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Abstract:
This paper explores the economic consequences of the enlargement of the European Union with countries from Central and Eastern Europe. We focus on integration aspects that go beyond the reduction of formal trade barriers, namely accession to the internal market and free movement of labour. The economic implications for sixteen industries in several European countries are assessed by using WorldScan, a CGE model for the world economy. The results suggest that the candidate member states will gain substantially from accession to the internal market, although some sectors in these countries will shrink. Most EU countries will experience small welfare increases. We also find that the internal market effects are large compared to the economic effects of removing formal trade barriers and migration.

Abstract:
Employed technologies differ vastly across countries.Within countries many technologies that would obviously improve firms' efficiency are not adopted. This paper explains these observations by emphasizing that a new technology positively affects workers by lowering prices and increasing their real income, but also negatively by costs of getting acquainted with the new technology. If the costs of adoption for workers exceed the benefits, they will aim at keeping the old technology in place. We formalise the trade-off in a simple OLG model with majority voting. Age groups that lose from adopting resist. Successful resistance blocks adoption and hence lowers growth. Finally, we analyse the effects of tougher competition. Provided that consumption and leisure are relatively good substitutes, tougher competition mitigates resistance and thus favours economic growth as it increases the share of the rent associated with the new technology that is being captured by the workers.

Abstract:
Structural Funds are the most intensively used policy instrument by the European Union to promote economic growth in its member states and to speed up the process of convergence. This paper empirically explores the effectiveness of European Structural Funds by means of a panel data analysis for 13 countries in the European Union. We show that - on average - Structural Funds are ineffective. For countries with a 'proper' institutional framework, however, Structural Funds are effective. The latter result is obtained for a wide range of conditioning variables, such as openness, institutional quality, corruption and indicators for good governance. It is robust to a wide range of robustness tests.

Abstract:
Structural funds are the most intensively used policy instrument by the European Union to promote economic growth in its member states and to speed up the process of convergence. This paper empirically explores the effectiveness of European Structural Funds by means of a panel data analysis for 13 countries in the European Union. We show that - on average - Structural Funds are ineffective. For countries with the 'right' institutions, however, Structural Funds are effective. The latter result is obtained for a wide range of conditioning variables, such as openness, institutional quality, corruption and indicators for good governance.

European Cohesion Policy, policy effectiveness, economic growth, European Union

Abstract:
We develop a model to analyze the social optimality of growth and product variety. The model contains two sectors, one assembly sector producing a homogeneous consumption good and one intermediate goods sector producing differentiated inputs. Growth results from R&D performed in the intermediate goods sector. We disentangle three effects associated with increased variety: (i) a productivity effect, (ii) a business stealing effect, and (iii) a growth effect. The market provides too little variety and suboptimally high growth if the productivity effect of variety is large relative to the market power of intermediate goods producers. If varieties are not very productive, the market provides too low a rate of growth, whereas variety may either be too low as well too high.

Abstract:
In the U.S., the skill premium and the non-production/production wage differential increased strongly from the late 1970s onwards. Skill-biased technological change is now generally seen as the dominant explanation, which calls for theories to explain the bias. This paper shows that the increased supply of skill - which is usually seen as countervailing the rise in skill premiums - can actually cause rising skill premiums. The analysis starts from an R&D-driven endogenous growth model. Our key assumption is that skilled labour is employed in non-production activities that both generate and use knowledge inputs. If firms can sufficiently appropriate the intertemporal returns from these activities, skill premiums may rise with the supply of skilled labour. The degree of appropriability is endogenous and rises with the supply of skills. As a result, the skill premium first falls and then increases when skilled labour supply rises. Simultaneously, patents per dollar spent on R&D fall.

wage inequality, growth, technological change, appropriability

Abstract:
We explore the relationship between openness and growth by taking a closer look at trade-related knowledge spillovers at the industry level. First, we estimate the relation between sectoral R&D expenditures, trade-related spillovers, and growth. Next, we incorporate these R&D linkages in a computable general-equilibrium model for the world economy. We simulate trade liberalization in the model with R&D spillovers and compare the effects on GDP in different regions with a non-R&D-based model simulation. We find that the GDP effects of trade liberalization are magnified considerably by R&D spillovers for some regions - notably Japan and Southeast Asia. In other regions, such as China, the additional GDP effects are modest. These findings can be traced back to changing specialization and import patterns.

Abstract:
This paper assesses empirically whether R&D spillovers are important and whether they originate from domestic or foreign activities. Data for eleven sectors are used to explain the impact on total factor productivity of R&D by the sector itself, by other Dutch sectors and by foreign sectors. We find that both domestic and foreign R&D are significant for the Dutch economy. The elasticity of total factor productivity with respect to R&D is approximately 35% for R&D by the sector itself, 18% for R&D by other Dutch sectors and 1*% for R&D by foreign sectors. Our findings also suggest that more R&D speeds up the absorption of foreign technologies. These results are confirmed in an analysis where we look at manufacturing and services separately. We find one difference: R&D in the service sectors helps to absorb foreign technologies, whereas R&D in manufacturing does not.

Abstract:
Where is the productivity growth from the IT revolution? Why did the skill premium rise sharply in the early eighties? Were these phenomena related? This paper examines these questions in a general equilibrium model of growth. Technological progress in firms is driven by research aimed at improving the production technology and by assimilation of ideas or principles present outside the firm. A new general purpose technology like the IT revolution generates an initial slowdown in economic growth and an increase in inequality.