European Union Member Countries Research Articles

A Factor‐Augmented New Keynesian Phillips Curve for the European Union Countries

AbstractIn this paper, a factor‐augmented version of the New Keynesian Phillips curve (NKPC) is assessed using a data set comprised of a large panel of European Union (EU) member countries. The factor‐augmentation is natural given that country‐level inflation rates are highly co‐moving. The presence of unattended common factors is important because it raises the issue of omitted variables bias, as the real marginal cost, which is a regressor of the NKPC, is likely to load on the same factors as inflation. One possibility here is to employ the regular instrumental variables approach. However, if the external instruments load on the same factors as the error term of the NKPC, the instruments would be invalid and the results would therefore likely be misleading. Motivated by this last observation, the present paper proposes a new estimator of the NKPC that allows for very general forms of factor dependencies and endogeneity. Our results provide evidence in support of the NKPC, but only after the presence of common factors has been appropriately accounted for.

The rebound effect of material and energy efficiency for the EU and its major trading partners

This study presents a comprehensive analysis and comparison of material and energy efficiency performances and their rebound effects, providing insights into their implications for sustainability and climate change policies. Using Stochastic Frontier Analysis (SFA), we examine material and energy efficiency scores and rebound effects in the European Union (EU) member countries and their major trading partners from 1995 to 2019. Our findings reveal several key insights. Firstly, developed EU countries and affluent trading partners exhibit higher material and energy efficiency scores, while less developed members and partners rank lower. The study highlights the potential implications of the EU's Carbon Border Adjustment Mechanism (CBAM) for low-efficiency trading partners, which may face substantial penalties and be incentivized to take significant steps to enhance material and energy efficiency. Secondly, a positive correlation is observed between efficiency improvements and rebound effects, suggesting that policymakers should take the rebound issue seriously. Thirdly, while energy efficiency scores are relatively higher, material efficiency performances are lower and improving over the years. Finally, the rebound effects of energy efficiency exceed those of material efficiency, implying that energy reduction potentials are largely offset. Therefore, prioritizing material consumption for environmental sustainability becomes crucial due to the significant potential for improvement with lower rebound effects.

Employment Perspectives and Current Trends in the Mining and Quarrying Industry in the European Union

Employment represents a comprehensive field in the mining and quarrying sector. It is related to many aspects of the macroeconomic situation. The two fundamental indicators explored in the analysis are in the forms of the production value and the value added at factor cost. The main employed methodology is a regression analysis technique, where the explained variable is represented by the value added in the mining and quarrying sector. The explanatory variables are the following ones: employment, labour productivity, wage, labour input in industry, and turnover. The examined area includes all the 27 European Union member countries with the other selected European countries. The data set covers the time period from 2011 to the year 2020. The Discussion section offers a comparison with the other research studies. The elementary findings are confirmed in the outcomes related to the research hypotheses and the research questions. All the research hypotheses are rejected, so all the five explored indicators are proved to be statistically significant. Moreover, the research questions demonstrate the potential indicators that will play a key role in future development of the mining and quarrying industry. They will serve as a basement for policymakers in order to create the policies for enhancement macroeconomic area of the examined industrial sector.

The Inter-Relationships of Territorial Quality of Life with Residential Expansion and Densification: A Case Study of Regions in EU Member Countries

High-density urban development is promoted by both global and local policies in response to socio-economic and environmental challenges since it increases mobility of different land uses, decreases the need for traveling, encourages the use of more energy-efficient buildings and modes of transportation, and permits the sharing of scarce urban amenities. It is therefore argued that increased density and mixed-use development are expected to deliver positive outcomes in terms of contributing to three pillars (social, economic, and environmental domains) of sustainability in the subject themes. Territorial quality of life (TQL)—initially proposed by the ESPON Programme—is a composite indicator of the socio-economic and environmental well-being and life satisfaction of individuals living in an area. Understanding the role of urban density in TQL can provide an important input for urban planning debates addressing whether compact development can be promoted by referring to potential efficiencies in high-density, mixed land use and sustainable transport provisions. Alternatively, low-density suburban development is preferable due to its benefits of high per capita land use consumption (larger houses) for individual households given lower land prices. There is little empirical evidence on how TQL is shaped by high-density versus low-density urban forms. This paper investigates this topic through providing an approach to spatially map and examine the relationship between TQL, residential expansion, and densification processes in the so-called NUTS2 (nomenclature of terrestrial units for statistics) regions of European Union (EU) member countries. The relative importance of each TQL indicator was determined through the entropy weight method, where these indicators were aggregated through using the subject weights to obtain the overall TQL indicator. The spatial dynamics of TQL were examined and its relationship with residential expansion and densification processes was analysed to uncover whether the former or the latter process is positively associated with the TQL indicator within our study area. From our regression models, the residential expansion index is negatively related to the TQL indicator, implying that high levels of residential expansion can result in a reduction in overall quality of life in the regions if they are not supported by associated infrastructure and facility investments.

Transforming power of research and development on inequality and well-being: a European Union perspective within the circular economy framework

To establish a “well-being economy” that prioritizes human and environmental welfare, understanding the relationship between income inequality, research and development (R&D) potential, and human development is crucial. This study delves into these relationships in European Union (EU) countries, focusing on the adoption levels of a circular economy (CE). Analyzing data from the 27 EU member countries spanning 2010 to 2020, a cluster analysis was utilized to categorize nations based on their CE adoption levels. The panel regression analysis findings revealed a marked positive correlation between income and R&D, with countries having a more robust CE adoption showing stronger ties. Furthermore, a notable positive link was discerned between R&D and human development indicators. Despite these significant relationships, the government R&D sector exhibited inefficiencies, especially in countries with heightened CE adoption. These findings carry profound implications for policymakers, urging a redefinition of economic growth metrics and a shift toward a well-being economy that emphasizes human and environmental health.

The role of financial and trade globalization in enhancing environmental sustainability: Evaluating the effectiveness of carbon taxation and renewable energy in EU member countries

The study addresses the pressing issue of environmental degradation, pinpointing carbon dioxide (CO2) emissions as its primary driver, posing a threat to global environmental sustainability, including the member countries of the European Union (EU). Global warming problems persist, but previous studies have not adequately explored the factors that contribute to a reduction in carbon emissions in EU countries. The paper fills the gap by assessing the efficacy of carbon tax and eco-innovation in mitigating CO2 levels from 1994 to 2019, considering the influence of renewable energy and various aspects of globalization. The study establishes long-term associations among the indicators examined using advanced methodologies, including the cross-sectional autoregressive distributed lag approach and the Westerlund cointegration method. Notably, the results highlight that carbon taxes, eco-innovation, renewable energy, and globalization contribute to slowing environmental deterioration, and economic progress plays a role in mitigating environmental sustainability challenges in EU member states. These findings reinforce the importance of robust strategies for reducing CO2 emissions and minimizing adverse environmental impacts.

Corporate income taxation and external balances in the European Union

This study examines the impact of corporate taxation on the external balances of 27 European Union member countries from the late 1990s to 2021. Using an ARDL process and a 2-stage least squares estimation procedure, we find that, in the short term, higher corporate taxation is positively and significantly related to the current account balance and the trade balance for the whole sample. There are considerable differences in the effects in the euro area and non-euro countries, with the latter experiencing a much stronger short-term impact. In the long term, there are no critical differences in the results between the two groups, and the impact of corporate taxation is positive but statistically significant only for the trade balance. The size of the impact of corporate taxation on net exports and current account balances is of similar magnitude, which likely implies that the international profit shifting via manipulating intrafirm prices in international trade does not strongly affect the external balances in our sample. Our results imply that initiatives to increase global tax rates could be justified from an international trade perspective.

Comparison of the criteria affecting the digital innovation performance of the European Union (EU) member and candidate countries with the entropy weight-TOPSIS method and investigation of its importance for SMEs

Digital innovation offers new competitive opportunities for the EU to achieve its digital strategies and innovation objectives. This study aims to show that the digital innovation performance of SMEs is related to criteria that affect countries' levels of digital technology adoption, digital transformation and innovation management. The digital innovation indicators used for this purpose are ICT, knowledge-intensive employment, university-industry collaborations on R&D, digital skills, patent applications, investments in new technologies, R&D expenditures, use of virtual social networks and cyber security. Research data were obtained from the Global Innovation Index (GII), Global Competitiveness Index (GCI) and Network Readiness Index (NRI). These data were analyzed with the Entropy Weight-TOPSIS method and EU and candidate countries were compared. In the results of the research analysis, Austria, Denmark and Germany took the first three places. In the ranking of these countries, ICT utilization, patent applications and R&D expenditures have high scores. The last three ranked countries are Turkey, Serbia and Croatia. Compared to EU members and other candidate countries, these three countries have the lowest scores in ICT use, patent applications, knowledge intensive employment, digital skills, investment in new technologies and university-industry cooperation in R&D.

IMPACT OF INVESTMENTS ON FOOD SECURITY ACCESS: CASE OF EU AND NON-EU MEMBER COUNTRIES

Agriculture around the world faces a number of challenges. The aim of this paper is to investigate the impact of gross investments and agriculture investments on the level of food security in the member countries of the European Union (EU) and non-EU member countries. In the paper as a method of research hierarchical regression analysis was used. The results of the research showed that there is a statistically significant influence of gross investments and agriculture investments on the level of food security in the EU and non-EU member countries. The largest amount of gross investments and investments in agriculture was recorded in Croatia and Slovenia, as a EU members countries, which have the highest level of food security. On the other hand, the lowest volume of gross investments and investments in agriculture was recorded in Bosnia and Herzegovina, as non-EU member country, which has the lower level of food security.

Measurement of radium and radon gas in bottled mineral waters.

In this study, the radon gas and radium concentration in the bottled mineral water samples was measured. A total of sixty samples were collected from bottled mineral water sold in the markets in Kahramanmaraş. DURRIDGE Rad7 electronic radon detector was used for measurements. Radon and radium activity amounts range from 33.50 ± 1.30mBq/L to 51.70 ± 2.20mBq/L, and 2.92 ± 0.15mBq/L to 4.51 ± 0.26mBq/L, respectively. Average radon and radium active amounts are 41.67 ± 1.54mBq/L and 3.63 ± 0.18mBq/L, respectively. Total annual effective dose values were calculated for these mineral waters according to three different scenarios. In the first of these, it was assumed that natural mineral water was consumed annually instead of 730 L of drinking water (S1). In the second case, 150 L which was the annual average amount of natural mineral water consumed in European Union member countries was used for the annual average amount of natural mineral water consumed by adults (S2). Finally, the annual average amount of natural mineral water consumed in Turkey, 14 L, was used for adults (S3). For scenarios (S1, S2, S3), the total (ingestion + inhalation) annual average dose values ranged from 6.83E-04mSv/y to 1.05E-03mSv/y, 1.40E-04mSv/y to 2.17E-04, and 1.32E-05mSv/y to 2.03E-05mSv/y, their average values were 8.49E-04mSv/y, 1.75E-04mSv/y, and 1.64E-05mSv/y, respectively. The total effective dose values calculated within the scope of the current study were below the limit value announced by WHO.

Europe around the corner? How border proximity and quality of government explains European identity

Do citizens that live close to the border of another European country feel more European? We suggest that border proximity affects European identity formation, but that the positive effect of border proximity is confined largely to areas where citizens live close to regions with better quality of government and lower levels of corruption. Using our newly collected individual level and post-coded data from the most recent wave of the European Quality of Government survey, covering over 129,000 respondents in all 27 European Union member countries, we show that citizens that live close to the border of another country express a stronger European identity, all things being equal. Yet the effect is driven largely by citizens that live adjacent to regions with relatively higher/lower quality of government compared to their own region. Our study thereby contributes to a closer understanding of where and why citizens become attached to Europe, and if and how benchmarking institutional performance and quality of government affect citizens’ willingness to belong to, and identify with, Europe.

Evolution of environmental protection activity in Romania in the context of European integration

The article presents a review of the evolution of the legal and institutional framework in the field of environmental protection in Romania in the context of its harmonization with that of the European Union member countries, before but also during the negotiation process of Chapter 22 Environment. At the same time, some of the significant environmental policies and strategies for setting the main objectives and priority directions of action are presented in an unitary manner.

On the relationship between oil market and European stock returns

This paper investigates the dynamic relationship between the oil market and European stock market returns using monthly data from May 2007 to April 2022 for 27 European Union member countries. A novel approach is adopted by using the time-varying Granger causality test and the structural vector auto-regression model to examine the causal links. Empirical results reveal strong evidence of time-varying causation between the variables, considering the oil market from both the supply-side and demand-side perspectives. In light of these findings, numerous policy considerations emerge, including refining risk management strategies for investors, reformulating economic and energy policies, the potential impact on monetary policy decisions, the need for ad hoc market regulations, facilitating investor education initiatives, promoting international cooperation, and advancing the transition to sustainable energy sources.

Technological changes and carbon neutrality targets in European countries: A sustainability approach with Fourier approximations

The diffusion of net-zero technologies is highly recommended as European Union (EU) countries aim for carbon neutrality by 2050. Germany, France, and the Netherlands are EU countries that invest heavily in environmental patents, and the relationship between patent development and carbon reduction in these countries provides important clues for carbon neutrality goals. Therefore, this study examines the effects of technological change (environmental patents), human capital, and income on carbon (CO2) emissions for three EU member countries over the period 1974–2019 under the Environmental Kuznets Curve (EKC) hypothesis. For this purpose, the study applies the Fourier-ADL approach and various time series estimators. The results of the study show that the EKC hypothesis is valid for EU countries and that human capital contributes to carbon reduction. Moreover, environmental patents contribute to CO2 mitigation in Germany, but environmental patents do not have a significant effect on emission reduction in France and the Netherlands. These results suggest that France and the Netherlands should invest more in environmental patents and, like Germany, benefit from the CO2 reduction effects of environmental patents.

Does democracy matter in banking performance? Exploring the linkage between democracy, economic freedom and banking performance in the European Union member states

AbstractLiterature on the effects of socio‐political factors and the quality of political‐economic institutions on banking performance is scarce and mixed. To contribute to this literature, this study analyzes whether democracy and economic freedom affect the banking sector in European Union member countries. We provide empirical evidence of the influence of democracy and economic freedom on banking performance using a sample of 27 countries from 2001 to 2020, and accounting‐based return on assets (ROA) and return on equity (ROE) as performance measures. A dynamic model (system GMM) was used to address issues such as heteroscedasticity, serial correlation, and endogeneity. These findings indicate that democracy is positively associated with banking performance, whereas economic freedom negatively affects it in the sample countries. Additionally, this study adds to the growing literature on the relationship between control variables (macroeconomic determinants, bank‐specific factors, or a country's legislative regime) and banking performance. This study is practically valuable for managers, investors, stakeholders, policymakers, and academicians.

Assessing Global Competitiveness: A Comparative Analysis of Financial Institutions Development through the Global Competitiveness Index

This study aims to investigate the relationship between a country’s financial development and its global competitiveness, specifically focusing on financial institution efficiency. The research utilizes the Global Competitiveness Index (GCI) and the Financial Market Development Index Dataset as primary sources, covering the period from 2007 to 2019. Additionally, the study seeks to analyse and compare the rankings of European Union (EU) member countries and the United Kingdom in terms of the financial markets pillar of the GCI, while also examining the disparities between the “old” GCI and GCI 4.0. This study focuses specifically on the eighth pillar of the GCI, namely “Financial mar­ket development”. It emphasizes the significance of an efficient financial sec­tor in allocating resources, facilitating business investment, and fostering pro­duc­tivity. A sophisticated financial market, encompassing elements such as sound banking, regulated stock exchanges, and venture capital, plays a pivotal role in driving private sector investments. Transparency, credibility, and ade­quate regulation within the banking sector and financial markets are essential for protecting investors and ensuring the overall stability of the economy. By focusing on the financial institutions pillar within the EU and using the Glo­bal Competitiveness Index as a benchmark, this study can contribute valuable in­sights to policymakers and stakeholders, aiding them in making informed decisions to strengthen the EU’s financial sector and overall economic competiti­veness.

Euro Switch and Shadow Economies

ABSTRACT This paper studies the effect of euro adoption on the shadow economies of a group of European Union member countries using pooled mean group estimation. Controlling for macroeconomic factors and conducting several robustness checks, our results indicate that euro adoption has a negative association with the size of the shadow economy for this particular group of EU countries. We speculate this relationship may be due to increased transparency in financial markets, more government regulation post-euro adoption, or more legal-sector opportunities post-euro adoption. European countries considering euro adoption may find the results useful in making their final decision regarding currency adoption.

The Renewable Energy Performances of Black Sea and Balkan Countries: An Application of Grey Principal Component Analysis

Renewable energy, accepted as a solution to global energy needs, is an environmentally benign energy source that contributes to the economic development of countries, protects natural resources, and reduces pollution. Dependency on non-renewable energy sources raises serious concerns such as environmental degradation, energy security problems, and supply shortages. This study aims to evaluate the renewable energy performances of 14 Balkan and Black Sea countries with similar historical, cultural, and structural characteristics. For this purpose, the data on countries’ renewable energy indicators in 2020 is used in the grey principal component analysis that integrates grey system theory and principal component analysis. Thanks to the grey principal component analysis, it is possible to measure the countries’ existing state in renewable energy and evaluate the performance of countries comparatively. Results indicate that countries such as Russia and Türkiye, which stem from their potential in renewable energy indicators, or European Union member countries such as Greece and Romania, which are expected to fulfill certain obligations on renewable energy, rank first in the reference year. On the other hand, countries such as Bosnia–Herzegovina and Serbia, which have critical shortcomings in renewable energy applications, are in last place in the performance evaluation.

Environmental taxes, eco-innovation, and environmental sustainability in EU member countries.

Environmental taxes and renewable energy consumption are becoming central policy instruments in countries especially in European Union (EU) countries to enhance environmental sustainability; however, no attention has been given to eco-innovations in the nexus between environmental taxes and carbon dioxide emission. This study investigates the effect of environmental taxes, innovations, and renewable energy consumption on CO2 emissions in 26 EU countries from 2000 to 2020. Panel quantile regression was employed for analysis where the results show that environmental taxes have both positive and negative influence on CO2 emissions across quantiles in different models, whereas renewable energy consumption considerably reduces carbon emissions. Economic growth causes an increase in CO2 emissions; however, the financial progress greatly reduces CO2 emissions. Eco-innovations and its square term have a negative influence on carbon emissions which shows that eco-innovations significantly reduce carbon dioxide emission. The findings have significant implications for public policy in the sample countries, notably in terms of promoting renewable energy sources and transitioning to green growth through eco-innovations in order to achieve environmental sustainability.

Real exchange rate convergence in the euro area: Evidence from a dynamic factor model

This paper uses a time-varying error-correction model to measure the speed of real exchange rate (RER) convergence of the original European monetary union (EMU) member countries both before and after the introduction of the euro with those of a larger sample of European countries. These estimates are then incorporated into a multivariate dynamic factor model to identify common European and EMU-specific components determining the temporal dynamics of RER adjustment across these two country groupings. We find the convergence speed in the EMU members to have accelerated substantially from the mid-2000s, stalling only briefly in the wake of the Great Recession of 2007–09 and the subsequent European debt crisis of 2010–12. In contrast, the speed of RER adjustment for the larger sample of European countries displays a secular slowdown lasting to the end of the sample in the late 2010s. The evidence suggests that the EMU members in fact experienced a genuine exchange rate stabilization, particularly during the latter years of the sample.