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We analyze the determinants of minimum wages in China at the regional level. We include a broad set of economic variables and consider the role of spatial spillovers, which reflect the geographical pattern of regions and can arise for several reasons, including competition between local policymakers. The analysis primarily reveals the existence of strong regional ties in the development of minimum wages. Once these spatial effects are considered, the role of economic variables in the determination of minimum wages declines, and their impact is lower than initially thought. Whereas consumption per capita and consumer prices remain significant, regular wages lose their importance when controlling for reverse causation. Although minimum wage regulation stresses the relevance of economic factors in the determination of appropriate levels, actual development is largely driven by regional dependencies. As minimum wage standards set by local officials do not fully reflect regional economic conditions, further reform should be on the agenda. [ABSTRACT FROM AUTHOR]

Persistent streams of oil revenues can have a long-lasting impact on GDP per capita in oil-exporting countries. Higher revenues might finance government activities and GDP. Besides the direct impact, an indirect effect may occur, as revenues may lead to higher investment that could raise capital accumulation and the production frontier. In this paper, the relationship between poli revenues, GDP and investment is explored for Iran and the countries of the Gulf Cooperation Council ( GCC). To account for nonstationarities of the variables involved, (panel) cointegration techniques are applied. Several results are drawn from the analysis. Cointegration between oil revenues, GDP and investment can be established for all countries. While the cointegration vector is found to be unique for Iran, long-run equations for GDP and investment per capita are distinguished for the Gulf countries. While GDP and investment both respond to deviations from the steady state, oil income can be treated as weakly exogenous. The long-run oil elasticities in tGCC states exceed their Iranian counterparts. While oil revenues are closely related to investment activities in the GCC states, investment in Iran does not react to oil revenues in the long run. [ABSTRACT FROM AUTHOR]

ABSTRACT Since the onset of the economic reforms more than three decades ago, the Chinese growth miracle has been based on exports and investment. While strong output growth was maintained even during the financial crisis, imbalances within the country increased. To return to a more sustainable development path, recent government policies have aimed to improve the role of private consumption. This article argues that China's institutional framework is an impediment to this strategy, as it weakens the incentives of households to consume. As well as a low level of social security and highly regulated financial markets, the authors stress the relevance of the hukou system as the main driver for modest consumption, especially in recent years. After controlling for different income levels, the average propensity to consume is found to be significantly lower for migrants, as their access to public services is limited. If not accompanied by relevant reforms, the urbanization strategy of the government is likely to raise the number of migrants with limited hukou rights, further increasing the downward pressure on consumption. Therefore, in the absence of reforms in the household registration system, the shift towards consumption-driven growth is at risk. [ABSTRACT FROM AUTHOR]

For many analysts, the Chinese economy is being spurred on by a bubble in the housing market, probably driven by the fiscal stimulus package and massive credit expansion, with potentially adverse effects on the real economy. The house price development is investigated by panel cointegration techniques. Evidence is based on a data-set for 35 major cities. Cointegration is detected between real house prices and a set of macroeconomic determinants. The results indicate that the bubble is less than 15 per cent of the equilibrium value implied by the fundamentals at the end of 2010. The bubble is particularly huge in the cities in the south-east coastal areas and special economic zones. While the spillovers from real house prices to consumer price index (CPI) inflation are significant at the margin, gross domestic product (GDP) growth may not be heavily affected. Thus, a decline of the bubble will likely have only modest effects on the real economy. [ABSTRACT FROM AUTHOR]

The current economic and political crisis management in Europe bears the risk of low real economic growth coupled with higher inflation rates. Unemployment has risen in many member states, causing increasing doubts on the benefits of the monetary union. The article discusses the costs and benefits from a German perspective. The starting point is the macroeconomic development before and after the introduction of the euro area, particularly emphasizing real economic growth and inflation rates. The analysis of the micro- and macroeconomic effects reveals that Germany had disadvantages from the monetary union in the first period, due to inflation below the average. In recent years the advantages have become more visible. This favourable evolution can be attributed, at least in part, to the implementation of labour market reforms. [ABSTRACT FROM AUTHOR]

On the EU summit at the end of July, the Euro area leaders have agreed on a second bailout package for Greece. Additional credit lines are planned to solve the debt crisis. However, the outcome has not convinced the markets. This article provides a critical review of the rescue package and stresses the main deficits, particularly the insufficient haircut and the non mandatory involvement of the private sector in the solution. Moreover, policy options to overcome the economic recession in Greece are discussed. A larger debt conversion might be more favourable and can lead to lower costs for the taxpayers. It should further be accompanied by an EU investment programme to ensure the success of the reform process. Finally, the role of the European Central Bank is analysed. [ABSTRACT FROM AUTHOR]

Evidence during the nineties about the response of real wages to shocks highlights that this response is substantially lower in European countries than in the United States and that there are important differences among European countries. Which are the reasons that explain these different reactions? In this paper, we apply meta-analytical techniques in order to provide a quantitative summary of the available evidence regarding the influence of labour market institutions on real wage flexibility. We find that the design of the study affects the obtained results, and that in more deregulated labour markets with a lower presence of trade unions, this response is particularly larger. [ABSTRACT FROM AUTHOR]

Abstract: In this paper a structural macroeconometric model for the Euro area is presented. In contrast to the multi-country modelling approach, the model relies on aggregate data on the supra-national level. Due to non-stationarity, all equations are estimated in error correction form. The cointegrating relations are derived jointly with the short-run dynamics, avoiding the finite sample bias of the two-step Engle Granger procedure. The validity of the aggregated approach is confirmed by out-of-sample forecasts and several simulation exercises. Several shocks are considered, and their implications for Euro area growth and inflation are examined. In particular, shocks to US growth, the nominal interest rate and the exchange rate of the Euro against the US dollar are discussed. [Copyright &y& Elsevier]

This paper applies Verdoorn's and Okun's law to derive efficient estimates of the employment and unemployment threshold in the Unified Germany. The analysis is built on a disaggregated dataset of regional labour markets, where spatial dependencies are taken into account. Especially, a spatial SUR model is proposed utilising the eigenfunction decomposition approach suggested by Griffith (1996, 2000 ). The thresholds turn out to be unstable over time. However, minimum output growth sufficient for a rise in employment is below the level needed for a drop in the unemployment rate. If spatial effects are ignored, the thresholds seem to be markedly overrated. [ABSTRACT FROM AUTHOR]