Optimal Unemployment Insurance and International Risk Sharing

Moyen, Stéphane; Stähler, Nikolai; Winkler, Fabian

doi:10.17016/feds.2016.054

Cited by 16 publications

(20 citation statements)

References 30 publications

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“…Again, it is somewhat lower in the public sector but slightly higher in the construction sector. In line with Moyen et al (2016), the unemployment rate in core is 8.4%, while it is 12.7% in the periphery. Of all employed people, 16.5% (17.7%) work in the public sector and 7.3% (20.1%) work in the construction sector in the core (periphery).…”

Section: Calibrationsupporting

confidence: 57%

“…Together with targeting a GDP-weighted average of domestic expenditure shares of 85% in line with Balta and Delgado (2009), this allows us to derive the corresponding home bias parameters endogenously. Furthermore, we set the per capita GDP of the periphery relative to core's per capita GDP to 0.875 in line with Moyen et al (2016).…”

Section: Calibrationmentioning

confidence: 99%

“…The steady-state public-sector wage markup relative to the private consumption/investment goods sector in the core (periphery) amounts to 1.04 (1.14), while it is 0.99 (1.06) for those workers working in the construction sector (see also Giordano et al, 2011). The steady-state replacement rate of the unemployment insurance amounts to 72.5% in the core and 52.3% in the periphery following Moyen et al (2016). In order to match the wage relations between the public, consumption/investment goods and construction goods sectors, we derive the sector-specific bargaining powers.…”

Section: Calibrationmentioning

confidence: 99%

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Who benefits from using property taxes to finance a labor tax wedge reduction?

Stähler

2019

Journal of Housing Economics

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We use a New Keynesian DSGE model with a rental housing market to evaluate how financing a labor tax wedge reduction through higher property taxation affects the real economy and welfare. We find that a labor tax wedge reduction generates favorable macroeconomic effects and improves international competitiveness, independent of the financing instrument used. Even though it negatively affects the housing market, property acquisition taxation outperforms all other instruments as the financing instrument in terms of welfare. This finding is the result of allowing households to decide whether to buy or to rent housing services and of the fact that, in this situation, they shift from purchasing to renting more housing services. Abandoning tax credit on mortgage interest payments effectively harms borrowers.

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Section: Calibrationsupporting

confidence: 57%

Section: Calibrationmentioning

confidence: 99%

Section: Calibrationmentioning

confidence: 99%

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Who benefits from using property taxes to finance a labor tax wedge reduction?

Stähler

2019

Journal of Housing Economics

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“…We set the labor force participation rate to 65 percent; we assume that 20 percent of jobseekers are searching in the public sector and that 18 percent of employed workers are working for the government. 13 For the remaining labor market parameters, we follow Moyen, Stähler, and Winkler (2016), who calibrate a model for the euro area with one block matching the periphery. As such, the unemployment rate is set to 12 percent, the net replacement rate to equal 52.3 percent, and vacancy posting costs to represent 7.29 percent of private wages.…”

Section: Fiscal Rule Parameters For Wage Cutsmentioning

confidence: 99%

Fiscal Consolidation in a Low Inflation Environment: Pay Cuts Versus Lost Jobs

et al. 2016

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We construct a model of a monetary union to study fiscal consolidation in the periphery of the euro area, through cuts in public-sector wages or hiring when the nominal interest rate is constrained at its lower bound. Consolidation induces a positive wealth effect that increases demand, as well as a reallocation of workers towards the private sector, which together boost private activity. However, in a low-inflation environment, demand is suppressed and the private sector is * We would like to thank the editor, L. Reichlin, and an anonymous referee for their comments, as well as A. Trigari for the insightful discussion. We are also grateful for comments to R. Wouters and other participants in the International Journal of Central Banking Research Conference 2017 and in the "Fiscal Policy after the Crisis" workshop organized by the European Commission. We would also like to thank A

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“… Although Hjortsoe, () shows that spending coordination could lead to substantial welfare gains, we restrict our analysis to revenue‐based centralization schemes as those are more often discussed in the public sphere. Furthermore, analysing alternative fiscal union scenarios such as, among others, a common unemployment insurance system or other politically viable transfer schemes, should also remain on the research agenda (see Moyen et al ., , going in that direction). …”

mentioning

confidence: 96%

Thoughts on a Fiscal Union in EMU

Gadatsch

Hollmayr

Stähler

2019

German Economic Review

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Reproduction permitted only if source is stated.ISBN 978-3-95729-307-7 (Printversion) Non-technical summary Research QuestionRecently, calls for a deeper fiscal integration in the Euro Area have been voiced. We examine short-and long run effects of precisely three different forms of a fiscal union, ascending in the degree of fiscal integration: i) a per-capita public revenue equalisation scheme, similar to the German Länderfinanzausgleich, ii) tax harmonisation, where labour income tax and social security contribution rates are harmonised and iii) a supranational/centralised fiscal authority at the European level, where both revenue and expenditure-side fiscal instruments and public debt are centralised. ContributionWe analyse and compare the different fiscal union scenarios with the New Keynesian DSGE model GEAR. The model incorporates a detailed fiscal sector and is estimated with a rich set of data for Germany and rest of the Euro Area. It enables us to draw some quantitative conclusions for these (groups of) countries. Furthermore, by means of a welfare analysis, we are able to draw some normative conclusions and provide a ranking of the three fiscal union scenarios, which may be region-specific. ResultsOur analysis shows that all three fiscal union scenarios considered in this paper do not improve international risk sharing significantly. Hence, neither Germany nor the rest of the Euro Area would benefit on a considerable basis from introducing any of these integration steps. Even when introducing risk premia on government bonds, this general finding is not changed -although risk premia per se decrease welfare notably. In the long run, redistribution generates winners and losers depending on the degree of integration and how key macroeconomic variables adjust. Nichttechnische Zusammenfassung FragestellungIn der politischen Diskussion wird zunehmend eine stärkere fiskalische Integration für den Euroraum gefordert. Wir untersuchen in diesem Papier die kurz-und langfristigen Auswirkungen von drei konkreten Formen einer Fiskalunion, ansteigend im Grad der fiskalischen Integration: i) eine Nivellierung öffentlicher Einnahmen pro Kopf, ähnlich dem deutschen Länderfinanzausgleich, ii) eine partielle Steuervergemeinschaftung, bei der Lohnsteuer und Sozialversicherungsabgaben vergemeinschaftet werden, und iii) die Zusammenfassung der nationalen Staatshaushalte in einer zentralen europäischen Fiskalbehörde, in der sowohl die einnahmen-als auch die ausgabenseitigen Fiskalinstrumente sowie die Staatsverschuldung zentralisiert sind. Beitrag AbstractUsing an estimated large-scale New-Keynesian model, we assess welfare and business cycle consequences of a fiscal union within EMU. We differentiate between three different scenarios: public revenue equalisation, tax harmonisation and a centralised fiscal authority. Relative to the status quo, long term consequences generate winners and losers depending on the degree of integration and on how key macroeconomic variables adjust. Short term differences between the regimes are...

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Optimal Unemployment Insurance and International Risk Sharing

Cited by 16 publications

References 30 publications

Who benefits from using property taxes to finance a labor tax wedge reduction?

Who benefits from using property taxes to finance a labor tax wedge reduction?

Fiscal Consolidation in a Low Inflation Environment: Pay Cuts Versus Lost Jobs

Thoughts on a Fiscal Union in EMU

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