A key argument for the introduction of the euro was that it would make prices transparent across Europe, thereby fostering competition and lowering prices. But research by Michael Baye, Rupert Gatti, Paul Kattuman and John Morgan reveals that in fact online shoppers in the eurozone have lost out relative to their counterparts elsewhere in the European Union (EU) following the currency changeover. Their results were presented at the Royal Economic Society’s Annual Conference.
The researchers find that the euro changeover neither mitigated price differences nor resulted in purchasing power parity for products sold online, either within or between countries. In fact, average prices charged by e-retailers within the eurozone increased by about 6% relative to those in EU countries not adopting the euro. The impact on the minimum or best prices in each country was even more dramatic, with the lowest online prices in the eurozone rising by 11% relative to non-eurozone e-retailers. Read the rest of this entry »
Anyone who is good at using computers or communicating can expect to earn considerably more than their educational qualifications alone would suggest. That is the central conclusion of research by Professor Francis Green and Dr Andy Dickerson, presented at the Royal Economic Society’s Annual Conference.
Their analysis of the 2001 Skills Survey, a nationally representative survey of 4,500 working individuals in Britain aged 20-60 (and compares it with a similar survey of 2,500 individuals in 1997), shows that: Read the rest of this entry »
Does lack of freedom result in greater support for rebellion in countries like China or Saudi Arabia? And if so, what is the cost of buying off the potential threat of greater instability via faster economic growth?
Research by Robert MacCulloch and Silvia Pezzini suggests that a policy of buying off trouble by going for growth when freedoms continue to be denied requires close to unattainable rates of sustained economic growth. Instead, more should be done to promote political rights and democracy, where revolutionary fervour is strongly increased by lack of freedom. Read the rest of this entry »
In trying to reduce serious political conflicts within countries, it may be more effective to be tougher on the causes of discontent than on the unrest itself. That is the implication of research by Dr Patricia Justino, presented at the Royal Economic Society’s Annual Conference.
Her work suggests that, in unstable socio-political environments, social redistributive policies may be an important means of conflict management. For example, analysis of rioting in India over the past 30 years show that public expenditure on social services has contributed significantly towards the reduction of conflict, whereas the accumulated use of police over time is associated with increases in rioting. Read the rest of this entry »
High-profile plant closures and job-cuttings by multinational companies have refuelled the criticism that these firms are highly footloose, quick to shift their production facilities from one country to another if the current economic environment changes to their disadvantage. One example is the US car manufacturer Ford, which announced the end of car assembly at its Dagenham plant near London, leading to 1,100 job losses, as well as 1,400 jobs lost at its plant in Genk, Belgium as part of a strategy of restructuring European operations.
But research by Holger Görg and Eric Strobl, presented at the Royal Economic Society’s Annual Conference, suggests that the argument is not as clear-cut as critics of multinationals make it seem. While a comparison of foreign multinationals and domestic plants shows that the former are about 40% more likely to exit an industry than comparable domestic plants, new jobs created in multinationals are about 10% more likely to survive than jobs created in similar domestic plants. Read the rest of this entry »
Monetary policy in the UK has been highly successful in recent years. Following the introduction of inflation targets in October 1992, inflation has remained within 1 percentage point of the target of 2.5%. This stability is in marked contrast to the high and volatile inflation rates experienced before 1992. Read the rest of this entry »