do not trust the fairness of the game (and the person playing it). In this paper, we claim that for many people, especially people unfamiliar with finance, the stock market is not intrinsically different from the three-card game. They need to have trust in the fairness of the game and in the reliability of the numbers to invest in it. We focus on trust to explain differences in stock market participation across individuals and across countries. We define trust as the subjective probability individuals attribute to the possibility of being cheated. This subjective probability is partly based on objective

The rise of the regulatory state in Europe

Abstract: Privatization and deregulation have created the conditions for the rise of the regulatory state to replace the dirigiste state of the past. Reliance on regulation ‐ rather than public ownership, planning or centralised administration — characterises the methods of the regulatory state. This study examines the growth of regulation in Europe, at the national and Community levels. It stresses the advantages of this mode of policy making, but also recognises its problems. It is suggested that political accountability can be ensured by a variety of substantive and procedural controls, among which judicial review is especially important. Executive oversight and co‐ordination may be improved by using new tools of public management like the regulatory budget or the regulatory clearing house.