Research Themes

 

 

Equilibrium theory and optimisation for public policy and industry regulation

The objective of the project is to simultaneously develop analytical tools for economic equilibrium analysis and use those tools in the fields of public policy and regulation. There are three main topics:  equilibrium theory and optimisation, public policy, and market and industry regulation. ECON/IRES is more particularly involved in five sub-themes: developing intertemporal general equilibrium models with imperfect competition, innovation and growth;  analyzing welfarist and non-welfarist optimal redistribution; studying the effect on intergenerational equity of social security, growth and demographic externalities; designing institutions to promote regional cooperation and trade;  reforming labor markets.
 

New  macroeconomic perpectives in development

In the recent decades, the income gap between the rich and the poor countries has substantially increased, and despite the Chinese and Indian success stories, the number of poors (say with less than one dollar per day) around the world is far from being reduced. In the 60s, underdevelopment was merely considered as one of the consequences of a deficit in domestic savings. Nowadays, it is widely admitted that this phenomenon is by nature complex and multi-dimensional. A low endowment in physical capital cannot explain by itself why many countries couldn’t take off so far. Underdevelopment is related to a much wider set of characteristics: low literacy rates, hard access to health facilities, high demographic growth rates, low life expectancy and inconsistent institutions, mostly reluctant to modernization.
Our project builds on three distinct but inter-dependent parts: the first one develops analytical tools and models, the second is a reflection on the history of development theories, and the third one is a case study. The first part tackles three types of issues: first, the determinants and consequences of technology transfers are reexamined with a closer description of how technological advances are actually produced in the North and transferred to the South; secondly, game-theoretic frameworks are constructed in order to assess which trade agreement is the most favorable to developing countries (multilateral, bilateral, free trade); last but not least, a detailed study of the role of demographic characteristics in growth and (income) inequalities is conducted.
The second part on the history of economic thought assesses and feeds back the analytical models put forward in the first part, with the necessary historical perspective. Th third part tests the implications (notably the development strategies implications) of the analytical part in the case of South-Kivu, a region of the Democratic republic of Congo.



Micro- and macroeconomic evaluation of reductions of payroll taxes

The objective of this research is to evaluate the efficiency of reductions of social security contributions. In a microeconomic perspective, the evaluation criteria are the transition rate from unemployment towards employment and the length of the employment spell. In a macroeconomic perspective, we study the effects of reductions of employers’ social security contributions on technological choices and on job creation. This analysis takes account of the wage negotiation process, the heterogeneity of skills on the Belgian labour market and the existence of other labour market policies (unemployment insurance, active labour market policies).


Transitions between Unemployment and Employment, and Economic Policy

The objective is to improve our understanding of te working of the labor market so as to allow a better assessment of labor market policies. The emphasis will be on the analysis of labor market transitions in an economy with heterogeneous workers and firms. Job search behaviors (by the workers) and job destruction decisions (by firms) will be accounted for and modelled carefully. Labor market institutions like for instance minimum wage constraints or employment protection will be taken into account. The methodology is based on dynamic general equilibrium models with labor market frictions. The models are calibrated and simulated to investigate the effects of variuos types of labor market policies. In as much as possible, the calibration will aim at reproducing the working of the Walloon labor market.  


Economics of Higher Education Finance

Should access to higher education remain ‘free’? Theoretical answers to this question are at least twofold. First, public higher education is said to be regressive as a privileged minority profits from extra human capital, while the general public foots the bill. A possible reply is that higher education students enjoying ‘free’ access are implicitly borrowing public money that they pay back when entering the labour market, via progressive income taxes. By developing a simple lifecycle framework and using EU data this research intends to produce estimates of how much graduates are likely to ‘reimburse’ society via income tax. As there might be reasons for shifting part of the higher educational cost burden from taxpayers to individuals, the next critical issue is that of the desirable characteristics of higher education private finance. Deferred and income-contingent payment might condition effectiveness – students and lenders should not be deterred by excessive risk – and equity – contributions should be tailored to ex post ability to pay. The central aim of this part of the project is to produce estimates of how graduates’ and non-graduates’ lifetime income is affected by the generalisation of these instruments, using data on income across EU countries and using finance by income tax as a benchmark. A further step is to consider the different ways of financing the cost of income-contingency, with a particular focus on the risk of adverse selection inherent to pooling the cost among graduates.


Monetary policy and economic growth in Belgium under Bretton Woods - 1944-1971

For the 175th anniversary of Belgium, the National Bank will publish four volumes about its history and its monetary policy. In addition to three historical issues, the aim of this research is to present a macroeconomic analysis of the monetary and exchange rate policies in Belgium between 1944 and 1971. Although the Bretton Woods era is nowadays considered as an exceptionally stable period, having generated unprecedented growth, the historical analysis reveals or recalls all the problems related to the establishment of an international monetary system and to the practice of national monetary policies in this framework. The analysis underlines the multiple inter-relations between the world economic context, the structural or institutional distinctive features of the Belgian economy and the conduct of the monetary policy. The evolution of the monetary policy, of its aims and instruments appears as a subtle and non linear path inside moving constraints.
The volume resulting from this research will be published by the National Bank in November 2005.


Active Welfare State : a paradigm change ?

Since the 80’, Welfare States are in crisis. At the century turn, social democrats have returned to power in most of the EU-15 countries. The goal of maintaining the “acquis” of the Welfare State as progressively constructed in the previous decades in Europe, while adapting it to the new global economic environment, has led to new ways of thinking, new ways of doing and the emergence of a new concept: the active welfare state. The GRIDES, “interdisciplinary research group: law, economic, society” has gathered researchers coming from various backgrounds to confront their opinions on the nature and the challenges of the ongoing change. Are the new principles and policies which are more and more implemented in the social protection systems the continuity of the past and the previous social pacts or are they a breakdown of the previous path dependency dynamic? The result of this research will be published in an edited volume in September 2005, PIE-Peter Lang editor.


Business Cycles,  macroeconomics forecasts and conjonctural analysis

An important part of the research conducted in the Economic analysis service (EAS) is the analysis of conjonctural developments in Belgium and abroad.  Four studies are published every year on this topic.  The other research projects of the EAS are concerned with the broad analysis of the economic business cycle in Belgium.  Two topics have received much of our attention over the last two or three years.  The first one is the construction of indicators of the probability of the Belgian economy entering into recession.  The second topic is the usefulness of business survey data for the forecast of the Belgian GDP and its main demand components. 
                                                                                                                                                                        

Dynamique des filières productives et développement rural intégré

Le projet vise à créer, au sein de l'Université catholique de Bukavu, un "Laboratoire d'Economie Appliquée au Développement" (LEAD) comme pôle de compétences dans le domaine économique et dans celui de disciplines connexes, le droit et l'agronomie. La recherche porte sur l'analyse des capacités de développement de filières productives choisies en fonction de leur contribution à la lutte contre la pauvreté et au rétablissement des relations socio-économiques entre la ville et les campagnes de la région du Kivu. Les aspects relatifs à la micro-finance, à la formation de main d'oeuvre, aux infrastructures, aux techniques agricoles et pastorales et aux questions de droit foncier seront abordées. Les résultats attendus sont l'établissement d'indicateurs de priorités de re-développement et de stratégies de mise en oeuvre de ces priorités pour les acteurs de terrain.


Microstructure of Financial Markets in Europe

The goal of the proposed network is the study of microstructure of European financial markets. This will be done on the basis of recently available data for various European financial markets at the transaction level (UHF-data). The special features of this type of data require the development of new econometric tools that combine methods from microeconometrics with methods from time series analysis.


Evaluations of Policies of local development. Toward a New Generation of Measurement Indices

Les régions se tournent vers des politiques de valorisation de leurs avantages concurrentiels. Nous en étudierons deux aspects fondamentaux: la mise en réseau des entreprises et le rôle du capital social comme facteur de développement


Financing Retirement in Europe : Public Sector Reform and Financial Market Development

The financing of retirements is one of the most significant medium to long-term issues of economic and social policy that Europe faces. If long-established demographic and labour market trends continue, major changes to the existing national systems of retirement are inevitable. This is widely recognised and, indeed, major changes are already underway. However, there is considerable debate among economists and policy makers as to the most appropriate form for new institutions, and there is very little willingness on the part of the general population to contemplate any changes that might reduce benefits from current publicly-funded systems.


Climat Change and International Negociations (CLIMNEG II)

The CLIMNEG 2 research project is devoted to the analysis of international and Belgian climate change policy questions in the post-Kyoto era. The research project is an exercise in integrated assessment analysis, i.e. it looks at the problem of climate change from a broad perspective in order to fully appreciate the numerous and complex interactions between the many economic actors (consumers, producers, national governments, supranational organisations) and the complex physical environment they are operating in. This broad perspective is reflected in the extensive geographical coverage (international, European and Belgian), the extensive time horizons considered (several centuries for integrated assessment modelling, several decades for analysis of climate change policies for the first commitment period 2008-2012 of the Kyoto Protocol), and the variety of policy questions it considers (integrated assessment of both climate change and acidification for the emissions of sulphate aerosols, the interaction of policy instruments like carbon taxes and emission permit trading, nonpoint source greenhouse gas (GHG) emissions from agriculture and so forth).

The Evaluation of Labour Market Policies (COST A23)

Major European research centres in the field of applied econometrics and labour economics have joined forces in a COST network. This network aims at a regular exchange of researchers of various countries, to benefit from each other's experience and expertise. Every 6 month a workshop is organised at one of the participating institutions. The research is focused on the adequate design and the evaluation of policy interventions.


Matching models, business cycle and labour market policies 

The equilibrium matching model with Nash bargaining over wages leads to too flexible wages. It cannot explain the magnitude of business cycle fluctuations in unemployment and vacancies. This model is also not as good as expected to evaluate labour market policies. The project aims at analyzing the properties of the equilibrium matching model when the wage bargain is treated differently (rigid relative wages ; uncertainty and incomplete markets ; asymmetric information).


Brain Drain and Human Capital Formation in Developing Countries

The purpose of this research project is to empirically evaluate the impact of the brain drain on human capital formation in developing countries.The first step consists in building a variant of the Docquier-Marfouk (2005) database on skilled migration by controlling for age of entry of immigrants. This is an essential step as only people who acquired education in their home country can truly be defined as "highly-skilled emigrants" from that country. We expect the corrected migration rates to be significantly lower for some countries. Second, building on the new data, we will evaluate the impact of skilled migration on human capital formation in source countries. Building on Beine et al. (2003), we will use OLS regressions as well as instrumental estimation techniques to address potential problems of reverse causality between migration prospects and human capital accumulation. Using the world development indicators, we will also be able to introduce additional controls in our regressions (notably on income and wealth distribution) and use various econometric techniques allowing for a >substantial upgrade of the empirical analysis. We plan to use the "gross" emigration rates of the existing Docquier-Marfouk dataset as an upper bound and the corrected (or "net") emigration rates after children have been netted out as a lower bound in our regressions. 


Economic Analysis of heterogeneity in social organization

The goal of the research is to provide both theoretical and empirical examination of the link between the degree of heterogeneity in the existing environment and the variance of benefits emerging as an outcome of the economic or political process.   In this perspective, an important feature of our analysis is a clear distinction between exogenous
heterogeneity, which describes environments where agents possess diverse individual characteristics, preferences or beliefs, and endogenous heterogeneity, which emerges as an outcome of an economic process when even a priori identical agents enjoy different benefits fromeconomic interaction.  Finally, we will address policy implications that could be socially desirable in various types of heterogeneous environments. 

 

 

 


 

 

| 1/10/2009 |