Chairman Administrative Coordinator - feb.kuleuven.be · Prof. Dr. Erwin Ooghe Prof. Dr. Stef...

In 1928, Léon H. Dupriez established the Department of Economics at the Catholic University of Leuven.

Later, in 1955, Gaston Eyskens founded the Centre for Economic Studies. Currently the full-time

academic staff of the Department includes 19 professors grouped into 7 research units: Development

Economics; Econometrics; Energy, Transport and Environment; International Economics; Monetary

and Information Economics; Public Economics; and Quantitative Economic History.

This Annual Report provides a comprehensive overview of the ongoing research at the Department

and its research output in 2010. The research covers a wide range of areas in the broadly defined

field of economics. The Report is largely organized according to the above-mentioned research

units. Besides describing research interests and listing publications, this Report also provides an

overview of externally funded research projects and of the research-related activities (conferences,

workshops, seminars, Ph.D thesis defences) that took place in the Department in 2010.

Any publication mentioned in this Report can be obtained by contacting Karla Vander Weyden

([email protected]) or by downloading it from the author’s webpage.

Working papers can be downloaded from www.econ.kuleuven.be/eng/ew/

Erik Buyst Karla Vander Weyden

Chairman Administrative Coordinator

ANNUAL RESEARCH REPORT 2010

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CHAIRMAN: Prof. Dr. Erik Buyst

FACULTYProf. Dr. Filip AbrahamProf. Dr. Erik BuystProf. Dr. Laurens CherchyeProf. Dr. Guido De BruyneProf. Dr. André DecosterProf. Dr. Paul De GrauweProf. Dr. Hans DewachterProf. Dr. Geert DhaeneProf. Dr. Maarten GoosProf. Dr. Jozef KoningsProf. Dr. Luc LauwersProf. Dr. Erwin OogheProf. Dr. Stef ProostProf. Dr. Erik SchokkaertProf. Dr. Jo SwinnenProf. Dr. Jo Van BiesebroeckProf. Dr. Patrick Van CayseeleProf. Dr. Frank VerbovenProf. Dr. Gerald Willmann

EMERITIProf. Em. Dr. Jean-Paul AbrahamProf. Em. Dr. Louis BaeckProf. Em. Dr. Anton BartenProf. Em. Dr. Lode BerlageProf. Em. Dr. Marc EyskensProf. Em. Dr. Dirk HeremansProf. Em. Dr. Wim MoesenProf. Em. Dr. Theo PeetersProf. Em. Dr. Frans SpinnewynProf. Em. Dr. Karel TavernierProf. Em. Dr. Herman Van der WeeProf. Em. Dr. Paul Van Rompuy

POST- DOCTORAL RESEARCHERSDr. Fay DunkerleyDr. Ivan PetrellaDr. Koen Decancq

Dr. Øyvind ThomassenDr. Tom TruytsDr. Saskia van der LooDr. Carine Van de VoordeDr. Marijke Verpoorten

RESEARCHERSWim BenootThomas BlondiauNicolas BouckaertBen BouryLiesbeth ColenEllen CoosemansKaren DecancqKoen DeclercqPieter DeleuDries De SmetKris De SwerdtFrancesco Di LodovicoMaarten DuboisHang GaoMaryam GiahiToni GlaserLaura GrigolonCatherine HaeckXavier JaraYuemei JiEmilia JurzykKristof LowyckSimon MiegielsenLaura NurskiJavier Olivera AnguloJudith OomsLotte OvaereGiulia PiccilloPablo Rovira KaltwasserAnna SalomonsWillem SasAnnette SchminkeAlexander SchmittKevin Spiritus

Zuzanna StudnickaPriscilla ToffanoRien Van de WallThijs VandemoorteleAnneleen VandeplasToon VandyckAnnelore Van HeckeKristine Van HerckBert Van LandeghemPieter VanleenhoveEls VanonckelenDenise Van RegemorterFrank VastmansDirk VerwerftBert WillekensYingting YiGeorge Zhang

AFFILIATED RESEARCHERSDr. Koen AlgoedDr. Karolien De BruyneDr. Johan EyckmansDr. Guido PepermansDr. Cindy MoonsDr. Eline PoelmansDr. Genserik ReniersNicky RoggeDr. Sandra RousseauDr. Jan Van HoveDr. Tom Van PuyenbroeckDr. Tom Verbeke

ADMINISTRATIVE COORDINATOR

Karla Vander Weyden

PROJECT AND FINANCE COORDINATOR

Andras Avonts

ADMINISTRATIVE STAFFHeidi De VadderJacqueline Van Hal

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Development Economics ________________ p. 5

Econometrics __________________________ p. 15

Energy, Transport and Environment ______ p. 27

International Economics ________________ p. 39

Monetary and Information Economics ____ p. 53

Public Economics ______________________ p. 59

Quantitative Economic History __________ p. 81

Centre for Economic Studies Seminars __ p. 87

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Development Economics

FACULTY MEMBERS:

Jo Swinnen

EMERITI:

Louis BaeckLode Berlage

POST-DOCTORAL RESEARCHERS:

Marijke Verpoorten

RESEARCHERS:

Liesbeth ColenJudith OomsThijs VandemoorteleAnneleen VandeplasKristine Van HerckBert Van Landeghem

Jo Swinnen conducts research on the impact ofinstitutions and reforms on economic performance;on the interaction between markets and regulation;on the political economy of public policy makingin general, and food and agricultural policy inparticular; on the economics of violent conflict;and on the relation between sports and development.

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I Institutional reforms and development

The growth effects of liberalizations in the 1980s and 1990sdiffered strongly between regions in Africa, Asia and Europe.Jo Swinnen, Anneleen Vandeplas and Miet Maertens firstdocument these differences in a comparative frameworkand then develop a model to analyze how liberalization affectsproduction and income distribution when institutions thatgovern production and exchange are also affected. The authorsderive hypotheses on how endogenous institutional adjust-ments affected the growth response to the liberalizations.These insights are then used to forward a series of explanationson the differences in performance across countries andcommodities following liberalization.

Economic liberalization in Madagascar, one of the poorestcountries in sub-Saharan Africa, began in the 1980s and hasled to a rapid increase in both imports and exports over thelast 20 years. However, the growth of trade has had littleimpact on economic opportunities for Madagascar’s ruralpopulation, and rural exports on the whole have declined.Bart Minten, Philippe Meral, Lelaina Randrianarison and Jo Swinnen study two cases where changing trade ruleshave had important effects on poverty and the environment.First, they document the rapid expansion of maize productionin southwest Madagascar, a case that illustrates the contri-bution of trade to agricultural land extensification and defor-estation and its links to changing environmental mores.Second, they study contract farming of high-value vegetables,which illustrates the opportunities of trade for the poor andthe contribution which the private sector can make to sustainable agriculture through intensification.

Over the past two decades, earnings from farming in theformer communist countries of Eastern Europe and CentralAsia have been altered hugely by governments’ sectoral

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and trade policy reforms. Kym Anderson and Jo Swinnensummarize the evidence on market distortions in the agricultural sector since transition. In particular, they examinethe extent to which, following initial shocks, there has beena gradual improvement in farmer incentives. This new evidenceis not inconsistent with the past pattern of earlier-developingcountries, but the speed of assistance increase is relativelyrapid and is linked with actual or desired accession to theEuropean Union. They also focus on future prospects, particularly what might be done to prevent agricultural protection levels from becoming excessive.

Agricultural output and productivity have changed dramat-ically in Central and Eastern European countries (CEECs)and the Former Soviet Union (FSU) since the fall of theBerlin Wall. Initially, market reforms caused a strong declinein agricultural output. The extent to which this output declinewas associated with changes in productivity is related tothe speed with which labor could exit agriculture and agri-cultural factor and output markets could develop. This, in turn,depended on the initial conditions and implemented reformpolicies. Considering the fact that the initial conditions andreform policies were very different across countries in theregion, productivity evolved very differently across countries.Jo Swinnen, Kristine Van Herck and Liesbet Vranken docu-ment these changes in agricultural output and productivity,and identify four ’patterns’ of productivity changes, relatedto differences in initial conditions and reform policies. In relatedwork, Jo Swinnen and Liesbet Vranken provide a conceptualframework for the evolution of productivity and link thisevolution to the issue of factor abundance while taking intoaccount specific transition characteristics. Their analysisindicates that the productivity changes were related to theextent of the pre-reform distortions, initial resource endow-ments and technology use, and to how the reforms wereimplemented.

As part of the 2003 reform of its Common Agricultural Policy(CAP), the EU shifted farm support for most agriculturalproduction from coupled payments to decoupled supportthrough the single payment scheme (SPS). Economic theoryand empirical findings suggest that land markets are influ-enced by how agricultural support is provided. Supportpay ments tend to become capitalized into land values tosome degree, affecting both the sales and rental prices of land.These effects, in turn, have a bearing on the transfer efficiencyof the support and on structural change in agri culture.Pavel Ciaian, d’Artis Kancs and Jo Swinnen investigatewhether the SPS has led to the capitalization of supportinto land values in the EU-15, and, if so, to what extent.Drawing from a combination of data sources, their extensiveempirical analysis offers preliminary evidence on the reactionof EU land markets and asset values to the policy changes.

Co-ownership of assets is widespread in many countriesdue to inheritance. Central and Eastern Europe offers aninteresting natural experiment to assess the effects of thistype of property rights imperfection because of the assetrestitution process in the 1990s. In Bulgaria, where co-ownership is very prominent and land is strongly fragmented,the land reform and inheritance legislation allows identificationof the impact of co-ownership by taking advantage of adiscontinuity created by a minimum plot size law. Using micro-survey data from Bulgaria, Liesbet Vranken, Karen Macours,Nivelin Noev and Jo Swinnen analyze how this propertyrights imperfection of co-ownership affects households’allocation of assets. The authors find that land in co-ownershipis more likely to be used by less efficient farm organizationsor to be left abandoned, and that it is related to significantwelfare losses. Hence, there is evidence of suboptimalland allocation following a privatization which establishedformal but imperfect property rights.


I Markets and regulation

While it is generally agreed that consolidation istaking place in the food industry, both in high incomecountries and in emerging economies, the impact ofconcentration in global food chains on efficiency andrent distribution is more nuanced and complex thanoften claimed. Jo Swinnen and Anneleen Vandeplasbriefly review the literature and develop a model whichexplicitly takes into account market imperfections andcontract enforcement issues in supply chains. They showthat increased competition is likely to benefit farms byimproving contract conditions, but may hurt them ascontract enforcement becomes more complicated.

Bart Minten, Anneleen Vandeplas, and Jo Swinnen studytraditional wholesale markets for vegetables in Uttarakhand(India) and find a number of important governance prob-lems: marketing regulations are ineffective; there is confu-sion regarding the function of brokers and wholesalers;and few services are being delivered in return for themoney paid to brokers and wholesale market authorities.Licensing schemes and political muscle seem to be usedto ensure that the system continues in its current formand that the development of closer vertical coordination,which is required in modern markets but generally by -passes brokers, is delayed.

Miet Maertens, Liesbeth Colen and Jo Swinnen studythe household-level implications of increased foreigninvestments and trade in the horticulture sector inSenegal. Using household survey data they analyzethe case of investments in the tomato export supplychain in Northern Senegal and its income and povertyeffects for the rural population. Stringent rich countrystandards are imposed on exports, and the supplychain is controlled by a single multinational company

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with extreme levels of supply base consolidation andvertical integration, and complete exclusion of small-holder suppliers. In many aspects this represents whatmany would consider a ‘worst-case scenario’. Despite this,the authors find significant positive welfare impacts throughemployment creation and labor market participation.

Financial constraints and credit market imperfectionsare a major constraint on investment, growth and povertyreduction in transition and developing countries.Liesbeth Dries and Jo Swinnen analyze the impact oninvestment of financial assistance programs as part ofinterfirm relationships. Their empirical analysis shows thatdairy companies have played an important role in providing financial assistance, in particular for dairy-specific investments. In addition, the companies had animportant indirect impact on farm activities and investmentsthrough feed supply and loan guarantee programs.

I Political economy

Jo Swinnen reviews the research on political economythat has emerged in recent years, both in the generaleconomics literature and as applied to agricultural andfood policies. There have been important innovationsand new insights in these fields, particularly regardingthe micro-foundations of political decision-making, the impact of political institutions and ideology, and therole of the media. Data have also improved substantially.However, there are still important gaps in the literature.Further research should focus on capturing interactionsbetween explanatory variables; more refined measurementof (political) institutions and reforms; the effects of inter -national agreements; broader representation of agents;more explicit modeling of crises, discontinuous effects,and the interaction of multiple policies.

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low’ or ‘too high’, and which standards could be labeled asprotectionist measures.

Consumers are increasingly concerned about quality andsafety issues, leading to stricter public and private standards.However, there is a concern that these standards may beused as protectionist instruments. Jo Swinnen, LiesbethDries, Martha Negash and Thijs Vandemoortele focus onthis relation between consumer interests and the politicaleconomy of European agricultural and food policy. Basedon evidence from public surveys, political events andmedia attention, and a review of new theoretical insightsand empirical evidence, they note that the effects of EUfood standards are conditional on a variety of parametersand, hence, are not necessarily protectionist instruments.

Jo Swinnen and Thijs Vandemoortele analyze the EU’s currentauthorization procedure of genetically modified organismsand illustrate its regulatory gridlock. They scrutinize someinstitutional reforms that are being proposed and undertakenat the EU level to overcome this policy gridlock.

Mass media has become an important factor in influencingpublic opinion. Extensive media coverage affects consumerperceptions on products and risk, and consequently demandfor business services and products. Given these importanteffects it is surprising how little attention economists havepaid, until relatively recently, to how the industrial organizationof the media industry and the structure of the informationmarket affects the quantity and quality of information supply,and what the implications are. Recently, however, an importantand rapidly growing literature has emerged on this issue,analyzing the impact of media structures and ownership oninformation distribution and economic welfare. Jill McCluskeyand Jo Swinnen review this emerging literature on the econom-ics of media and its implications for business and government.

Over the past decade, economists have made significanttheoretical and empirical advances in analyzing the linkbetween governance structures, political economics, and theselection of actual policies. Gordon Rausser and Jo Swinnensummarize key insights on the impact of governance structures on public policymaking in general and food policyin particular. Governance structures determine to what extenta government, once appointed, can rule with ex post control:what type of majorities it needs to ensure its ability to passlegislation and whether groups have veto power. In general,the nature of the relationship between (changes in) governancestructures and policy reform is complicated and nuanced.It depends not only on broad constitutional differences(autocracy vs. democracy) but also on more detailed rules,such as the nature of the electoral system.

Alessandro Olper, Valentina Raimondi and Jo Swinnenstudy how electoral rules and forms of government shapedagricultural policy across a large sample of developing anddeveloped countries in the last fifty years. Main results givesupport to the idea that political institutions systematicallyaffect agricultural protection. Democratic reform inducesan increase in agricultural protection that is conditional onthe country’s choice of the form of democracy. Moreover,they show that the redistributive attitude of proportionaldemocracy is not driven by the (left) ideology orientation ofthe governments.

Jo Swinnen and Thijs Vandemoortele develop a politicaleconomy model of public standards in an open economy.They use the model to derive the political optimum and toanalyze different factors that have an influence on this politicalequilibrium. The authors study the relation between tradeand political equilibriums, and compare the political out-come to the social optimum to identify under which casespolitical considerations lead to standards being set ‘too

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I Economics of violent conflict

During the nineties, Rwanda experienced civil war, geno-cide, (counter-) insurgency and a massive refugee crisis.Among these events, genocide has by far receivedmost attention. In order to provide a more balancedview of the Rwandan conflict cycle, Marijke Verpoortenderives a detailed spatial pattern of wartime excessmortality from pre- and post-conflict population censusdata for approximately 1500 administrative units. She seeks to understand how the observed spatialpattern of excess mortality relates to the different eventsof the Rwandan conflict cycle, and presents the firstquantitative evidence to date of high excess mortalityin Gisenyi, the north-western province which was thelocation of (counter-) insurgency and served as a corridorfor more than a million refugees. The regression analysisindicates that both the refugee crisis and (counter-)insurgency contributed to a high death toll in Gisenyi.

Marijke Verpoorten demonstrates how continuous andcategorical measures of genocide intensity can bederived from the records of the Rwandan transitionaljustice system. The data, which include the number ofgenocide suspects and genocide survivors across 1484administrative sectors, are highly skewed and containa non-negligible number of outlying observations. After deriving nine proxies of genocide intensity fromthe data, various sets of these proxies are subjected toskewness-adjusted Robust Principal Component Analysis(ROBPCA), yielding four distinct continuous indices ofgenocide intensity. The effect of survival bias on theseindices is reduced by augmenting the set of genocideproxies subjected to ROBPCA with the distance froman administrative sector to the nearest mass grave.

Finally, the administrative sectors are divided into distinctcategories of low, moderate and high genocide intensityby means of Local Indicators of Spatial Auto-Correlation(LISA) that allow identification of significant high-highand low-low clusters of genocide intensity.

I Sports and development

Ruxanda Berlinschi, Jeroen Schokkaert and Jo Swinnenexamine the impact of football player migration on theirorigin countries’ international football performance. In their model, emigration of players improves nationalteam performance because migrated players acquiresuperior skills in foreign clubs. Based on information onthe club of employment of national team players formost countries in the world, the authors construct anoriginal migration index, weighting each emigrant playerby the quality of his club of employment. They findstrong and robust support for the theoretical predictionthat migration of players to foreign leagues improvestheir origin countries’ international football performance.

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11Development Economics

I Publications

ARTICLES IN INTERNATIONALLY REVIEWED SCIENTIFIC JOURNALS

ANDERSON, K., SWINNEN, J. (2010), How distortedhave agricultural incentives become in Europe’s transitioneconomies?, Eastern European Economics 50(1).

DRIES, L., SWINNEN, J. (2010), The impact of inter-firm relationships on investment: evidence from thePolish dairy sector, Food Policy 35(2), p. 121-129.

MAERTENS, M., COLEN, L., SWINNEN, J. (2010),Globalization and poverty in Senegal: A worst-casescenario?, European Review of AgriculturalEconomics, forthcoming.

MINTEN, B., VANDEPLAS, A., GHORPADE, Y.,SWINNEN, J. (2010), Horticulture wholesale tradeand governance in India: evidence from Uttarakhand,Journal of South Asian Development 5(1), p. 113-136.

RAUSSER, G., SWINNEN, J. (2010), Governancestructures, political economy and public policy, AmericanJournal of Agricultural Economics, forthcoming.

SWINNEN, J. (2010), The political economy of agricultural and food policies: recent contributions, new insights, and areas for further research, AppliedEconomic Perspectives and Policy (32), p. 33-58.

SWINNEN, J., VAN HERCK, K., VRANKEN, L.(2010), Agricultural productivity in transitioneconomies, Choices 24(4).

SWINNEN, J., VANDEMOORTELE, T. (2010), Policy gridlock or future change? The political economy dynamics of EU biotechnology regulation,AgBioForum, forthcoming.

SWINNEN, J., VANDEMOORTELE, T. (2010), Trade and the political economy of food standards,Journal of Agricultural Economics, forthcoming.

SWINNEN, J., VANDEPLAS, A. (2010), Market power and rents in global supply chains,Agricultural Economics 41(1), p. 109-120.

SWINNEN, J., VANDEPLAS, A., MAERTENS, M. (2010),Liberalization, endogenous institutions, and growth: a comparative analysis of agricultural reforms inAfrica, Asia, and Europe, The World Bank EconomicReview, forthcoming.

SWINNEN, J., VRANKEN, L. (2010), Reforms andagricultural productivity in Central and Eastern Europeand the former Soviet Republics: 1989-2005,Journal of Productivity Analysis 33(3), p. 241-258.

VRANKEN, L., MACOURS, K., NOEV, N., SWINNEN, J.(2010), Property rights imperfections and asset allocation: co-ownership in Bulgaria, Journal ofComparative Economics, forthcoming.

BOOKS

RAUSSER, G., SWINNEN, J., ZUSMAN, P. (2010),Political Power and Economic Policy: Theory,Analysis and Empirical Applications. CambridgeUniversity Press, forthcoming.

SWINNEN, J., CIAIAN, P., KANCS, D. (2010), EULand Markets and the Common Agricultural Policy.Brussels: Centre for European Policy Studies.

SWINNEN, J. (Ed.) (2010), The Economics of Beer.Oxford University Press, forthcoming.

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sVOGEL, D., SWINNEN, J. (eds.) (2010), TransatlanticRegulatory Cooperation: The Shifting Roles of theEU, the US and California. Edward Elgar, forthcoming.

BOOK CHAPTERS, INTERNATIONALLY RECOGNIZED SCIENTIFIC PUBLISHER

BERLAGE, L. (2010), Globalisering: internationale handel,in DECOSTER, A. (eds.), Economie, een inleiding, p. 823-851. Leuven: Universitaire Pers Leuven.

BERLAGE, L. (2010), Globalisering: internationalekapitaalstromen en migratie, in DECOSTER, A.(eds.), Economie, een inleiding, p. 853-880. Leuven:Universitaire Pers Leuven.

COLEN, L., MAERTENS, M. (2010), Buitenlandsedirecte investeringen als motor voor economischegroei en ontwikkeling, in BERLAGE, L., RENARD, R.(eds.), Ontwikkeling en ontwikkelingssamenwerking ineen internationaal perspectief, forthcoming.

MAERTENS, M., COLEN, L., SWINNEN, J. (2010),Export vegetable supply chains and rural householdsin Senegal, in MITHÖFER, D., WAIBEL, H. (eds.),Socio-economic research in vegetable productionand marketing in Africa, CABI, Wallingford, UK, forthcoming.

MAERTENS, M., SWINNEN, J. (2010), EU standardsin trade and development, in OSKAM, A., MEESTER,G., SILVIS, H. (eds.), EU policy for agriculture, foodand rural areas. Wageningen Academic Publishers.

MCCLUSKEY, J., SWINNEN, J. (2010), Media econom-ics and the political economy of information, in COEN, D.,GRANT, W., WILSON, G. (eds.), The Oxford handbookof business and government, p. 643-662. OxfordHandbooks in Business & Management.

MINTEN, B., MERAL, P., RANDRIANARISON, L.,SWINNEN, J. (2010), Trade liberalization, rural povertyand the environment: two studies of agriculturalexports in Madagascar, in COOK, J., CYLKE, O.,LARSON, D., NASH, J., STEDMAN-EDWARDS, P.(eds.), Vulnerable places, vulnerable people: tradeliberalization, rural poverty, and the environment, p. 78-97. A co-publication of the World Bank, WWF and Edward Elgar.

SWINNEN, J. (2010), Political economy of agriculturaldistortions: the literature to date, in ANDERSON, K.(eds.), The political economy of agricultural price distortions, p. 81-104. Cambridge, UK: CambridgeUniversity Press.

SWINNEN, J., DRIES, L., NEGASH, M., VANDE-MOORTELE, T. (2010), Consumers and EU agriculturaland food policies, in OSKAM, A., MEESTER, G., SILVIS, H. (eds.), EU policy for agriculture, food and rural areas, p. 255-265. Wageningen (NL):Wageningen Academic Publishers.

SWINNEN, J., MAERTENS, M. (2010), Standards,trade and development, in Trade adjustment costs in developing countries: Impacts, determinants andpolicy responses, p. 331-342. Centre for EconomicPolicy Research (CEPR) and World Bank Publications.

SWINNEN, J., NEGASH, M., VANDEMOORTELE, T.(2010), Consumers and the political economy ofEuropean agricultural and food policies, in NELLO,S., PIERANI, P. (eds.), International trade, consumerinterests and reform of the common agricultural policy.Routledge.

SWINNEN, J., VAN HERCK, K. (2010), Compensationpayments in EU agriculture, in Trade adjustment costsin developing countries: Impacts, determinants andpolicy responses, p. 361-381. Centre for EconomicPolicy Research (CEPR) and World Bank Publications.

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SWINNEN, J., VAN HERCK, K. (2010), Towards a“Green Deal” for EU agriculture?, in The changinglandscape of European agriculture. Essays in honourof Professor Csaba Csaki. Budapest, Hungary:AGROINFORM Publisher.

SWINNEN, J., VAN HERCK, K., VRANKEN, L. (2010),Shifting patterns of agricultural production and productivityin the former Soviet Union and Central and EasternEurope, in ALSTON, J., BABCOCK, B., PARDEY, P.(eds.), The shifting patterns of agricultural productionand productivity worldwide, p. 279-313. CARD-MATRICElectronic Book. Ames, IA: Center for Agriculturaland Rural Development.

SWINNEN, J., VANDEPLAS, A. (2010), Voedselcrisisen economische crisis, in RAYMAEKERS, B. (eds.),In gesprek met morgen. Lessen voor de 21ste eeuw.Leuven: Universitaire Pers Leuven.

SWINNEN, J., VANDEPLAS, A., MAERTENS, M. (2010),Governance and surplus distribution in commodityvalue chains in Africa, in MORRISON, J., SARRIS, A.(eds.), Food security in Africa: Market and trade policyfor staple foods in Eastern and Southern Africa, p. 77-98. Edward Elgar Publishing.

SWINNEN, J., VANDEMOORTELE, T. (2010), The political economy of food standards, in LUSK, J.L.,ROOSEN, R., SHOGREN, J.F. (eds.), Oxford handbookon the economics of food consumption and policy.Oxford: Oxford University Press, forthcoming.

WORKING PAPERS AND REPORTS

COLEN, L., DEMONT, M., SWINNEN, J. (2010),Analysis of smallholder participation in value chains:the case of domestic rice in Senegal, 1-30 pp, FAO.

OLPER, A., RAIMONDI, V., SWINNEN, J. (2010),Constitutional rules and redistributive policies:Evidence from global agricultural protection,Pue&Piec Working Paper 2010/12.

SWINNEN, J., VAN HERCK, K. (2010), Policy responseto challenges in agriculture and rural development inthe Europe and Central Asia region: sharing experienceand enhancing cooperation in the region, Working paperfor FAO 27th ERC Ministerial Roundtable, May 2010,Yerevan, Armenia, 1-39 pp.

SWINNEN, J., VAN HERCK, K. (2010), Social impactof discount and organized food retail formats on remoteregions in Poland, Bulgaria and Romania, FAO.

SWINNEN, J., VAN HERCK, K. (2010), The transfor-mation of food production and distribution systems,Working paper, 1-50 pp: OECD.

SWINNEN, J., VRANKEN, L. (2010), Review of thetransitional restrictions maintained by Bulgaria andRomania with regard to the acquisition of agriculturalreal estate, report to the EC DG Internal Market, 1-85 pp. Brussels: Centre for European policy studies(CEPS).

SWINNEN, J., COLEN, L., MAERTENS, M. (2010),Constraints to smallholder participation in high-valueagriculture in West-Africa, 43 pp, FAO.

VERPOORTEN, M. (2010), Detecting hidden violence:the spatial distribution of excess mortality in Rwanda,LICOS Discussion paper series 254/2010, 1-28 pp.Leuven: K.U.Leuven LICOS.

VERPOORTEN, M. (2010), The intensity of the Rwandangenocide: fine measures from the Gacaca records,LICOS Discussion paper series 256/2010, 1-27 pp.Leuven: K.U.Leuven

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I Doctoral dissertations

BERT VAN LANDEGHEM, Essays on subjective well-being, November 22, 2010.SUPERVISOR: Jo SwinnenDOCTORAL COMMITTEE: E. Buyst, E. Schokkaert,E. Ooghe, A. Oswald, L. Vranken

TAO XIANG, Food standards and development:Partial and general equilibrium analyses with applicationsto China, September 10, 2010.SUPERVISOR: Jo SwinnenDOCTORAL COMMITTEE: M. Maertens, J. VanBiesebroeck, D. Kancs, S. Rozelle, A. Van Assche

I Research projects

Micro-economic foundations of institutionalchange, policy and performance, funded byResearch Fund K.U.Leuven, supervised by J. Swinnen

Assessment of the impacts of non-tariff barriers –NTB on the competitiveness of the EU andselected trade partners, funded by EuropeanCommission – IMPACT, supervised by J. Swinnen

Structural change in agriculture and rural livelihoods, funded by European Commission –SCARLED, supervised by J. Swinnen

Trade, agricultural policies and structuralchanges in India’s agrifood system; Implicationsfor National and Global Markets, funded byEuropean Commission – TAPSIM, supervised by J. Swinnen

Trade, standards and welfare in developing countries:the case of fisheries in Benin, funded by FWO –Research Foundation Flanders, supervised by J. Swinnen

Media, overheidsbeleid en economische ontwikkeling:Theorie en een empirische studie van Madagaskar,funded by FWO – Research Foundation Flanders,supervised by J. Swinnen

Private standards and international trade. An economic and legal analysis of the agri-foodsector, funded by NBB – National Bank of Belgium,supervised by J. Swinnen

Standards and the Bio-Economy, funded by NBB– National Bank of Belgium, supervised by J. Swinnen

Interdisciplinary database on international political,juridical and economic development, funded byHercules Foundation, supervised by J. Swinnen

Political economy and institutions of food policyand development, funded by Research FundK.U.Leuven, supervised by J. Swinnen

I Awards

Jo Swinnen has been appointed President-Elect of the International Association of AgriculturalEconomists (IAAE) for 2009-2012, and President for 2013-2016.

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Econometrics

FACULTY MEMBERS:

Geert Dhaene [1]Luc Lauwers [2]Jo Van Biesebroeck [3]Frank Verboven [4]

EMERITI:

Anton BartenFrans Spinnewyn

RESEARCHERS:

Ben Boury Paolo CordellaRembert De Blander Wouter D’HoogheHang Gao Maryam GiahiLaura Grigolon Catherine HaeckKoen Jochmans Laura NurskiMathias Reynaert Annette SchminkeAlexander Schmitt Øyvind ThomassenYingting Yi

1 2

4 5

Geert Dhaene is interested in econometric theory andapplications. Currently his main interest is in developing biasreduction methods, especially for panel data models withfixed effects where incidental parameter problems arise.

Luc Lauwers is interested in social choice theory and ingame theory. He investigates methods that aggregate individual preferences into a social preference (or into asocial outcome).

Jo Van Biesebroeck is interested in industrial organizationand international trade, and specializes in the study of theautomotive industry and the Chinese economy. Of particularinterest are the areas where these different fields meet,such as in modeling export behavior or international outsourcing.

Frank Verboven is interested in industrial organization andapplied microeconomics, with applications to competitionpolicy and regulation. His current work looks at competitionin retail services and liberal professions, entry barrierstowards foreign firms and environmental policies in theEuropean car market, and policy reforms in the market ofhigher education.

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suitably combining the full panel MLE with the subpanelMLEs. Simulation results confirm that (i) the first-order biasof the MLE can be thus eliminated; (ii) the second-orderbias is minimized by splitting the panel into four equallylarge subpanels, each containing half of the cross-sectionalunits and half of the time periods; (iii) the correspondingconfidence intervals have much improved coverage com-pared to those based on the MLE; and (iv) the asymptoticvariance of the split-panel jackknife is the same as that ofthe MLE. These results extend the scope of the split-paneljackknife method to models containing time effects in additionto individual effects.

In a series of papers, Koen Jochmans studied the applica-bility of rank-based estimation routines to problems whereconditioning on control variables is needed to tackle heterogeneity. Prime examples where such an approach isuseful are in the semiparametric estimation of nonlinearstructural models with sample selection and triangularendogeneity. Rank estimators build on weak monotonicityconditions in a natural fashion. They are known to berobust against data contamination and avoid the need toestimate nuisance functions and to specify smoothingparameters. Distribution theory for such techniques, how-ever, does not follow readily from standard arguments,seeing as the relevant criterion function is non-smooth inthe parameters of interest. Using U-statistic decompositions,conditions are given under which such “local-rank” estimatorsconverge to a Gaussian process at the parametric rate andmethods for inference are proposed.

I Econometric theory

Geert Dhaene examined McCullagh and Tibshirani’s(JRSSB, 1990) bias adjustment of the profile score as ageneral approach to solving incidental parameter problems,either exactly or approximately. The method relies on a calcu-lation of the bias of the profile score, which is subsequentlyused to center the profile score. Three observations are made;(i) In a model there is an incidental parameter problem if,and only if, the profile score has non-zero bias. Therefore,the method provides a diagnostic tool for assessing whetherthere is an incidental parameter problem (a non-trivial assess-ment in certain models). (ii) The bias calculation may revealthat the bias, while non-zero, is independent of the incidentalparameters. In that event, an exact centering of the profilescore is possible and, hence, an exact solution to the incidentalparameter problem follows. Two important examples wherethis occurs are the non-stationary linear dynamic panel modeland the linear dynamic spatial panel model. The correspondingadjustments to the profile score in these models are studiedin collaboration with Koen Jochmans and Maryam Giahi,respectively. (iii) In models where the bias depends on theincidental parameters, a simple scheme is found to iteratethe adjustment of the profile score, yielding successive higher-order approximations to an exactly unbiased estimatingequation. Although the iterations usually have to be carriedout numerically, a single parametric bootstrap draw ateach iteration suffices, so the iterated bias adjustment iscomputationally feasible.

Ben Boury explored the possibilities of the split-panel jackknifeto reduce estimation bias in nonlinear panel data models ina set-up where there are both individual effects and timeeffects. Here, bias reduction (of the maximum likelihoodestimate, MLE) is achieved by splitting the panel simulta-neously into the cross-section and the time dimension and

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ordering implies the existence of a non-Ramsey set (a non-constructive object whose existence requiresThe Axiom of Choice).

Therefore, each Paretian and finitely anonymous quasi-ordering either is incomplete or does not have anexplicit description. Hence, the possibility results ofSvensson [Econometrica, 1980] and of Bossert,Sprumont, and Suzumura [Journal of Economic Theory2007] do require The Axiom of Choice.

Wouter D'Hooghe is working towards a PHD thesisunder supervision of Luc Lauwers and Sabrina Bruyneel.He attempts to extend standard (expected utility) decisiontheory to allow for 'large worlds' where subjectiveprobabilities for some states of the world are unknown.Agents are assumed to be averse of choices thatinvolve unknown probabilities. This allows for an expla-nation of acting against ones best interest that doesnot rely on inconsistent preferences. Furthermore, the theory is applied to procrastination.

I Industrial organization

Research in industrial organization focuses on theunderstanding of market structure and market power,with applications to competition policy and regulation.A first main research theme looks at competition issuesin markets characterized by product differentiation.Frank Verboven is currently extending his earlier struc-tural model of demand to understand patterns of productdifferentiation and localized competition. In a first exten-sion, together with Laura Grigolon, he is estimating acombination of the nested logit model with the compu-tationally more burdensome random coefficients model.

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Koen Jochmans proposed a generalization of first differ-encing to estimate panel data models with non-additivefixed effects. The approach starts by extending thestandard fixed-effect model to a model that features anindividual-specific partially-linear index. This partially-linearcomponent is not restricted through a parametric form.The idiosyncratic component would difference-out onlyif it remained constant between two time periods.Next, using insights from the literature on pairwise-dif-ferenced estimation of cross-sectional models, kernelweights are introduced so that, asymptotically, only suchfirst-differenced observations are retained. Distributiontheory is worked out in detail for GMM estimators ofpartially-linear panel data models. The estimator is fixed-Tconsistent and has the standard nonparametric con-vergence rate.

I Economic theory

Kristof Bosmans (Maastricht Universiteit), and LucLauwers consider different rules for adjudicating conictingclaims and examine for each pair of rules in the list,whether or not the two rules are Lorenz comparable.They allow the comparison to depend upon whetherthe amount to divide is larger or smaller than the half-sumof claims. In addition, they provide Lorenz-based charac-terizations of the constrained equal awards, constrainedequal losses, Talmud, Piniles', constrained egalitarian,and minimal overlap rules.

Luc Lauwers studied the (non-) constructibility(Zermelo-Fraenkel set theory without the Axiom ofChoice) of orderings in the set of infinity utility streams.The existence of a Paretian and finitely anonymous

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Econometrics

Øyvind Thomassen, a recent PhD from Oxford Universityhas completed his job market paper which estimates anew model for the demand of cars at the variant level. His model allows for unobserved characteristics in a moregeneral way than earlier work. This enables him to addressinteresting questions about the effects of registration taxesand price discrimination, as applied to the Norwegian market.

A second main research theme looks at the estimation ofgame-theoretic entry models, to draw inferences about thenature and extent of competition. Catherine Schaumans(Tilburg University) and Frank Verboven have developed anew model to compute adjusted entry thresholds, whichaccounts for product differentiation and thereby provides asignificant extension to the seminal work of Bresnahan andReiss. They demonstrate how to apply their methodologyto local services and liberal professions, such as real estateagents, architects and retail services. Similarly, Frank Verboven,in collaboration with Kathleen Cleeren, Marnik Dekimpeand Catherine Schaumans, extend this analysis further toassess competition between two types of firms, supermarketsand discounters, thereby extending their earlier work.

Stijn Ferrari and Frank Verboven analyzed vertical restraintsin the distribution of magazines. Theoretical models aretypically too simple, since they typically assume that upstreamfirms can control the size of their distribution network bysetting market-specific wholesale prices and franchise fees.When this is not possible, it may be optimal to restrict entryin some markets (to avoid excess entry and the associatedfixed distribution costs). Their empirical analysis showshow a ban on entry restrictions may hurt profits withoutnecessarily benefiting consumers.

This work enables them to assess the relative advantagesand weaknesses of both models using Monte Carlo simulationand an application to the demand for new cars. The resultsshow that both the nested logit and random coefficientsmodels have their relative strengths and weaknesses, so thatthe choice between models depends on the applicationbeing studied.

In another project, Laura Nurski and Frank Verbovenextend the random coefficients demand model to includespatial differentiation (in addition to product differentiation).This enables them to consider the role of dealer proximity.Based on a rich data set of Belgian car sales, they findstrong evidence on how a dense distribution networkincreases the demand for cars. They show that exclusivedealing, the practice of selling only a single brand at a dealer -ship, may act as an entry barrier to new Asian manufacturers.Hence, since the removal of tariff barriers exclusive dealingserves as a non-tariff trade barrier.

In other work on the car market, Laura Grigolon and FrankVerboven further extend the model to see whether consumersmake the “correct” tradeoff between paying a higher initialpurchase price for a car, and subsequently saving on fuelcosts. This trade-off depends on the mileage decision. Under -standing whether consumers make rational decisions isboth of interest from the perspective of behavioral economicsand from a policy point of view, where there has been astrong attention to encourage consumers to buy fuel efficientcars. Data on the distribution of mileage per model andcountry are being collected to estimate the model. MathiasReynaerts and Frank Verboven are currently using themodel to investigate implications for environmental policies(taxes versus emission standards).

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I Economics of education

Catherine Haeck and Frank Verboven look at careerdynamics in a university. They find that the institutioncan be strongly characterized as an internal labor market,with a strong port of entry at low job levels and realwages that have not changed for more than a decadein contrast to sharp real wage increases for other high-skilland high-occupation workers in the region. Furthermore,career dynamics within the university follow patternsconsistent with economic theories of learning aboutability and incentives and show the importance of bothresearch output and teaching load as determinants ofthe speed of promotion.

Koen Declercq and Frank Verboven analyze studentbehavior in higher education, based on a rich data seton Flemish universities and colleges. In a first paper,they document very high student failure rates in theirfirst year, but much less so in subsequent years. Failure rates are closely related to students’ high schoolbackground and other characteristics. Their work hasimplications for the desirability of the current ex postscreening policy (after the first year) versus the morecommonly applied ex ante screening policy in othercountries (based on admission criteria). In ongoingwork, Koen is analyzing student choices and how theymay (or may not) take into account their expected subsequent success.

I Chinese economy

With Loren Brandt and Yifan Zhang, Jo Van Biesebroeckis continuing his research on the Chinese manufacturingsector. In a first completed paper from this project,they present the first comprehensive set of firm-leveltotal factor productivity estimates for China’s manufac-turing sector spanning China’s entry into the WorldTrade Organization (WTO). Productivity growth is foundto be among the highest compared to other countries.For the preferred estimate, the weighted average annualproductivity growth for incumbents is 2.7% for a grossoutput production function and 7.7% for a value addedproduction function over the period 1998-2006. It isfurther shown that new entrants are a particularlydynamic force and that firms experience large productiv-ity declines before exiting from the sample.

Work on a second project — investigating a causal linkbetween reforms on several policy dimensions and the Chinese productivity growth record — is ongoing.Preliminary results indicate that there is a positive effectof tariff reductions and liberalization of the FDI regime,but that it is relatively small in magnitude for continuingfirms. The effect through the net-entry channel is muchlarger and more robust. The estimates also point towardsimportant heterogeneities in the effects: Private andforeign-owned firms benefit to the greatest extent fromreductions in tariffs on final products, while state-ownedfirms experience productivity declines if they receivelower tariff protection. The effects of input tariff reductionsare particularly striking: the least productive firms gain,while less productive firms suffer.

Econometrics

Additional projects have been started with new graduatestudents. Hang Goa investigates the productivity effect ofderegulation and vertical unbundling in the Chinese electricitysector. Yingting Yi studies the comparative advantage ofthe Chinese economy paying particular attention to themodularity of products. Annette Schminke evaluates theeffect that Science, Technology, and Innovation Parks havehad on export performance.

I Automotive industry

Together with Tim Sturgeon, Jo Van Biesebroeck is continuinghis work on global value chains in the automotive industry.Using detailed data on supplier relationships in the sector,they are testing whether three crucial variables in the theory,i.e. product complexity, supplier capability, and codifiability,have the expected effects. Preliminary results suggest thatthey can be used to objectively rank sourcing relationshipsfrom armslength to captive, with relational and modularpartnerships intermediate forms.

With a new graduate student, Alex Schmidt, the same datais used to investigate the establishments of sourcing relation-ships themselves. A first project looks at the role of distance;both geographical distance between plants as well as thecultural distance between firms are considered. A secondproject investigates whether commercial relation ships followor predate technological relationships, which can be gleanedfrom patent citation files.

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I Publications


ANASTAKIS, D., VAN BIESEBROECK, J. (2010),Introduction: the automobile and its industry in Canada,Canadian Public Policy 36(Special issue), p. 3-10.

BOSMANS, K., LAUWERS, L. (2010), Lorenz com-parisons of nine rules, International Journal of GameTheory, accepted.

BOUCKAERT, J., VAN DIJK, T., VERBOVEN, F.(2010), Acces regulation, competition and broadbandpenetration: an empirical study, TelecommunicationsPolicy 34(11), p. 661-671.

CLEEREN, K., VERBOVEN, F., DEKIMPE, M., GIELENS, K. (2010), Intra- and interformat competitionamong discounters and supermarkets, MarketingScience 23(3), p. 456-473.

DE BLANDER, R. (2010), A simple estimator for the correlated random coefficient model, EconomicsLetters 106(3), p. 158-161.

DHAENE, G., BOUCKAERT, J. (2010), Sequentialreciprocity in two-player, two-stage games: anexperimental analysis, Games and EconomicBehavior 70, p. 289-303.

DHAENE, G., SANTOS SILVA, J. (2010),Specification and testing of models estimated by quadrature, Journal of Applied Econometrics,forthcoming.

FERRARI, S., VERBOVEN, F. (2010), Empirical analysisof markets with free and restricted entry, InternationalJournal of Industrial Organization 28(4), p. 403-406.

FERRARI, S., VERBOVEN, F., DEGRYSE, H. (2010),Investment and usage of new technologies: evidencefrom a shared ATM network, The AmericanEconomic Review 100(3), p. 1046-1079.

HENRY DE FRAHAN, B., BAUDRY, A., DE BLANDER, R.,POLOME, P. and HOWITT, R. (2011), Dairy farmswithout quotas in Belgium: Estimations and simulationswith a flexible cost function, European Review ofAgricultural Economics 38(2), forthcoming.

HERZBERG, F., LAUWERS, L., VAN LIEDEKERKE, L.,SENYO, E. (2010), Ultraproducts and aggregation,Journal of Mathematical Economics, accepted.

KELCHTERMANS, S., VERBOVEN, F. (2010),Participation and study decisions in a public systemof higher education, Journal of Applied Econometrics25(3), p. 355-391.

KELCHTERMANS, S., VERBOVEN, F. (2010), Programduplication in higher education is not necessarily bad,Journal of Public Economics 94(5-6), p. 397-409.

LAUWERS, L. (2010), Ordering infinite utility streamscomes at the cost of a non-Ramsey set, Journal ofMathematical Economics 46(1), p. 32-37.

LAUWERS, L. (2010), Intergenerational equity, efficiency, and constructibility, Economic Theory,accepted.

VAN BIESEBROECK, J. (2010), Governments at the bidding table, Canadian Public Policy XXXVI, p. S31-S47.

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ARTICLES IN OTHER SCIENTIFIC JOURNALS

GROENEZ, S., DE BLANDER, R. (2010), The dynamicsof skill formation: Evidence from a Flemish cohort study,Longitudinal and Life Course Studies 1(3), p. 193,supplement.

HENRY DE FRAHAN, B., DE BLANDER, R. (2010),La politique agricole commune: horizon 2014,Reflets et Perspectives de la vie économique 49(2-3),p. 137-156.


LILEEVA, A., VAN BIESEBROECK, J. (2010), The impactof trade and technology adoption on production flexibility in Canadian manufacturing, in CIURIAK, D.(eds.), Trade policy research 2009, p. 63-94. Ottawa (Canada): Foreign Affairs and InternationalTrade Canada.

VAN BIESEBROECK, J., STURGEON, T. (2010),Effects of the 2008-09 crisis on the automotiveindustry in developing countries: a global value chainperspective, in GEREFFI, G., STARITZ, C. (eds.),Global value chains in a postcrisis world: a developmentperspective, p. 207-242. Washington DC (USA):World Bank Publications.

VAN BIESEBROECK, J., YU, E., CHEN, S. (2010),The impact of trade promotion services on Canadianexporter performance, in CIURIAK, D. (eds.), Trade PolicyResearch 2009. Ottawa (Canada): Foreign Affairsand International Trade Canada.

VERBOVEN, F. (2010), De onderneming als organisatie,in DECOSTER, A. (eds.), Economie, een inleiding, p. 209-243. Leuven: Universitaire Pers Leuven.

VERBOVEN, F. (2010), Productie en kosten, in DECOSTER, A. (eds.), Economie, een inleiding, p. 245-281. Leuven: Universitaire Pers Leuven.

VERBOVEN, F. (2010), Volmaakte mededinging, in DECOSTER, A. (eds.), Economie, een inleiding, p. 285-320. Leuven: Universitaire Pers Leuven.

INTERNAL OR TECHNICAL REPORTS

FERRARI, S., VERBOVEN, F. (2010), Vertical controlof a distribution network - an empirical analysis ofmagazines, CES Discussion Paper Series 10.19, 1-34 pp. K.U.Leuven CES.

HAECK, C., VERBOVEN, F. (2010), The internal economics of a university - evidence from personneldata, CES Discussion paper Series 10.18, 1-58 pp.K.U.Leuven CES.

LAUWERS, L. (2010), Intergenerational equity, efficiency, and constructability, CES DiscussionPaper Series 10.22, 1-16 pp. K.U.Leuven CES.

LAUWERS, L. (2010), Purely finitely additive measuresare non-constructible objects, CES Discussion PaperSeries 10.10, 1-7 pp. K.U.Leuven CES.

THOMASSEN, Ø. (2010), A generalised nested-logitmodel of the demand for automobile variants, CESDiscussion Paper Series 10.17, 1-33 pp. K.U.LeuvenCES.

THOMASSEN, Ø. (2010), Bounds on willingness-to-pay in a pure-characteristics model of the demandfor automobile variants, CES Discussion PaperSeries 10.16, 1-46 pp. K.U.Leuven CES.

THOMASSEN, Ø. (2010), Automobile engine variantsand price discrimination, CES Discussion PaperSeries 10.15, 1-38 pp. K.U.Leuven CES.

VAN BIESEBROECK, J., YU, E., CHEN, S. (2010).The impact of trade promotion services on Canadianexporter performance, CES Discussion Paper Series10.14, 1-46 pp. K.U.Leuven CES.

EXTERNAL REPORTS

DE BLANDER, R., HENRY DE FRAHAN (2010),Estimating flexible cost functions using EU-FADNand Eurostat data, in Pacioli 18. Proceedings of the 18th International Workshop on Micro-EconomicDatabases in Agriculture, ed. by K. BOONE, and C.TEEUWEN, no. 2010-075 in LEI report, pp. 27-32.

HASHMI, A., VAN BIESEBROECK, J. (2010), Marketstructure and innovation: a dynamic analysis of theglobal automobile industry, NBER Working paper seriesWP 15959, 1-47 pp. Cambridge, Massachusetts (USA):National Bureau of Economic Research (NBER).

VAN BIESEBROECK, J. (2010), The demand for andthe supply of fuel efficiency in models of industrialorganisation, OECD/ITF Discussion paper 2010-9, 1-32 pp. Paris (France): OECD/ITF Joint transportresearch centre.

I Editorial activities

Jo Van Biesebroeck: - Associate Editor: Journal of Productivity Analysis- Editorial board: Canadian Journal of Economics- Guest Editor: Canadian Public Policy

Luc Lauwers is member of the editorial board ofMathematical Social Sciences.

Frank Verboven is member of the K.U.LeuvenResearch Council.

I Research projects

Reductie van de vertekening van niet-lineairedynamische panel data schatters, January 2007 –December 2010, funded by Research FoundationFlanders, supervised by G. Dhaene.

Trade, productivity, and firm capabilities in China'smanufacturing sector, 2009 – 2014, funded byEuropean Research Coucil (ERC) Starting Researchergrant, supervised by J. Van Biesebroeck.

Het effect van de toetreding tot de Wereldhandels -organisatie (WTO) op de Chinese industry, 2009 –2011, funded by Onderzoeksraad K.U.Leuven, START-TBA, supervised by J. Van Biesebroeck.

A retailer’s private-label portfolio: budget, standardand premium private labels, 2011 -2015, funded byResearch Foundation Flanders, supervised by F. Verboven.

Center of Excellence Program Financing, 2010-2017,funded by Onderzoeksraad K.U.Leuven, supervisedby F. Verboven.

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I Awards

Jo Van Biesebroeck received an Excellence Award inGlobal Economic Affairs (Porsche Fellowship) from theKiel Institute.

I Seminars and Workshops

The Joint seminar Econometrics - Statistics, co-organ-ized by Gerda Claeskens, Christophe Croux, Geert Dhaene,Martina Vandebroek and Frank Verboven met as followed:

February 23, 2010: GUIDO CONSONNI (Universityof Pavia), Enhanced objective Bayesian tests forthe equality of two proportions

March 2, 2010: STIJN VANSTEELANDT (GhentUniversity), On instrumental variables estimation of the effect of an exposure on a dichotomousoutcome

March 9; 2010: THOMAS OTTER (Goethe UniversityFrankfurt), A probit model with structured covariancefor similarity effects and source of volume calculations

March 16, 2010: MICHAEL LECHNER (Universityof St. Gallen), The performance of different propensityscore matching estimators in a realistic MonteCarlo study

March 23, 2010: JAN MAGNUS (Tilburg University),An introduction to model averaging

March 30, 2010: STEPHANE HESS (University ofLeeds), Random scale heterogeneity in discretechoice models

April 27, 2010: TOBIAS KLEIN (Tilburg University),The effect of private health insurance on medicalcare utilization and self-assessed health in Gemany

May 4, 2010: ALLESANDRA SALVAN (Universityof Padova), Adjusting pseudo-likelihoods

The Joint seminar ECORE – K.U.LEUVENEconometrics, co-organized by Luc Bauwens, GeertDhaene and David Veredas, met as followed:

May 25, 2010: JEAN-MARC ROBIN (University of Paris 1 and University College London), On thedynamics of unemployment and wage distributions

November 17, 2010: ANDREW CHESHER(CeMMAP and UCL), Generalized instrumentalvariable models.

Geert Dhaene organized the Netherlands Econo -metric Study Group Meeting on June 11th-12th2010.

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Energy, Transport and Environment

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The research group focuses on Energy, Transport andEnvironmental problems and consists of the researchers of the CES and the associated researchers of the HUB.The group specializes in the use of modeling tools (generalequilibrium, partial equilibrium) to address pricing, regulationand investment problems. It has developed models suchas GEM-E3, MARKAL, TRENEN, TREMOVE and MOLINOwhich are used for policy making at national and EU level.Research activities are almost fully covered by externalfunds. There is close cooperation with the EngineeringFaculty of the K.U.Leuven via the ’Energy Institute’ of theK.U.Leuven (www.kuleuven.be/ei) and it is also one of thefounders of the spin-off company ‘Transport Mobility Leuven’(www.tmleuven.be).

I Environmental economics

Sandra Rousseau and Carole Billiet (UGent) continue toinvestigate monitoring and enforcement aspects associatedwith environmental regulations (SBO project).

Thomas Blondiau and Sandra Rousseau have developed a model to analyze the impact of intent on the level of admini -strative and criminal fines. The theoretical model is tested forBelgian data on environmental sanctions. The results also allowus to comment on the objective functions used by sanctioningauthorities (i.e. criminal judges and administrations) in practice.

Carole Billiet, Thomas Blondiau and Sandra Rousseauhave analyzed the judicial decision making process inFlanders concerning environmental sanctions. The analysisstudies the decision made by judges initially to postpone averdict or to impose an effective and/or a suspended sanction,as well as the decision made by appeal judges to changethe verdicts imposed by lower courts.

FACULTY MEMBERS:

Stef Proost

VISITING FACULTY:

Carole Billiet Bruno De BorgerAndre de Palma Johan EyckmansInge Mayeres Guido PepermansGenserik Reniers Sandra RousseauTom Verbeke

DOCTORAL RESEARCHERS:

Fay Dunkerley Saskia van der Loo

SENIOR RESEARCHER:

Denise Van Regemorter

RESEARCHERS:

Wim Benoot Thomas BlondiauMaarten Dubois Gerd KupperJacques Houard Joris MorbéeLotte Ovaere Toon VandyckGeorge Zhang

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Sandra Rousseau and Carmen Arguedas (UAM) study thedesign of emissions standards and inspection strategies ina hierarchical setting. The differences in available informationand in objectives at local and national levels lead to the useof uniform standards and might lead to incomplete deterrenceof potential violators.

Sandra Rousseau contributed to the EU impact assessmentof possible options to revise the Recommendation2001/331/EC providing for minimum criteria for environ-mental inspections (RMCEI) in collaboration with EcorysNetherlands.

Lotte Ovaere is working on a paper on the political economyof environmental standards, together with Stef Proost andSandra Rousseau. They are developing a theoretical modelthat explains how different lobby groups influence the enforce -ment of environmental regulations.

Johan Eyckmans, Simon De Jaeger and Sandra Rousseaucontinued their research on hedonic pricing models forodor pollution caused by an animal waste treatment plantin Flanders and noise pollution by road traffic. Spatial regres -sions were run using housing data and field measure mentsprovided by the Flemish regional environmental authorities.

Johan Eyckmans and Simon De Jaeger continued workingon the economics of residential solid waste. A spatial econo -metric model was estimated to explain different waste fractionsgenerated by citizens and the corresponding price levelsset by local municipalities.

Johan Eyckmans also worked on the economics of climatechange. The Climneg World model was used to evaluategame-theoretical stability of the long term EU climate policytarget (with Thierry Bréchet, UCL-CORE) and sequential

formation of international environmental agreements (withMichael Finus, University of Exeter, UK). In addition, globalcarbon markets in the future were studied (with CathrineHagem, Statistics Norway) and moral motivation in emissiontrading equilibria (with Snorre Kverndokk, Frisch Center,Norway). New work was initiated on integrating the tradeoff between climate mitigation and adaptation strategies inthe CWS model as the basis for a book project on the eco-nomics of climate change (with Thierry Bréchet).

Tom Verbeke works on the institutional determinants ofenvironmental outcomes. His work also includes researchon policy competition (with Stefan Van Parys, Glenn Raypand Bruno Merlevede).

The main research interests of Genserik Reniers are in thearea of safety and, in particular, the safety issues in thechemical industry. His multi-disciplinary research makes useof game theory, real options and empirical action research.

Jacques Houard, Stef Proost, Saskia Van der Loo andDenise Van Regemorter worked on the role of the transportsector in the reduction of greenhouse gas emissions. This research was funded by the PREDIT programme in France.

I Transport issues

Stef Proost, Fay Dunkerley and Saskia Van der Loo finalizeda few publications summarizing the research results in theFUNDING consortium. These publications focus on the eco-nomics of the Trans European Transport Network (TENs).


Stef Proost continued his research on the economicsof transport pricing and investment in a multi-level government context financed by the FWO. With FayDunkerley and Ami Glazer (UCIrvine) he worked on thepolitical economy of fuel taxes and road investments.With Bruno De Borger (UA) he worked on the accept-ability of road pricing. He also joined a new researchconsortium financed by the PREDIT program in Franceto study road pricing in Paris. This is research in coop-eration with Andre de Palma (ENS Cachan) andNathalie Picard (Cergy). Another research project is incooperation with KTH (Stockholm) on local governmentdecision making in the transport sector.

George Zhang continued work on his PhD thesis onpricing and investment of transport infrastructure in China.This includes a case study of Shanghai with 2 paralleland 2 serial roads; long distance travel and competitionbetween rail and aviation, and a political economymodel to understand tolling practices in China.

Saskia van der Loo and Stef Proost analyzed roadpricing in Flanders (financed by Flemish government).They built a model for the pricing and investmentissues around the Oosterweel project and looked intopossible road tax competition between countries.

Saskia van der Loo and Stef Proost are also part of theSustaincity consortium (EU funded) where they workedon the sustainability concept for cities and on the equi-librium notion for landuse – transport models.

Fay Dunkerley, Stef Proost and Andre de Palma startedworking on a generalized network pricing problem,where there is product differentiation, where consumersare heterogeneous and different types of operatorscontrol parts of the network.

Stef Proost started research on airline economics withJan Brueckner (UCIrvine). They worked on competition reg-ulation of airline alliances and competition between airports.

Genserik Reniers conducts research regarding the optimi -zation of safety and security (management, technology,concepts, policies, etc.) of hazmat transports and thehazmat transportation system. For this research, whichis situated on several domains/research questions (andfrom a multi-mode viewpoint), he collaborated and/orcollaborates, amongst others, with Kenneth Sörensen (UA),Frank Witlox (UGent), Dirk Lauwers (UGent), Jun Zhuang(University at Buffalo, New York), Luca Zamparini (Universityof Salento, Italy), Joseph Szyliowicz (University of Denver), etc.

I Energy economics

Denise Van Regemorter continued to act as focal pointfor the development and use of the GEM-E3 model.This is a multi-period, multi-country general equilibriummodel for the EU that now also exists in a world version.The country modules are linked via trade flows andenvironmental damage flows. The model was furtherdeveloped to integrate endogenous biased technicalprogress and the modeling of energy technologies.The World model was used to evaluate the impact ofdifferent participation schemes for post-Kyoto scenarios forEU DGENV in preparation for the Copenhagen negotiations.

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Toon Vandyck, Denise Van Regemorter and Stef Prooststarted to work on a regional version of the general equilib-rium model GEM-E3 – this is part of the FLEMOSI project todevelop a modeling platform for the Flanders region. ToonVandyck also started work on the role and financing ofregional transport costs in regional economics.

The MARKAL/TIMES model represents the Belgian energysector and was used by Denise Van Regemorter to studythe cost and the technological options at the Belgian levelfor stringent post Kyoto reduction targets. Denise VanRegemorter and Wim Benoot participate in the EU projectNEEDS for the construction of an EU wide MARKAL/TIMES model with each EU country modeled and interlinked,and with a full integration of the external costs.

Wim Benoot and Stef Proost worked on the use of environ -mental policy in a strategic trade context, applying the theoryon the car market.

Gerd Küpper studied strategic incentives to invest in electricitygeneration capacity using a local fuel such as renewablesor coal. He shows that investing in this capacity, even if notused, improves the bargaining position of a power producingfirm that also imports another fuel such as gas. When severalimporters in separated markets are considered, he findsthat investment has a positive strategic effect on all otherimporters' bargaining position. A government energy policywhich forces utilities to invest in capacity based on particularfuels can therefore be justified, not only for environmental,but also for strategic reasons.

Gerd has extended the model to several power producingfirms operating in a single electricity market. The aim is twofold:on the one hand, there may be a conflict between fosteringmarket integration and improving bargaining power withrespect to a gas supply remaining concentrated. On theother hand, the aim is to highlight possible conflicts andsynergies between environmental policy and security ofsupply issues.

Joris Morbée continued his research on the political economyof energy resource taxation. Within the context of this work,Joris’s main current focus is to elaborate the cross-sectionalempirical analysis of oil taxation rates across countries, in particular in order to address endogeneity bias and omittedvariable bias. Joris is also revising the underlying theoreticalmodel, based on the theory of the political economy ofpublic debt.

Joris Morbée and Bert Willems worked on a paper titles“Financial markets can prevent inefficient entry in a competitiveindustry”, in which they generalize the theory developed ina previous paper. They show that free entry decisions maybe socially inefficient, even in a homogeneous and perfectlycompetitive market without set-up costs, minimum entrycapacity or other similar restrictions. In their model, inefficiententry decisions are the result of risk-aversion of incumbentproducers and consumers, combined with incompletenessof the financial markets that would allow for risk-sharingbetween them.

Pieter Himpens, Joris Morbée and Stef Proost presentedtheir paper on “Nuclear market power: taxation or liberal-ization?” to audiences in Toulouse, Leuven and Louvain-la-Neuve. The paper analyzes the case of a country where adominant producer has efficient nuclear production capacityand faces a competitive fringe of non-nuclear producers.


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Three types of public policies are considered: (i) propor-tional taxes on nuclear energy, (ii) liberalizing the marketby a divestiture of the existing capacity, and (iii) increas-ing the interconnection capacity at the border. Effects ofpolicies are compared in the short run (before invest-ment) and in the long run with and without governmentcommitment.

Guido Pepermans continued his research on the valuationof reliable electricity supply by households.

Supported by the National Bank of Belgium (NBB),Bram Delvaux (Institute for Environmental and EnergyLaw, K.U.Leuven), Gerd Kupper and Guido Pepermansanalyzed the Flemish Green Certificates system whichsupports the development of renewable energy withinthe Flemish Region This was done in order to come toa better choice of instruments to achieve the EuropeanRES directive.

Guido Pepermans initiated a pilot choice experiment onthe willingness-to-pay of Flemish households for renewablepower supply. In the choice experiment, households areoffered the choice between a number of green electricitycontracts characterized by three attributes: the renew-ables share in electricity supply, the renewable generationtechnology (Onshore wind, Offshore wind, Biomass, Largescale PV, a mix of Wind and Biomass, and a mix ofWind, Biomass and Large Scale PV) and impact on theelectricity bill. The experiment should mark the start ofa larger scale choice experiment on this topic.

With the financial support of the NBB grant to theK.U.Leuven association, Johan Eyckmans, GuidoPepermans and Stef Proost edited a book on ‘ClimateChange and Energy Perspectives’. The book consistsof five contributed chapters of which the first two chaptersare contributions by international experts in the field ofclimate change, technology and renewables policy. The three other chapters were authored by members ofETE and discuss energy and climate policy questions atthe Belgian and Flanders level.

Guido Pepermans and Bert Willems studied the issueof cost recovery in congested networks. Large scaleinvestments in European electricity networks are foreseenin the next decade and pricing the network at marginalcost will not be sufficient to pay for those investmentsconsidering the fact that the network is a natural monopoly.The paper derives numerically the socially optimal trans -mission prices for cost recovery, taking into account thatelectricity networks are often congested, while allowingfor market power in generation. The model is illustratedwith a Stackelberg game for the Belgian electricity market.

I Publications


ADLER, N., PROOST, S. (2010), Introduction to special issue of Transportation Research Part B,Transportation Research B, Methodological 44B(7),p. 791-794.

AUDENAERT, A., PRIMS, J., RENIERS, G., WEYNS, D.,AUDENAERT, E. (2010), Evaluation and economicimpact analysis of different treatment options for ankledistortions in occupational accidents, Journal of evaluation in clinical practice 16(2010), p. 933-939.

BILLIET, C., ROUSSEAU, S., BALCAEN, A., MEEUS, R.(2010), Minnelijke schikkingen voor milieumisdrijvenin Vlaanderen, Panopticon: Tijdschrift voor Strafrecht,Criminologie en Forensisch Welzijnswerk 31(4), p. 78-84.

BILLIET, C.M., BLONDIAU, T., ROUSSEAU, S. (2011),Milieucriminaliteit in het beleid van de strafrechter:bestraffen tussen Haus en Brundtland, RechtskundigWeekblad.

BLONDIAU, T., ROUSSEAU, S. (2010), The impactof the judicial objective function on the enforcementof environmental standards, Journal of RegulatoryEconomics 37(2), p. 196-214.

BRÉCHET, T., EYCKMANS, J., GÉRARD, F., MAR-BAIX, P., TULKENS, H., VAN YPERSELE, J. (2010),The impact of the EUs carbon emissions reductionproposals on the stability of global climate agreements,Climate Policy 10(2), p. 148-166.

BRUECKNER, J., PROOST, S. (2010), Carve-outsunder airline antitrust immunity, International Journalof Industrial Organization, p. 657-668.

CALTHROP, E., DE BORGER, B., PROOST, S. (2010),Cost-benefit analysis of transport investments in distorted economies, Transportation Research B,Methodological 44, p. 850-869.

DE PALMA, A., DUNKERLEY, F., PROOST, S. (2010),Trip chaining: who wins who loses?, Journal of economics & management strategy 19(1), p. 223-258.

DE PALMA, A., PROOST, S., VAN DER LOO, S. (2010),Assessing transport investments - towards a multi-purpose tool, Transportation Research B,Methodological 44(7), p. 834-849.

EYCKMANS, J., KVERNDOKK, S. (2010), Moral con-cerns on tradable pollution permits in internationalenvironmental agreements, Ecological Economics69(9), p. 1814-1823.

EYCKMANS, J., HAGEM, C. (2011), The EuropeanUnion’s potential for strategic emissions tradingthrough permit sale contracts, Resource and EnergyEconomics 33, p. 247-267.

FINUS, M., RUNDHAGEN, B., EYCKMANS, J.(2010), Simulating a sequential coalition formationprocess for the climate change problem: first come,but second served?, Annals of Operations Research,accepted.

LE BRETON, M., ZAPOROZHETS, V. (2010),Sequential legislative lobbying under political certainty,The Economic Journal 120(543), p. 281-312.

MORBEE, J., PROOST, S. (2010), Russian gasimports in Europe: how Does Gazprom reliabilitychange the game?, The Energy Journal 31(4), p. 79-110.

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PROOST, S., DUNKERLEY, F., DE BORGER, B.,GÜNHNEMAN, A., KOSKENOJA, P., MACKIE, P.,VAN DER LOO, S. (2010), When are subsidies totrans european network projects justified?,Transportation Research A, Policy and Practice,accepted.

PROOST, S., VAN DER LOO, S. (2010), Transportinfrastructure investment and demand uncertainty,Journal of Intelligent Transportation Systems 14 (3),p. 129-139.

RENIERS, G., DUPONT, I. (2010), A framework for the integration of safety and security in case of critical infrastructure protection (FISSCIP), Disaster advances 3(4), p. 4-12.

RENIERS, G., SOUDAN, K. (2010), A game-theoreticalapproach for reciprocal security-related preventioninvestment decisions, Reliability engineering and system safety 5(1), p. 1-9.

RENIERS, G. (2010), A management of changeapproach for assessing and evaluating operationalstaffing levels (MocESL) in chemical plants, Safetyscience 48(7), p. 885-893.

RENIERS, G. (2010), A novel methodology for evaluatingthe change of existing operational staffing levels(MCSL) in the chemical industry, Safety science48(2), p. 179-185.

RENIERS, G. (2010), An external domino effectsinvestment approach to improve cross-plant safetywithin chemical clusters, Journal of hazardous materials177(2010), p. 167-174.

RENIERS, G., DULLAERT, W., VISSER, L. (2010),Empirically based development of a framework foradvancing and stimulating collaboration in the chemicalindustry (ASC): creating sustainable chemical industrialpark, Journal of cleaner production / Masson 18(16),p. 1587-1597.

ROUSSEAU, S. (2010), Evidence of a filteredapproach to environmental monitoring, Europeanjournal of law and economics 29(2), p. 195-209.

ROUSSEAU, S., TELLE, K. (2010), On the existenceof the optimal fine for environmental crime,International Review of Law and Economics 30(4), p. 329-337.

WILLEMS, B., MORBEE, J. (2010), Market complete -ness: How options affect hedging and investments in the electricity sector, Energy Economics 32, p. 786-795.

WILLEMS, B., KUPPER G. (2010), Arbitrage in energy markets: price discrimination under congestion,The Energy Journal 31(3).


EYCKMANS, J. (2010), Publieke goederen en externeeffecten, in DECOSTER, A. (eds.), Economie, eeninleiding, p. 403-427. Leuven: Universitaire Pers Leuven.

EYCKMANS, J., BRÉCHET, T. (2010), Coalition theoryand integrated assessment modeling: lessons for climate governance, in BROUSSEAU, E., JOUVET,P., DEDEURWAERDER, T. (eds.), Governing globalenvironmental commons: institutions, markets, social preferences and political games. Oxford (UK):Oxford University Press.

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OTHER BOOK CHAPTERS

EYCKMANS, J., PEPERMANS, G. (2010), Is therea future for nuclear energy?, in EYCKMANS, J.,

PEPERMANS, G., PROOST, S. (eds.), Climatechange and energy perspectives, p. 69-103. Leuven: Centrum voor Economische Studiën.

EYCKMANS, J., ROUSSEAU, S. (2010), The European emissions trading system in Belgium,in EYCKMANS, J., PEPERMANS, G., PROOST, S.(eds.), Climate change and energy perspectives. p. 41-67. Leuven: Center for Economic Studies.

NIJS W., VAN REGEMORTER D. (2010), EU-objec-tives on climate change and renewable energy for2020 in Belgium, in EYCKMANS, J., PEPERMANS,G., PROOST, S. (eds.), Climate change and energyperspectives. Leuven: Center for Economic Studies.


DE BORGER, B., PROOST, S. (2010), A politicaleconomy model of road pricing, CES DiscussionPaper Series 10.20, 1-37 pp. K.U.Leuven CES.

DECOSTER, A., PROOST, S. (2010), Waarom eensplitsing van de personenbelasting geen goed ideeis, CES Leuvens Economisch Standpunt 2010/133,1-22 pp. Leuven: K.U.Leuven CES.

DUNKERLEY, F., GLAZER, A., PROOST, S. (2010),What drives gasoline taxes?, CES Discussion PaperSeries 10.01, 1-36 pp. K.U.Leuven CES.

EYCKMANS, J. (2010). Het internationaal klimaat-beleid tussen Kopenhagen en Cancún, CESLeuvense Economische Standpunten 2010/134, 1-23 pp. Leuven: K.U.Leuven CES.

GLAZER, A., PROOST, S. (2010), Reducing rentseeking by providing wide public service, CESDiscussion Paper Series 10.31, 1-21 pp. Leuven:K.U.Leuven CES.

KÜPPER, G. (2010), What is the strategic value of investments in alternative local energy supply?, CES Discussion Paper Series 10.04, 1-36 pp.K.U.Leuven CES.

PROOST, S., ZAPOROZHETS, V. (2010), The politicaleconomy of fixed regional investment shares with an illustration for Belgian railway investments, CES Discussion Paper Series 10.05, 1-24 pp.K.U.Leuven CES.

PROOST, S., VAN DER LOO, S. (2010), Waarom de Oosterweelverbinding een economisch onver -antwoord project is, CES Leuvense EconomischeStandpunten 2010/128, 1-23 pp. K.U.Leuven CES.

PROOST, S., DUNKERLEY, F., VAN DER LOO, S.,ADLER, N., BRÖCKER, J., KORZHENEVYCH, A.(2010), Do the selected Trans European transportinvestments pass the cost benefit test?, CES DiscussionPaper Series 10.02, 1-22 pp. K.U.Leuven CES.

VAN DER LOO, S., PROOST, S. (2010), The Oosterweeljunction revisited, CES Discussion Paper Series10.07, 1-25 pp. K.U.Leuven CES.

EXTERNAL REPORTS

CLAUS, K. and ROUSSEAU, S. (2010), Public versusprivate incentives to invest in green goofs: A costbenefit analysis for Flanders, HUB discussion papers2010/30.


PEPERMANS, G. (2010), The value of continuouspower supply for Flemish households, HUB -Research paper series 2010/24, 1-37 pp. Brussels:HUB - Faculty of Economics & Management.

RENIERS, G. (2010), Multi-plant safety and securitymanagement in the chemical and process industries.Weinheim: Wiley, 272 p.

OTHER JOURNAL PUBLICATIONS / MISCELLANEOUS

PEPERMANS, G., WILLEMS, B. (2010), Cost recoveryin congested electricity networks, in Zeitschrift fürEnergiewirtschaft 34 (3), p. 195-208. Vieweg undTeubner Verlag.

RENIERS, G., VAN HEUVERSWYN, K. (2010),Nieuwe norm voor risicobeheer geschikt voorbeveiliging, Beveiliging managementblad 23(2010), p. 99-101.

RENIERS, G., VAN HEUVERSWYN, K. (2010),Onderzoek naar prestatie-indicatoren voor beveiligingin organisaties, Private veiligheid: het tijdschrift voorde private veiligheidssector 46(2010), p. 38-43.

ROUSSEAU, S. was co-author of the vision text‘Biodiversiteit: Basisgoed of luxegoed’ written by the Metaforum Biodiveristy of the K.U.Leuven.

VAN PASSEL, S., DE GHELDERE, S., DUBOIS, M.,EYCKMANS, J. and VAN ACKER, K. (2010),Exploring the socio-economics of enhanced landfillmining, in JONES, P.T. and TIELEMANS, Y. (eds),Enhanced landfill mining and the transition towardssustainable materials management, Proceedings ofthe International Academic Symposium on EnhancedLandfill Mining, 4-6 October 2010, Houthalen-Helchteren (Belgium), p. 247-264.


Stef Proost served on the editiorial boards ofTransportation Research Part B and on the Review ofEnvironmental Economics and Policy (REEP). He editeda symposium on transport and the environment for REEP.

Genserik Reniers serves as an Associate Editor for the Journal of Loss Prevention in the ProcessIndustries (Elsevier).

Genserik Reniers serves on the editorial boards ofDisaster Advances and the International Journal ofSafety and Security Engineering.


SASKIA VAN DER LOO, Transport infrastructure: pricing and investment issues, October 29, 2010.SUPERVISOR: Stef ProostDOCTORAL COMMITTEE: W. Moesen, F. Verboven,A. Decoster, B. De Borger, A. de Palma

GERD KUPPER, Contributions to European energypolicy, October 27, 2010.SUPERVISOR: Stef ProostDOCTORAL COMMITTEE: E. Buyst, R. Veugelers, R.Belmans, G. Pepermans, Thomas Rutherford, B. Willems

FAY DUNKERLEY, Essays in transport economics,February 25, 2010SUPERVISOR: Stef ProostDOCTORAL COMMITTEE: E. Buyst, E. Ooghe, G. Willmann, B. De Borger, A. de Palma

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I Research projects

Environmental law enforcement: a comparison ofpractice in the criminal and the administrativetasks, April 2007 – March 2011, funded by IWT, super-vised by S. Rousseau and S. Proost.

This research project has three strategic goals. (1) Wewant to lay the foundations for the development of apublic (penal and administrative) environmental lawpenalization that is internally consistent. (2) We wantto lay the foundations for the learning process thatenvironmental administrations will have to completewith regard to several penalization instruments alreadyknown by the penal court system. (3) We want tocheck if there are possibilities to optimize the way inwhich penalization instruments are currently used andwhether certain aspects of current practice call forchanges in the law. Basic features of the researchdesign are a.o. the following ones. (1) The research isbased on empirical data concerning penalizationpractice (building up of databases). (2) The parallelbetween the penal and administrative track dominatesthe project elaboration. We conduct the research as atwin panel, step by step confront the regulation andpractice from the penal track with those of the admin-istrative track. (3) The research is multidisciplinary: law (with internal transdisciplinarity environmental,administrative and penal law), economics (especiallyenvironmental economics) and Law & economics.

The political economy of road pricing and roadinvestments, January 2008 – December 2011, fundedby FWO, supervised by S. Proost.

Omgaan met onzekerheid en risico in energiesystemenmat MARKAL/TIMES (TUMATIM), December 2007 –December 2010, funded by Federaal Wetenschaps -beleid, supervised by D. Van Regemorter and S. Proost.

Steunpunt Fiscaliteit en Begroting, January 2008 –December 2010, funded by Ministerie VlaamseGemeenschap, supervised by S. Proost.

Gestion du transport et de la mobilité dans lecadre du changement climatique, December 2007– May 2010, funded by Université de Cergy-Pontoise,supervised by S. Proost.

Climatecost, December 2008 – July 2011, funded byEuropean Commission, supervised by D. Van Regemorterand S. Proost.

Development of Methods and Tools for Evaluationof Research (DEMETER), January 2009 – December2011, funded by European Commission, supervisedby D. Van Regemorter and S. Proost.

SustainCity, January 2010 – December 2012, fundedby European Commission, supervised by S. Proost.

Tarification des transports, October 2009 – September2011, funded by L’école normale superieure de Cachan,supervised by S. Proost.

I Conferences

Johan Eyckmans, Sandra Rousseau, Stef Proost,Tom Verbeke and Thierry Bréchet (UCL) organized theBelgian Environmental Economics Day BEED 2010at the Center for Economic Studies of K.U.Leuven onJanuary 29, 2010.

Tom Verbeke was one of the academic coordinatorsof the 29th Flemish scientific economic conference.With Hadjila Krifa (Equippe, University of Lille) he co-organized an international workshop on regulation,institutions and FDI.

Energy, Transport and Environment 37

Sandra Rousseau organized the InternationalWorkshop on the Law and Economics ofEnvironmental Sanctioning in Leuven on 21 and 22 September 2010. It included presentations byCaroline Abbot (University of Manchester), Christian Almer(University of Bern), Carmen Arguedas (UAMadrid),Carole Billiet (U.Gent), Thomas Blondiau (CES),Michael Faure (University of Maastricht), Timo Goeschl(University of Heidelberg), Lotte Ovaere (CES), SandraRousseau (CES & HUBrussel), Jay Shimshack (TulaneUniversity) and Kjetil Telle (Statistics Norway).

I Seminars and workshops

The Energy, Environment and Transport Workshop,co-organized by Stef Proost met as followed:

March 11, 2010: SIMON DE JAEGER (CES -HUB), Do households export their recyclablewaste?THOMAS BLONDIAU (CES), Differential treat-ment of intentional and accidental violators:harm-based, risk-based and gain-based environ-mental sanctions

March 18, 2010: GERD KUPPER (CES), What isthe strategic value of investments in alternativelocal energy supply?JORIS MORBEE (CES), Nuclear market power:tax or liberalize?

April 15, 2010: SASKIA VAN DER LOO (CES),The Oosterwheel junction revisitedSTEF PROOST (CES), Ex-ante uncertainty andthe acceptability of road tolls: why tolls are noteasily accepted.

May 6, 2010: TOM VERBEKE (CES – HUB),Urban waste prices and yardstick competitionSTEF PROOST (CES), Why is universal serviceso common?

May 20, 2010: GUIDO PEPERMANS (CES –HUB), Willingness to pay for non-interruptedelectricity supplyGERD KUPPER (CES), How to deal with energyimport dependence? Is market integration anddiversification the solution?

May 27, 2010: JOHAN EYCKMANS (CES –HUB), Mitigation versus adaptation in climatepolicy revisitedSANDRA ROUSSEAU (CES – HUB), Emissionstandards and monitoring strategies in hierarchi-cal setting

June 15, 2010: THOMAS RUTHERFORD (ETH –Zurich), Climate choices: policy subject to con-straints or constraints subject to policy?

June 22, 2010 JOHN NELLTHORP (ITS,University of Leeds), Toward an urban modelincluding streetscape quality

I External visiting:

Stef Proost spent 4 weeks at the University ofCalifornia – Irvine and 2 weeks at Ecole Nationalesuperieure à Cachan (FR).

Sandra Rousseau spent 1 week at the AutonomousUniversity of Madrid, Spain.

Johan Eyckmans spent 1 week at Exeter University,UK, visiting Michael Finus.

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International Economics

Filip Abraham collaborated with Joep Konings on three majorthemes using company data. First, the employment decisionsof multinational companies, located in Belgium, were addres -sed. They found that multinational companies are more likelyto cut jobs in affiliates that are farther away from headquarters.A second issue concerned the impact of increases in laborcost and productivity on employment of individual Belgianfirms. As a third major theme the productivity performanceof the Technological and the Chemical Industry was analyzed.In joint work with Jan Van Hove the impact of Asian com-petition on Belgian exports was measured based on verydetailed company data, made available by the BelgianNational Bank.

Paul De Grauwe's research interests are focused in fourareas. The first one deals with the theory and the empiricalanalysis of optimal currency areas. The second area concernsthe application of behavioral economics in the modeling offoreign exchange markets and in macroeconomic models.The third area deals with the causes and consequences ofthe financial crisis. The fourth area is about illicit drugs anddrug policies.

Hans Dewachter's research focuses on issues related tomonetary economics, finance and econometrics. In recentresearch he has been analyzing, both theoretically andempirically, the interactions between the macroeconomicdynamics and the financial markets within the frameworkof rational expectations models.

Ivan Petrella's research interests are macroeconomics,monetary policy and macroeconometrics. His recent workhas dealt with multi-sectoral models of the business cycle,focusing on empirical issues that arise in the presence offactor demand linkages and optimal monetary policy in thiscontext. Furthermore, he has been working on the asym-metry in the transmission of monetary policy.

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FACULTY MEMBERS:

Filip Abraham [1] Paul De Grauwe [2]Hans Dewachter [3] Gerald Willmann [4]Jan Van Hove [5]

EMERITI:

Theo Peeters

RESEARCHERS:

Francesco Di Lodovico Toni GlaserLeonardo Iania Pelin IlbasPablo Rovira Kaltwasser Giulia PiccilloZuzanna Studnicka Priscilla ToffanoEls Vanonckelen

POSTDOCTORAL RESEARCHERS:

Ivan Petrella

VISITING PROFESSORS:

Karolien De Bruyne Romain Houssa

VISITING RESEARCHERS:

Sophie Béreau Mara Pirovana

1 2

3 4 5

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Gerald Willmann’s research focuses on policy aspects ofinternational trade. He has recently studied possible expla-nations for conditional trade policy, diverging trade policyinterests within industries, multilateral investment agreements,and the effects of globalization on educational choices andon the middle class. In addition, he has also initiated a proj-ect on the political economy of further European integration.

Paul De Grauwe continued his research on behavioral macro -economics. He has been working on a book “BehavioralMacroeconimics”. In this book he analyzes how waves ofoptimism and pessimism can be modeled in a macro -economic context. The model creates waves of optimismand pessimism (“animal spirits”) that can emerge sponta-neously, without any fundamental shock causing thesemovements. He analyzes the influence these animal spiritshave on the business cycle; the implications for the trans-mission of monetary policies and for optimal monetarypolicies. He also developed a separate chapter extendingthe model to allow for asset markets to influence themacroeconomy.

Cláudia Costa Storti (European Monitoring Centre forDrugs and Drug Addiction), Paul De Grauwe and AnnaSabadash, examined how business cycle conditions, in particular employment opportunities, affect the demandfor drug-addiction treatment in the European countries.Making use of the data on country-specific drug treatmentdemand, employment status of the drug patients and supplyof treatment units, in combination with the macro-economicindicators, they estimated the effect of the changing eco-nomic conditions on the dynamics and structure of the drugtreatment demand. They find that in general worseningeconomic conditions lead to an increased demand fordrug treatment.

Paul De Grauwe, Romain Houssa and Giulia Piccilloexamine the determinants of the recent surge in China-Africa trade linkages. For this purpose, they analyze aunique bilateral trade data set between China and Africancountries from 1997 to 2004. In particular, they study thestructure and composition of China's increasing importsand exports to Africa. They show that China is importing agrowing amount of raw materials from an increasing numberof African countries. At the same time, Chinese productsare increasingly being exported to a growing number ofAfrican nations. Moreover, they apply the standard gravitymodel to identify government quality of the China's Africantrade partners. As a benchmark they run the same regressionson other African major trading partners (France, Germany,UK, and USA). They conclude that China is the only countrywhich is consistently willing to trade with African countriesthat have a lower political standing. By doing so, China fillsa gap left open by other major world economies, and mighteven play a key role in the future development of Africa.

Paul De Grauwe continued his research on the governanceof the Eurozone. He analyzed how the recent decisions ofthe European Council to introduce collective action clausesin future government bond contracts have destabilized thegovernment bond markets of the eurozone. He argues thatthese decisions introduce a speculative dynamics that makesthe eurozone very fragile, much in the same way as in thedefunct Exchange Rate Mechanism of the EuropeanMonetary System.

Sophie Béreau completed her doctoral work on the economics of exchange rates. She analyzed the dynamicsof the exchange rates when these deviate from their fundamental values. She also studied a behavioral modelof the exchange rate, as well as defending her thesis atParis Nanterre in October.


Hans Dewachter and Priscilla Toffano empiricallyassessed the impact of active and passive fiscal policyregimes on the yield curve. The passive fiscal policyregime is identified as a fiscal policy consistent with anon-accelerating, stabilizing debt-to-GDP dynamics,while in the active policy regime, fiscal policy is set infunction of generating certain macroeconomic effects,independently of the debt-to-GDP ratio (Leeper 1991).Analyzing US data over the period 1965-2010, they findthat (i) fiscal policy is regime dependent, (ii) fiscal policyhas been predominantly passive over time whereas therecent financial crisis represents a period of fiscal activism,(iii) the impact of fiscal policy on the yield curve is regimedependent; a permanent one percentage shock in theprimary deficit typically leads to a contemporaneousincrease in long-term yields of about 10 basis points,and even stronger cumulative effects only for the activefiscal policy regime. No significant impact of deficit onyields is found in the passive fiscal policy regime.

Hans Dewachter, Ivan Petrella and Priscilla Toffanoinitiated a research project on the effects of anticipatedfiscal policy shocks on financial markets. The main goalof this research is to empirically assess the impact offiscal policy on the yield curve. The large governmentsstimulus packages which have been implemented allaround the world during the last recession, has revivedthe interest of macroeconomists on the effects of fiscalpolicy. While the effects of a monetary expansion/con-traction are generally accepted, there is less consensusconcerning the impact of fiscal policy. Much of thedebate centers around the potential interest rates impactof fiscal expansions and around the complications dueto implementations lags and fiscal foresights, intrinsic toany fiscal policy process. The authors present an empiricalmacro-finance model that combines a no-arbitrage affine

term structure model with a set of structural restrictionsthat allows to identify fiscal policy shocks and to tracethe effects of these shocks on the prices of bonds ofdifferent maturities. Problems of non-fundamentalnessrelated to anticipations are addressed by resorting toDynamic Factor Models (Giannone et al, 2009).

Hans Dewachter, Deniz Erdemlioglu, Jean-Yves Gnaboand Christelle Lecourt continued their research projecton the impact of central bank announcement on thefinancial markets. The central question in this researchis to which extent announcement can trigger jump inasset prices. The authors carry out an event-study andinvestigate the link between price jumps and centralbank communication for the FED and ECB. The mainresults are as follows. i) Financial markets indeed exhibitjumps in response to central bank communications; ii) The jump-impact of the communication events is foundto be long-lasting for the exchange rates while it isshort-lived for the stocks and bonds. Even though theinformation content is absorbed by the markets in20 minutes, the jump-effects continue to be significant and- relatively - more persistent in the currencies. iii) Interestingly,most of the jumps occur as a reaction to the commentsof the US officials.

Hans Dewachter, Leonardo Iania, Wolfgang Lemkeand Kristien Smedts study the information content ofthe corporate bond spreads for macroeconomic dynamicsand in particular for economic growth. The analysis inperformed in the context of a medium-scaled macro-finance model, integrating corporate spread factors(i.e. determinants of the external finance premium) intoan otherwise standard Macro-finance framework.

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Preliminary results point out that decomposing the corporate bond spreads into an expected and risk premiacomponent helps to forecast future economic activity.

Hans Dewachter and Leonardo Iania finalized their researchon extended macro-finance (EMF) models. The EMF modelallows them to empirically model and assess the impact ofliquidity and risk appetite shocks in the bond market. The modelis estimated on US data using Bayesian estimation techniques.Two findings stand out; first, the model significantly outperformsthe benchmark (structural and semi-structural) Macro-Financemodels in terms of cross-sectional fit of the yield curve. Second,financial shocks, either in the form of liquidity or risk appetiteshocks, have a statistically and economically significant impacton the yield curve. The importance of financial shocks inyield curve dynamics precludes a purely macroeconomicinterpretation of yield curve changes. This research is forth-coming in the Journal of Financial and Quantitative Analysis.

Hans Dewachter, Leonardo Iania and Marco Lyrio usethe EMF model to assess the information value of the yieldcurve and forward rates for predicting macroeconomictrends. Statistical analysis based on the EMF model showsthat the yield curve (or the forward rates) is suboptimalinformation variables. In particular, the information contentof yields is biased due to the presence of risk premia.Current findings point to the existence of important andeconomically significant time variation in the risk premia,impeding the direct use of yields as information variables.Subsequently, the EMF model is used to separate expectationsfrom risk premium components and to extract unbiasedinformation variables from the yield curve.

Hans Dewachter, Romain Houssa and Priscilla Toffanoare analyzing the mechanisms of financial contagionbetween economies in times of crisis. Spatial techniques(Anselin (2001)) are used to account for spillovers related tofinancial integration. In particular, interbank lending relationsfor a large set of countries are considered to create a time-varying “connectivity matrix” which depicts the linkage betweenthe different countries. In the absence of data on bank bybank lending, BIS data by nationality of lender are used forthis purpose. The focus on the bank lending as a crisischannel seems justified in the light of the size and volatilityof bank credit and losses that we observe during the crises.The idea is that if a bank has exposures in countries affectedby financial crisis, the need to rebalance this exposure willlead to cutting of the credit lines to any other country whichcompetes for its credit, thereby generating a propagation ofthe crisis. This work relates to GVAR (di Mauro, Smith, Dees,Pesaran (2007)), SpVAR (Beenstock and Felsenstein (2007))and contagion-related (Van Rijckeghem and Weder (2000))literature, and will find an empirical application with respectto the 2007-2010 financial crisis.

Hans Dewachter, Romain Houssa and Leonardo Ianiastarted their project on bond risk premia and macroeco-nomic fundamentals. They aim at explaining and forecastingexpected excess bond returns in the USA using a largepanel of (macro-) economic fundamentals. For this purposea dynamic factor model is developed which includes, nextto the standard three yield curve factors, three well-definedbond supply factors. Moreover, they identify seven macro-economic fundamentals obtained from the reduced form ofa typical small scale stochastic macroeconomic model. A distinctive feature of the procedure lies in the identificationwithin the dynamic factor structure of a macroeconomicstochastic trend factor.


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Hans Dewachter and Mara Pirovano are exploringthe existence and magnitude of return and volatilityspillovers between Western and Eastern Europe, relyingon a spillover index recently developed by Diebold andYielmaz (2009). While many efforts have been devotedto quantifying the existence of spillovers, few attemptshave been made to identify their economic determinants.Their analysis will take a step further and, based on theresults from the spillover analysis, will proceed to estimatea gravity model of the determinants of stock marketspillovers in returns and volatility. In particular, this analysiswill provide information on the relative importance ofeconomic forces, market sentiment and contagion indriving spillovers in stock markets in the enlarged Europe.

In a joint work with Oleg Badunenko and DanielHenderson, Romain Houssa paper employ a productionfrontier approach that allows distinguishing technologicprogress from efficiency development. Data on 35 Africancountries in 1970-2007 show that efficiency losses haveconstrained growth in Africa while technology progresshas played a marginal growth enhancing role in the region.Moreover, physical and human capital accumulationare the main factors that drive productivity growth atthe country level. Examining the outcomes of successfulcountries suggests that good governance, institutionalquality and good policies are key factors for improvingeconomic development in Africa. These factors are evenmore required in Sub-Saharan Africa given the naturalconstraints of geography in the region.

Romain Houssa, Chris Otrok and Radu Puslengheadevelop a small open economy DSGE model usablefor monetary policy in Sub-Saharan Africa. They applythe model to quarterly data from Ghana from 1981-2007and find that permanent, but not transitory, technology

shocks are the most important source of fluctuations.They also find a significant role for fiscal policy shocksin explaining variations in the data. Furthermore, the esti-mated monetary policy rule suggests that policy isaimed almost exclusively at fluctuations in output andignores inflation, imports and exports.

Romain Houssa, Jo Swinnen and Marijke Verpoortenstarted their project on export market access of fisheriesin Benin. The aim of the project is to produce innovativeresearch on the capacity of developing countries toreach pro-poor growth by reforming the food and market-ing chains of their export sectors. This general objectivewill be achieved through a study of the shrimp sectorin Benin. The first innovative element of the project liesin its methodology. In particular, a combination of naturaland controlled experiments will be used to identify thewelfare effects of export market access and structuralchanges in the supply chain. The second originality isthe sector studied: artisanal fishery in Africa. Despite itsimportance as a source of protein for the local populationand its potential to generate export revenue, this sectorhas received surprisingly little attention from developmenteconomists. The third innovative aspect is the surveyset-up used, i.e. weekly follow-up of all members (>14years) of the sampled households. They completed thefirst round of this weekly follow-up from March to July2009 on three lakes including a total of 540 households.The data cleaning is ongoing.

Ivan Petrella and Sean Holly have written a paper thatdeals with the transmission of technology shocks inpresence of factor demand linkages amongst sectors.This paper argues that factor demand linkages may beimportant for the transmission of both sectoral andaggregate shocks. They illustrate this using a panel of

45International Economics

highly disaggregated manufacturing sectors together withsectoral structural VARs. When sectoral interactions areexplicitly accounted for, a contemporaneous technology shockto all manufacturing sectors implies a positive response inboth output and hours at the aggregate level; otherwise thereis a negative correlation, as in much of the existing literature,which would contradict the basic mechanism of the standardRBC model. Furthermore, they find that technology shocksare important drivers of the business cycle.

Ivan Petrella and Emiliano Santoro have been working onthe analysis of price-setting behavior in U.S. manufacturingindustries. Recent studies have heavily criticized the abilityof the New Keynesian Phillips curve to fit aggregate data oninflation (see, e.g., Rudd and Whelan, 2006). They showthat sectoral inflation can be closely predicted by combininga hybrid NKPC reflecting a preponderance of forward-lookingprice setters with a proxy for the real marginal cost basedon the cost of intermediate goods. Unlike alternative proxiesfor the forcing variable, such as detrended output and thelabor share, the income share of intermediate goods presentsdynamic cross-correlations with the rate of inflation andcyclical properties in line with the predictions of the theoryembodied in the NK model. On a more general note, providingempirical support to a model specification that employs theincome share of intermediate goods stresses the importanceof considering input materials into otherwise standard multi-sector dynamic general equilibrium models. This should helpat providing both a more rigorous description of the underlyingstructure of the economy (see, e.g., Bouakez et al., 2008and 2009) as well as formulating policy prescriptions thataccount for the presence of factor demand linkages amongstsectors (see below).

Ivan Petrella and Emiliano Santoro have written a paperthat deals with the implications of factor demand linkagesfor monetary policy design. They consider a dynamic generalequilibrium model with two sectors. Part of the output ofeach sector serves as a production input in both sectors, in accordance with a realistic input-output structure.Strategic complementarities induced by factor demandlinkages significantly alter the transmission of exogenousshocks and amplify the loss of social welfare under optimalmonetary policy, compared to what is observed in standardtwo-sector models. The distinction between value addedand gross output that naturally arises in this context is ofkey importance to explore the welfare properties of themodel economy. A key role is played by the relative price,which not only acts as an allocative mechanism on thedemand side, but also on the supply side, through its effecton the sectoral real marginal costs of production.

Edoardo Gaffeo, Ivan Petrella, Damjan Pfaifar and EmilianoSantoro have written a paper that proposes a novel explanationof the vast empirical evidence showing that output and pricesreact asymmetrically to monetary policy innovations over con-tractions and expansions in the business cycle. They design adynamic general equilibrium model based on the assumptionthat households' utility partly depends on deviations of theirconsumption from a reference level below which aversion toloss is displayed. In line with the theory developed by Kahnemanand Tversky (1979), losses in consumption utility loom largerthan gains. This implies state-dependent degrees of real rigidityand elasticity of intertemporal substitution in consumptionthat generate competing effects on the responses of outputand inflation following a monetary innovation. The key predic-tions of the model are in line with the data. They then explorethe state-dependent trade-off between inflation and outputstabilization that naturally arises in this context. During expan-sions stronger policy activism in the response to inflation isprescribed, compared to contractionary stages of the cycle.

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Sean Holly, Ivan Petrella and Emiliano Santoro havewritten a paper that deals with the dynamics of the cross-sectional distribution of firms growth rates. This paperargues that important insights into the business cyclecan be obtained by exploring the micro-structure of macro -economic fluctuations. They fit firm-level growth datawith the Asymmetric Exponential Power density, whichaccounts for asymmetric dispersion and kurtosis oneither side of the modal rate. Three novel results arereported. First, firms on the left side of the distribution,that is firms that are growing more slowly or declining,are typically more responsive to aggregate shocks thanthose on the right side of the distribution. Second, trendingbehavior in the volatility of firm growth is predominantlydriven by increasing dispersion in the growth of highlyperforming firms. Last, they deliver evidence in supportof the view that shifts in the probability mass on eitherside of the mode may act as important propagators ofbusiness fluctuations. The analysis points to financialfrictions as one of the mechanisms capable of inducingnon-linear micro adjustment consistent with both aggre-gate and cross-sectional dynamics.

Pablo Rovira Kaltwasser has continued his work onheterogeneous agent models. He has recently appliedthe newly developed method of simulated quantiles toestimate a heterogeneous agent model. Monte Carlosimulations show that this method can deliver accurateestimates of the parameter under investigation, compara-ble to other existing methods. This approach adds toliterature though it does so in an crucial way, for itallows estimating a wide range of models within this literature even when knowledge about the existence ofstatistical moments of the relevant stochastic processesis not known. This is a clear advantage compared toprevious methods to estimate these types of models.

Giulia Piccillo finalized her paper on the relationshipbetween exchange rates and asset prices. Her modeltakes on a behavioral approach, following the classicalfundamentalist chartist framework. The new contributionis given by expectations from a DSGE model, which havea strong impact on the evolution of the two markets.As a result, the dynamics show two kinds of bubbles;the first kind is a traditional chartist bubble, the secondone is uniquely supported by DSGE believing agents.The paper entails a theoretical and a smaller empiricalsection.

During her time visiting Stanford University, Giulia alsobegan working on a new project. Under the supervisionof Professor Kurz she studied the effects of introducingheterogeneous expectations in the New Keynesianframework. She is working on a draft of the paper whichstudies the impact of technology shocks in a DSGE withdiverse believes.

Mara Pirovano wrote a paper providing empirical evi-dence on the interaction between monetary policy andstock prices in four new EU member states of Centraland Eastern Europe. In particular, she compared thereaction of new member states’ stock prices to domesticand Euro Area monetary shocks and concluded thatfinancial markets in the aforementioned countries aremore sensitive to the ECB’s policy actions. Moreover,the relative importance of internal and external factorsin determining the volatility of stock prices is explored.The study concludes that the volatility of stock pricesin the new EU member states is mainly due to shocksrelated to exchange rate and Euro Area monetary policyshocks.


I Publications


ABRAHAM, F., KONINGS, J., SLOOTMAEKERS, V.(2010), FDI Spillovers, firm heterogeneity and degreeof ownership: evidence from Chinese manufacturing,The Economics of Transition 18(1), p. 143-182.

ABRAHAM, F., KONINGS, J. (2010), Loonkosten,productiviteit en werkgelegenheid in een concurrentiëleinternationale omgeving, Over Werk 2010/4, p 28-33.

ALTAVILLA, C., DE GRAUWE, P. (2010), Forecastingand combining competing models of exchange ratedetermination, Applied Economics 42, p. 3455-3480.

ALTAVILLA, C., DE GRAUWE, P. (2010), Non-linearitiesin the relation between the exchange rate and thefundamentals, International Journal of Finance and Economics 15, p. 1-21.

DE GRAUWE, P. (2010), The fragility of the Eurozone’sinstitutions, Open Economies Review 21(1).

DE GRAUWE, P. (2010), The scientific foundation ofdynamic stochastic general equilibrium (DSGE) models,Public Choice 144, p. 413-443.

DE GRAUWE, P. (2010), The return of Keynes,International Finance 13(1), p. 157-163.

DE GRAUWE, P. (2010), Animal spirits and monetarypolicy, Economic Theory, published online, DOI10.1007/s00199-010-0543-0.

DE GRAUWE, P. (2010), A mechanism of self-destruction of the Eurozone, Intereconomics 45,November/December.

DE GRAUWE, P. (2010), Quelle gouvernance pour la ZoneEuro, Revue d’Economie Financière 100, Décembre.

DE GRAUWE, P. (2010), Top-down versus bottom-upmacroeconomics, CESifo Economic Studies 56(4),December.

DEWACHTER, H. and IANIA, L. (2010), An extendedmacro-finance model with financial factors, Journalof Financial and Quantitative Analysis, forthcoming.

DEWACHTER, H. and TOFFANO, P. (2010), Fiscalactivism and the cost of debt financing, InternationalJournal of Finance and Economics, forthcoming.


DE GRAUWE, P. (2010), Financiële markten, in DECOSTER, A. (eds.), Economie, een inleiding, p. 627-654. Leuven: Universitaire Pers Leuven.

DE GRAUWE, P. (2010), Wisselmarkten, in DECOSTER, A. (eds.), Economie, een inleiding, p. 797-821. Leuven: Universitaire Pers Leuven.

DE GRAUWE, P. (2010), Geld en het bankwezen, in DECOSTER, A. (eds.), Economie, een inleiding, p. 595-625. Leuven: Universitaire Pers Leuven.

DE GRAUWE, P. (2010), Macro-economischeanalyse: wat en waarom?, in DECOSTER, A. (eds.),Economie, een inleiding, p. 473-485. Leuven:Universitaire Pers Leuven.

DE GRAUWE, P. (2010), The banking crisis: causes,consequences and remedies, in TALANI, L., (ed.),The global crash. Towards a New Global FinancialRegime. Palgrave, MacMillan, London.


ABRAHAM, F. and VAN HOVE, J. (2010), Can Belgianfirms cope with the Chinese dragon and the Asiantigers? The export performance of multi-productfirms on foreign markets, National Bank of BelgiumWorking Paper 204, October 2010.

ABRAHAM, F., KONINGS, J. and GOESAERT, T.(2010), Staying home or moving away: The effect ofrestructuring on employment in multinational head-quarters and their affiliates, VIVES Discussion Paper 12.

ABRAHAM, F., KONINGS, J. and GOESAERT, T.(2010), Verankering in België: Hoofdzetels zijn eenhoofdzaak (Staying Home or Moving Away in Belgium:Headquarters matter.), VIVES Briefings, April 2010.

ABRAHAM, F. and KONINGS, J. (2010), Loonkost,productiviteit en werkgelegenheid in een concurrentiëleinternationale omgeving: een analyse met Belgischebedrijfsgegevens (Labor costs, productivity andemployment in a competitive international environ-ment: An analysis with Belgian company data),Verbond Voor Belgische Ondernemingen (VBO).June 2010.

BADUNENKO, O., HENDERSON, D.J., HOUSSA, R.(2010), Explaining African growth performance: A production-frontier approach, CRED WorkingPaper 2010/13, University of Namur.

BORK, L., DEWACHTER, H., HOUSSA, R. (2010),Identification of macroeconomic factors in large panels,CRED Working Paper 2010/10, University of Namur.

CRABBÉ, K., DE BRUYNE, K. (2010), Taxes,agglomeration rents and location decisions of firms,CES Discussion Paper Series 10.27, 1-32 pp.Leuven: K.U.Leuven CES.

CRABBÉ, K., DE BRUYNE, K. (2010), Taxes,agglomeration rents and location decisions of firms, FBE Research Report AFI_1046, 1-33 pp.K.U.Leuven - Faculty of Business and Economics.

DE GRAUWE, P. (2010), De competitiviteit vanBelgië: een lange termijn analyse, CES LeuvenseEconomische Standpunten 2010/132, 1-14 pp.Leuven: K.U.Leuven CES.

DE GRAUWE, P. (2010), Booms and Busts: New Keynesian and behavioral explanations, CESifo Working Paper 3293, December.

DE GRAUWE, P. (2010), A mechanism of self-destruction of the eurozone, CEPS commentary,November.

DE GRAUWE, P. (2010), Not only governments are to blame for exploding government debts,Eurointelligence, November.

DE GRAUWE, P. (2010), Waarom België (voorlopig)geen budgettair besparingsplan nodig heeft, mimeo.

DE GRAUWE, P. (2010), What kind of governancefor the eurozone?, CEPS Policy Briefs, September.

DE GRAUWE, P. (2010), Why a tougher Stability and Growth Pact is a bad idea, VowEu.

DE GRAUWE, P. (2010), How to embed theEurozone in a political union, VoxEU.

DE GRAUWE, P. (2010), Fighting the wrong enemy,VoxEU.

DE GRAUWE, P. (2010), The Greek crisis and thefuture of the Eurozone, Eurointelligence.

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DEWACHTER, H., HOUSSA, R., TOFFANO, P.(2010), Spatial propagation of macroeconomicshocks in Europe, CES Discussion Paper Series10.12, 1-32 pp. Leuven: K.U.Leuven CES.

DEWACHTER, H., TOFFANO, P. (2010), Fiscal activism and the cost of debt financing, CES Discussion Paper Series 10.13, 1-19 pp.K.U.Leuven CES.

DEWACHTER, H., HOUSSA, R., TOFFANO, P.(2010), Spatial propagation of macroeconomicshocks in Europe, CRED Working Paper 2010/09,University of Namur.

DEWACHTER, H., IANIA, L., LYRIO, M. (2010),Macroeconomic and financial determinants of theterm premium, Insper Institute of Education andResearch, Working Paper WPE 230.

GAFFEO, E., PETRELLA, I., PFAJFAR, D., SANTORO, E. (2010), Reference-dependent preferences and the transmission of monetary policy, CES Discussion Paper Series 10.28, 1-34 pp.Leuven: K.U.Leuven CES.

HOLLY, S., PETRELLA, I. (2010), Factor demandlinkages, technology shocks and the business cycle,CES Discussion Paper Series 10.26, 1-43 pp.Leuven: K.U.Leuven CES.

KONINGS, J., ABRAHAM, F., VANORMELINGEN, S.,FRIEBEL, G. and HEINZ, M. (2010), The economicperformance of the technological sectors:International benchmarking and lessons fromGerman labor market reforms, Study for Agoria,September 2010.

PETRELLA, I., HOLLY, S. (2010), Factor demandlinkages, technology shocks and the business cycle.

PETRELLA, I., SANTORO, E. (2010), Inflationdynamics and real marginal costs: New evidencefrom U.S. manufacturing industries.

PETRELLA, I., SANTORO, E. (2010), Optimal monetary policy with durable consumption goodsand factor demand linkages.

PETRELLA, I., GAFFEO, PFAJFAR, D. and SAN-TORO, D. (2010), Reference-dependent preferencesand the transmission of monetary policy.

PETRELLA, I., HOLLY, S. and SANTORO, E. (2010),Aggregate fluctuations and the cross-sectionaldynamics of firm growth.

PIROVANO, M. (2010), Financial integration, monetarypolicy and stock prices: Empirical evidence for theNew EU Member States, University of AntwerpWorking Paper, 2010-024www.ua.ac.be/main.aspx?c=*TEWHI&n=83224

BOOKS

DE GRAUWE, P. (ed) (2010), Dimensions ofCompetitiveness. MIT Press, Cambridge, Mass.

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I Research projects

Regionale effecten van monetaire unificatie: speeltgeografie een rol: January 2007 – December 2010,funded by FWO, supervised by H. Dewachter.

Optimal monetary policy, incomplete informationand model uncertainty, January 2008- December2011, funded by FWO, supervised by H. Dewachter.

Monetary, fiscal and structural policies with hetero -geneous agents (www.polhia.eu/), November 2008– October 2011), funded European Commission,supervised by P. De Grauwe.

The POLHIA project is financed through Theme 8of the Seventh Framework Programme of theEuropean Commission (Socio-Economic Sciencesand Humanities). It is a research project conductedwith the collaboration of six European Institutions:Catholic University of Milan, University of Amsterdam,Polytecnic University of Marche, Fondation Nationaledes Sciences Politiques, Catholic University ofLeuven, University of Rome, La Sapienza. POLHIA'score scope consists in exploring the nexus ofmacroeconomic and microeconomic/structuralpolicies in an heterogeneous agents setting. POL-HIA aims at providing new insights and useful suggestions for the implementation of both macro -economic policies and structural policies and forrethinking policy coordination or coherence, whichemerges first between monetary and fiscal policiesand second between micro and macro policies.

Enlargement versus deepening: A trade-off facingeconomic unions, funded by the FWO, supervisedby G. Willmann.

There has been considerable public debate on thefuture course of the EU - whether to enlarge it orrather to deepen integration. Yet there has been little

research on this topic. We provide a positive modelof the degree of integration and use it to study theeffects of enlargement on the endogeneouslydetermined degree of integration. Beyond a certainsize, our analysis suggests that there exists atrade-off between further enlargement and theequilibrium degree of integration.

I Conferences

Pablo Rovira Kaltwasser organized the conferenceQuantifying and Understanding Dysfunctions ofFinancial Markets. This conference brought togethera broad group of key researchers in several differentfinance related areas, including economists, econo-metricians, mathematicians, physicists and psychologistswho presented their work on both theory and empiricsof financial markets. A special issue of the Journal ofEconomic Dynamics and Control will publish the proceedings of this conference early in 2012.

Pablo Rovira Kaltwasser organized the 5th regularmeeting of the POLHIA research network. Duringthe meeting several members of this research groupas well as an external group of researchers presentedtheir work “New Keynesian macroeconomic modeling,the importance of gender differences in financial markets,and behavioral finance”.

Paul De Grauwe organized a workshop on EU-Japaneconomic relations in Leuven, on January 29-30, 2010.This conference was funded by the University of Osaka.

Paul De Grauwe organized the yearly Cesifo areaconference “Money, Macro and InternationalFinance” in Munich on February 26-27, 2010.

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Paul De Grauwe and Zhaoyong Zhang organized aconference on “East Asian Financial and MonetaryRelations” in Perth, Australia. The conference wasfunded by the University of Yokohama and the EdithCowan University, Perth.


The International Economics Workshops, co-organ-ized by Paul De Grauwe, Hans Dewachter and GeraldWillmann, met as followed:

January 18, 2010: FRANK WESTERHOFF (Universityof Bamberg), The use of agent-based financial marketmodels to test the effectiveness of regulatory policies

February 1, 2010: PAUL SÖDERLIND (Universityof St. Gallen), The time-varying systematic risk ofcarry trade strategies

March 8, 2010: LUCA BENATI (European CentralBank), Evolving Philips trade-off

March 22, 2010: EMMANUEL DE VEIRMAN(Reserve Bank of New Zealand), Does wealth variation matter for consumption

October 11, 2010: DANIEL MEJIA (Universidadde los Andes), The war on illegal drug productionand trafficking

October 27, 2010: ANTONIO CONTI (ULB), On the sources of Euro area money demand stability: a time varying cointegration analysis

November 10, 2010: GUGLIELMO-MARIA CAPO-RALE (Brunel University), Inflation and inflationuncertainty in the euro area

I External visiting

Paul De Grauwe:Catholic University, Milan, May 2010

Leonardo Iania: European Central Bank, Feb-August, 2010

Leonardo Iania: National Bank of Belgium, Sept-Dec, 2010


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Monetary and Information Economics

FACULTY MEMBERS:

Maarten Goos [1] Jozef Konings [2]Patrick Van Cayseele [3]

EMERITI:

Jean-Paul AbrahamDirk HeremansKarel Tavernier

RESEARCHERS:

Ellen CoosemansDries De SmetSimon MiegielsenAnna SalomonsAnnelore Van HeckeBert Willekens

POST-DOCTORAL RESEARCHERS:

Xiaoqiang ChengJo ReynaertsStijn Vanormelingen

The monetary and information economics research grouphas developed a tradition of studying the functioning offinancial markets, product markets and labor markets in itsmacroeconomic, microeconomic, institutional and legalaspects. The current focus of our research is the impact ofinformation platforms on product and labor markets withapplications to the media market, financial and labor markets.

Maarten Goos is currently examining the quantitative andqualitative changes in the job structure of OECD countries,the recent and historical labor market impact of technologicalchange and globalization and the role of temporary helpagencies and job search engines as labor market intermediaries.

Jozef Konings’s current research interests focus on themicro-econometric analysis of firms operating in globalmarkets, regional economics and fiscal federalism. His recentresearch includes work that analyzes the effects of on-the-job training on the productivity of firms, the effect ofagglomeration economies on firm level productivity andhow corporate tax competition is being shaped in the con-text of clustering of economic activity.

Patrick Van Cayseele’s research is on the economics ofindustrial organization and financial and labor market intermediation. His recent research analyzes the implicationsof two-sidedness of payment mechanisms, value safekeep-ing and media markets.

His research interests also includes the economics of antitrustand competition policy, and, more in particular, informationeconomic and game theoretic approaches to communicationin and stability of cartels.

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Patrick Van Cayseele's research is on the economics ofindustrial organization and financial and labor market inter-mediation. More specifically, his research interests includethe economics of antitrust and competition policy, innovationand the dynamics of firm growth, as well as game theoryapplied to cartel profit sharing. His recent research analyzesthe implications of bank mergers on loan rates and liquidity,payment mechanisms, value safekeeping and two-sidedmarkets (platform competition) in media, financial andlabor markets.


I Publications


ABRAHAM, F., KONINGS, J., SLOOTMAEKERS,V. (2010), FDI Spillovers, firm heterogeneity anddegree of ownership: evidence from Chinesemanufacturing, The Economics of Transition 18(1),p. 143-182.

CAMESASCA, P., VAN CAYSEELE, P. (2010),Communication in cartelized industries, Review of Business and Economics 55(2), p. 233-248.

FERRARI, S., VERBOVEN, F., DEGRYSE, H.(2010), Investment and usage of new technologies:evidence from a shared ATM network, The Ameri -can Economic Review 100(3), p. 1046-1079.

HUTCHINSON, J., KONINGS, J., WALSH, P.P.(2010), The firm size distribution and inter-industrydiversification, Review of Industrial Organization 37,p. 65-82.

VAN BEVEREN, I. (2010), Total factor productivityestimation: a practical review, Journal ofEconomic Surveys, accepted.


GOOS, M. (2010), De arbeidsmarkt, in DECOSTER, A.(eds.), Economie: een inleiding, p. 379-402.Leuven: Universitaire Pers Leuven.

GOOS, M. (2010), Economische groei, in DECOSTER, A. (eds.), Economie: een inleiding, p. 575-594. Leuven: Universitaire Pers Leuven.

GOOS, M. (2010), Het macro-economisch evenwicht op de korte termijn: het IS/LM-TR model,in DECOSTER, A. (eds.), Economie: een inleiding, p. 689-716. Leuven: Universitaire Pers Leuven.

GOOS, M. (2010), Het aggregatieve aanbod, in DECOSTER, A. (eds.), Economie: een inleiding, p. 723-755. Leuven: Universitaire Pers Leuven.

GOOS, M. (2010), Het AV-AA Model, in DECOSTER,A. (eds.), Economie: een inleiding, p. 757-795.Leuven: Universitaire Pers Leuven.

KONINGS, J., VAN CAYSEELE, P., WARZYNSKI, F.(2010), The implementation of national competitionpolicy law and the dynamics of price-cost margins:evidence from Belgium and the Netherlands 1993-1999, in GAFFARD, J., SALIES, E. (eds.), Innovation,economic growth and the firm, p. 191-213.Cheltenham (UK) and Massachusetts (USA): Edward Elgar Publishing.

VAN CAYSEELE, P. (2010), Onvolmaaktemededinging en productdifferentiatie, in DECOSTER,A. (eds.), Economie, een inleiding, p. 349-375.Leuven: Universitaire Pers Leuven.

VAN CAYSEELE, P. (2010), Monopolie, in DECOSTER, A. (eds.), Economie, een inleiding, p. 323-347. Leuven: Universitaire Pers Leuven.


BOVHA-PADILLA, S., DAMIJAN, J., KONINGS, J.(2010), The cyclicality of R&D expenditures andfinancial constraints, LICOS Discussion Paper,K.U.Leuven.

DE SMET, D., VAN CAYSEELE, P. (2010). Productdifferentiation on a platform: the informative andpersuasive role of advertising, CES DiscussionPaper, K.U.Leuven.

GOOS, M., SALOMONS, A. (2010). Kwetsbaarheidvan beroepen op lange en korte termijn vanwerkenden in België, Steunpunt WSE WorkingPaper. Steunpunt Werk en Sociale Economie,Leuven.

KONINGS, J., VANDENBUSSCHE, H. (2010), Anti-dumping protection hurts domestic exporters,CEPR Discussion Paper and LICOS DiscussionPaper, K.U.Leuven.

KONINGS, J., VANORMELINGEN S. (2010), On-the-job training and firm level productivity, CEPR Discussion Paper and LICOS DiscussionPaper, K.U.Leuven.

PERSYN, D., SWINNEN, J., VANORMELINGEN, S.(2010), Belgian beers: Where history meetsglobalization, LICOS Discussion Paper, K.U.Leuven.

REYNAERTS, J., VARADHAN, R., NASH, J.C. (2010),The convergence properties of the BLP (1995)Contraction mapping and alternative nonlinearacceleration algorithms, mimeo, K.U.Leuven.

VAN CAYSEELE, P. (2010), Hub and spoke collusionby Embargo, mimeo, K.U.Leuven.

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HEREMANS, D., PEETERS, T., VAN HECKE, A.(2010), Pleidooi voor een nieuw regionaalfincancieringsmodel, VIVES Briefings, p. 2-4,K.U.Leuven.

KONINGS, J., ABRAHAM, F. (2010), Loonkosten,productiviteit en werkgelegenheid in eenconcurrentiële internationale omgeving: Een analysemet Belgische bedrijfsgegevens, Rapport in opdrachtvan VBO.

KONINGS, J., ABRAHAM, F. (2010), Verankering inBelgië: hoofdzetels zijn een hoofdzaak, VIVESBriefings, p. 1-7, K.U.Leuven.

KONINGS, J., ABRAHAM, F., GOESAERT, T. (2010),Staying home or moving away? The effect ofrestructuring on employment in multinationalheadquarters and their affiliates, VIVES DiscussionPaper, K.U.Leuven.

KONINGS, J., TORFS, W. (2010), De Walloniseringvan de Vlaamse arbeidsmarkt?, VIVES Briefings, p. 12-17, K.U.Leuven.

KONINGS, J., PERSYN D. (2010). Waarom wordenvacatures zo moeilijk ingevuld?, VIVES Briefings, p. 1-12, K.U.Leuven.

EXTERNAL REPORTS

GOOS, M., MANNING, A., SALOMONS, A. (2010),Explaining job polarization in Europe: the roles oftechnology, globalization and institutions, CEP Discussion Paper, Centre for EconomicPerformance, London School of Economics.


SERENA FATICA, Three essays on firm’s locationchoices and public policy, September 3, 2010Supervisor: P. Van CayseeleDoctoral Committee: J. Konings, H. Vandenbussche,L. Sleuwaegen, A.Sembenelli

STIJN FERRARI, Empirical models of restricted entry:efficiency in ATM deployment and retail magazinedistribution, September 23, 2010Supervisor: F. VerbovenDoctoral Committee: E. Buyst, P. Van Cayseele, H. Degryse, G. Dhaene, H.W. Smith

DAMIAAN PERSYN, Essays on unionized labourmarkets in a globalizing world, May 28, 2010Supervisor: J. KoningsDoctoral Committee: M. Goos, J. Konings, L. Lauwers, P. Neary, H. Vandenbussche

STIJN VANORMELINGEN, Essays on empiricalindustrial organization, March 31, 2010Supervisors: J. Konings, P. Van CayseeleDoctoral Committee: F. Abraham, L. George, J. Van Biesebroeck, F. Abraham

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I Research projects

Decentralization and optimal management of publicdebt in a federal state, January 2007 - December 2010,funded by Flemish policy-research program on budgetaryand tax policy, supervised by D. Heremans and K. Algoed.

Koen Algoed, Dirk Heremans and Annelore Van Heckeexamined the financing of the Communities andRegions in the devolution process in Belgium. The cost of the ageing challenge for public financein Belgium is only to be absorbed by more activelabor market policies by the regions. The necessaryincentives for the regions to bring this about are,according to the insights of the new politicaleconomy approach of fiscal federalism, to beprovided by introducing more tax decentralizationtowards the regions.

Evolutions of the demand and supply on the labormarket, January 2008 – December 2011, funded byFWO, supervised by M. Goos

The principle objective is to test the predictivepower of the simple supply-demand framework inexplaining changes in the overall college premiumand overall wage inequality and to prove that asubstantial part of the variation in the economy-wide average return to college and college-highschool wage gap can be captured by an aggregatemodel of relative demand for and supply of college labor.

I External visits

Maarten Goos visited the Centre for EconomicPerformance at the London School of Economicsfrom October 2009 until February 2010.

Anna Salomons visited the Centre for EconomicPerformance at the London School of Economicsfrom October 2009 until February 2010.

I Seminars and Workshops

Patrick Van Cayseele held the Schumpeter Lectureson “Competition Policy and Intellectual Property”, on March 5-9, at the University of Girona, Spain.

Patrick Van Cayseele gave a seminar “The Effect ofAnti-Trust Law on the Dynamics of Price-CostMargins in Indonesia”, on April 12, ESMT, at theHumboldt University, Berlin, Germany.

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FACULTY MEMBERS:

Laurens Cherchye [1] Guido De Bruyne [2]André Decoster [3] Erwin Ooghe [4]Erik Schokkaert [5]

EMERITI:

Mark Eyskens Wim MoesenPaul Van Rompuy

POST DOCTORAL RESEARCHERS:

Koen Decancq Thomas DemuynckTom Truyts

PRE DOCTORAL RESEARCHERS:Nicolas Bouckaert Karen DecancqPieter Deleu Kris De SwerdtXavier Jara Yuemei JiJavier Olivera Angulo Thomas ProostJeroen Sabbe Willem SasKevin Spiritus Sebastian VanderlindenCarine Van de Voorde (30%) Pieter VanleenhoveEwout Verriest Dirk Verwerft

AFFILIATED RESEARCHER:

Tom Van Puyenbroeck

Laurens Cherchye is interested in the modeling of micro -economic choice behavior and in composite indicatorconstruction. For the modeling of microeconomic choicebehavior, he mainly focuses on nonparametric techniques foranalyzing rational consumption and production behaviour,and for the latter, he mainly focuses on endogenous weightingmethods for measuring multidimensional policy performance.

Guido De Bruyne is doing research on macroeconomicoptimizing models of imperfect competition with sticky pricesand (or) wages. Within this general framework, he focuseson the welfare analysis of alternative monetary policy rules,and of various institutional arrangements; for example theregulation in goods and labor markets.

André Decoster is interested in income (re)distribution, morespecifically the measurement of inequality and poverty, andthe redistributive effects of direct and indirect taxes andsocial security. The analysis rests on the use of microdataand on the methodology of micro simulation. The measurementissues are also applied to the topical subject of world inequality.

Erwin Ooghe is doing research in social choice and publiceconomics. In social choice, he looks at the characterizationand application of welfare, inequality and poverty measures.In public economics he mainly focuses on (optimal) taxationand education policies.

Erik Schokkaert is interested in welfare economics and inpublic economics. In welfare economics he studies differentnotions of social welfare and economic justice and uses surveyresearch to see whether these notions are accepted by thepopulation. In public economics he focuses on the trade-offbetween justice and efficiency and on the role of the govern -ment with respect to taxation, health and social security.

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I Normative measurement theory

Karen Decancq continued her research on the evaluationof unfair inequalities by building a structural model identifyingand estimating the technologies of skill formation. Cognitiveand noncognitive skills, as well as investments in skillformation are modeled as low dimensional latent variablesof a dynamic factor model explaining skills. For the empiricalestimation of the model, data from the National ChildDevelopment Study are used. Starting from such astructural model will make it possible to close part of thegap between the educational literature on explainingdifferences in educational investment and resulting humancapital and the normative literature on unfair inequalities.

Together with Marc Fleurbaey (CERSES, Paris), ErikSchokkaert analyzed the welfare economic foundations ofmeasuring inequity in health and health care. Erik Schokkaert,Carine Van de Voorde, Marc Fleurbaey and StéphaneLuchini (GREQAM, Marseille) explored the application ofthe concept of equivalent income in the context of health.Their empirical application is based on data that have beencollected by a representative survey in France. With Peter Haanof DIW Berlin, André Decoster applied this “equivalentincome” approach to design new welfare measures for theassessment of policy changes in tax benefit models inducingchanges in the labor market. Koen Decancq studied withMarc Fleurbaey and François Maniquet (CORE, UCL) the“equivalent income” approach in the context of themeasurement of multidimensional poverty. Erwin Oogheanalyzes a similar problem, but allows for a more flexiblesoft cut based on a notion of partial compensation/responsibility into a first-best income tax model. He providetwo results, which generalize the key idea in this literature.

Together with Wulf Gaertner (University of Osnabrück), Erik Schokkaert wrote a book on “Empirical Social Choice”,which will be published by the Cambridge University Press.In this book they investigate to what extent different economictheories of distributive justice are supported by lay respondentsin questionnaire experiments. The results strongly suggestthat welfarist approaches do not capture the basic intuitionsin society.

Koen Decancq continued his work on the measurementof multidimensional inequality. With Erwin Ooghe he presenteda robust normative framework to answer the questionwhether the world moved forward between 1980 and2008 if non-income dimensions (longevity and education)are also included in the analysis. With Maria Ana Lugo(Oxford University), Koen Decancq investigated two multi -variate generalizations of the Gini inequality index and variousapproaches of selecting weights for the dimensions inmultidimensional welfare analysis. He studied the theoreticaland empirical applicability of copula-based techniques tomeasure dependence between the dimensions of well-being.In particular, he investigated the rearrangement underlyingmultivariate orderings of stochastic dominance on a Fréchetclass. Koen Decancq, André Decoster and Kristof Bosmans(Maastricht University) analyzed the differences betweenabsolute and relative views on global income inequality.

Erwin Ooghe, together with Kristof Bosmans (UniversiteitMaastricht) and Luc Lauwers (K.U.Leuven), characterizespoverty rankings with cardinal and ordinal attributes. Thenature of the attributes obliges to tailor some axioms (morespecifically, the transfer principles) to the measurementnature of some attributes. In addition, they do not imposea specific identification approach from the outset, and soidentification and aggregation follow jointly from the axioms.

I Microsimulation, social securityand welfare programs

André Decoster and Kris De Swerdt completedtheir research on the microsimulation model MIMOSIScommissioned by the FPS Social Security. The researchentailed further in-depth analysis of work (dis)incentivesinherent in the Belgian tax-benefit system, as well asthe exploration of integrating labor supply reactions inthe MIMOSIS-model itself. They started work on theestimation of the marginal cost of public funds forBelgium to quantify the efficiency effects of taxation.Kris De Swerdt and Kevin Spiritus were involved asnational modelers in implementing and updating theBelgian part of the EU-wide tax-benefit micro simulationmodel EUROMOD. André Decoster and Dirk Verwerftincorporated the effects of indirect taxes in redistri -bution analysis by means of the microsimulation modelEUROMOD. Within the FLEMOSI-project NicolasBouckaert, Koen Decancq, André Decoster, KevinSpiritus and Pieter Vanleenhove developed the newMEFISTO model, which extends EUROMOD for Flandersand provides a web-enabled access. Pieter Vanleenhoveestimated a labour supply model on the EU-SILC datato incorporate behavioral reactions into MEFISTO,while Nicolas Bouckaert started to study non take-upof minimum income protection to integrate non-take-upin microsimulation models such as EUROMOD andMEFISTO. André Decoster, Kris De Swerdt andWillem Sas used EUROMOD to evaluate proposals toreform the Special Finance Act for the Belgian Regionsand Communities.

Xavier Jara is interested in issues of justice in the contextof labor market outcomes, job satisfaction and laborsupply. His analysis consists of evaluating the effect ofnon-pecuniary job attributes on labor supply decisions,using discrete choice models. Based on EUROMOD,he developed a tax and benefit microsimulation modelfor the UK using waves 8, 9 and 10 from the BritishHousehold Panel Survey (BHPS). His current work focuseson behavioral microsimulation models with discretelabor supply in order to evaluate the changes in laborsupply elasticities once non-pecuniary job attributesare included in the estimation. Using the BHPS, he findssome evidence that labor supply elasticities vary whenfactors such as job insecurity are taken into account.

Javier Olivera Angulo analyzes the importance of socialnorms and intergenerational transfers within families.His theoretical work is meant to provide a better insightinto the future of intergenerational support in Latin America,including the optimal way to organize the pension system.He has also completed a project on “Recovering solidarityin the Peruvian pension system. A proposal for reform”,supported by the ACDI-IDRC Research Program andEconomic and Social Research Consortium (Peru),which has been published as a book in 2010. He andBlanca Zuluaga have been awarded a grant fromFundacion Carolina (Spanish Government) to study theeffects of a new non-contributory pension togetherwith changes in the personal income taxation in Peruand Colombia. They will develop a behavioralmicrosimulation model for that purpose. Furthermore,he is responsible for the Peruvian part in the globalproject of National Transfer Accounts, of which the aimis to estimate the effects of ageing on the public andprivate intergenerational transfers in 34 countries.

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Carine Van de Voorde continued her research on theoreticalaspects of risk adjustment in health insurance. More specifically,she finished her analysis of the potential of quantileregression as an alternative approach to conventional riskadjustment in reducing incentives for risk selection.Together with Erik Schokkaert she prepared a discussionpaper on the future of the Belgian health care system forRe-Bel (Rethinking Belgium).

Erik Schokkaert (with lawyers Stephan Callens and DiegoFornaciari) wrote a book on the application of competitionlaw to the hospital sector. The main idea of the book is toemphasize that competition law does indeed apply to thehealth care sector, but that a clever application can help toreach a good balance between competition and solidarity.

Erik Schokkaert participated in two discussion groups ofthe interdisciplinary think tank Metaforum of the K.U.Leuven;one on the increasing use of psychopharmaceuticals, the otheron the socioeconomic aspects of obesity. Tom Truytspartici pated in the former, Carine Van de Voorde in the latter.

Frank Vandenbroucke, together with Pieter Deleu, set upa study on the effectiveness of the 2nd pension pillar as aninstrument for social protection in Belgium. To this end,they linked administrative data on careers and socio-economic positions for blue-collar workers to data on theirsavings under occupational pension schemes at the sectorallevel. The goal is to provide more insight into the importanceof insurance and solidarity mechanisms in these schemes,and to identify possible shortfalls in social protection.

Nicolas Bouckaert obtained an FWO grant to analyze non-take-up behavior in welfare programs. He will extend currenteconomic models with key insights of behavioral economics.

Erwin Ooghe and Andreas Peichl (IZA, Bonn) introducefairness in a tax-benefit scheme which is based on severalcharacteristics which differ in terms of the degree of control,i.e., the extent to which it can be changed by exertingeffort. Two testable predictions result and are tested for 26 European countries (using EU-SILC data) and the US(using CPS data). First, in line with the theory, they find arobust tendency in all countries to compensate more forthe uncontrollable composite characteristic (based on sex,age and disability in their study) compared to the partiallycontrollable one (based on family composition, immigrationstatus, unemployment and education level). Second, they alsoestimate whether the tax-benefit schemes in the differentcountries can be considered fair. Only the Continental countriesFrance and Luxembourg pass the fairness test, whereasthe Baltic and Anglo-Saxon countries (including the US)perform the worst.

Dirk Verwerft started a study of the effect of providing aguaranteed nationwide income supported by a shift in taxbase from labor to consumption. The redistributive powerof the current system is taken as an expression of socialpreference and, as such, kept constant. The goal is topicture the efficiency effect of introducing this tax system.In this context, microsimulation techniques are applied topredict changes in consumer and labor market behavior inresponse to tax changes.

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Koen Decancq studies, together with Andreas Peichl(IZA, Bonn) and Philippe Van Kerm (CEPS/INSTEAD),the role of changes in correlation structure betweenmale and female earnings on the increased householdearnings distribution. This effect is quantified by thecomparison of the observed joint distribution with acounterfactual joint distribution constructed with acopula-based approach where the correlation structurehas been kept fixed over time, but where the male andfemale earnings distributions have been adjustedaccordingly.

I The foundations of the welfare state

Tom Truyts investigated the interaction betweendiversity and public support for redistribution. With ErikSchokkaert, he studied the impact of social structureon the perceived relative importance of various incomedeterminants to explain variations in the support forredistribution. Also with Erik Schokkaert, he studiedthe origins of group chauvinism and its implications forsolidarity. With Friederike Mengel (University of Maastricht)he examined the formation of social groups whenconsumers care both about group quality and beingsuperior in a group. He also continued to investigatethe implications of identity driven consumption foroptimal taxation, as well as the dependence of costlysignalling on the quality of alternative information sourcesin stochastic signaling games. With Maarten Van Dijck(KADOC), he studied the determinants of representatives’voting behavior in Belgium’s 19th century agriculturaltrade liberalization.

Yuemei Ji studies the importance of the psychologicaltrait “internal locus of control” on schooling behaviorand performance. Using the Add Health data from theU.S., she finds empirical evidence that locus of control(indicated as individual belief in hard working) significantlyinfluences academic performance and future investmentchoice in higher education. Moreover, the academicperformance at school positively influences individualbelief in hard working. Good academic performancereinforces the internal locus of control while bad perfor -mance weakens the internal locus of control. This positivefeedback mechanism generates self-reinforcing dynamicsbetween academic performance and belief in hardwork, which can intensify the influences of initial individualor environmental factors.

Erwin Ooghe and Erik Schokkaert set off from theconcern that school accountability will lead to an inequitabletreatment of schools and create perverse incentives forcream-skimming, if the performance measure used doesnot correct for pupil characteristics. They apply the theoryof fair allocation to illustrate under which restrictions ofthe education production function it is possible to rewardschools and avoid cream-skimming. They also show,using Flemish data, how the proposed funding schemecan be implemented. Correcting for pupil characteristicshas a strong impact on the subsidies (and on the underlyingperformance ranking) of schools.

Erwin Ooghe and Yuemei Ji set up a project to estimatethe cognitive effects of additional EEO (equal educationalopportunity)-resources in Flanders using a regressiondiscontinuity design. The optimal bandwidth and the orderof the polynomial of the control function is done viacross-validation. Preliminary results show that the effects

65Public Economics

on mathematics, reading and spelling are positive, but often not significant. In addition, effects tend to be strongerin the second period of EEO-funding (2005-2008) andstudents with a higher initial level seem to gain more from it.

Erik Schokkaert (together with Bert Weemaes (ResearchCenter Marketing)) analyzed the motivations of volunteerson the basis of data from SHARE. They found that thetheoretical predictions following from an impure public goodsmodel are not rejected by these data.

Koen Decancq and Erik Schokkaert have investigatedthe role of informal and formal social interaction (i.e. voluntaryinvolvement in civil society associations) on the willingnessto redistribute or solidarity. They have found that voluntaryassociations are important catalysts of pro-social behavior.

I Nonparametric analysis of choicechoice behavior and efficiency

Laurens Cherchye, Thomas Demuynck, Jeroen Sabbeand Ewout Verriest have been exploring the use of non -parametric revealed preference methodology for analyzingconsumption behavior. Their focus is on the use of revealedpreference techniques for analyzing the so-called ‘collective’model of household consumption. With Bram De Rockand Frederic Vermeulen, Laurens Cherchye conducted arevealed preference analysis of consumption behavior ofRussian households and considered the empirical implicationsof the collective consumption model under non-convexpreferences of the individual household members. WithBram De Rock, Laurens Cherchye and Thomas Demuynckconducted a revealed preference analysis of household

consumption behavior characterized by different degreesof cooperation. Jeroen Sabbe worked on empirical applicationsof the revealed preference methodology for addressingwelfare-related questions that are specific to the collectivemodel (i.e. essentially nonparametric sharing rule recovery).Ewout Verriest worked on the revealed preference analysisof intertemporal household decisions in the context of thecollective consumption model.

Laurens Cherchye, Kristof De Witte and Jeroen Sabbecontinued their research on nonparametric production andefficiency analysis, also known as Data Envelopment Analysis(DEA). Together with Bram De Rock, Filip Roodhooft andBart Dierynck, Laurens Cherchye and Jeroen Sabbeworked on the incorporation of Activity Based Costing(ABC) techniques into state-of-the-art efficiency measurementmodels. With Tom Van Puyenbroeck, Laurens Cherchyesuggested semi-radial technical efficiency analysis to accountfor input and output mix considerations in technicalefficiency assessments. Together with Timo Kuosmanen,Mika Kortelainen and Timo Sipilainen, Laurens Cherchyesuggested a methodology that allows for firm and industryprofit efficiency analysis under incomplete price information.Together with Erwin Ooghe and Kristof De Witte,Laurens Cherchye proposed a methodology that allowsone to account for equity considerations in the efficiencyanalysis. They have applied this methodology to evaluatethe performance of Belgian schools.

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Kristof De Witte used DEA techniques to model theperformance of pupils. Together with Mika Kortelainenhe tested the influence of exogenous characteristics fora large set of British pupils (from the Pisa data set). In collaboration with Emmanuel Thanassoulis, GarySimpson, Giuliana Battisti and Andrew Charlesworth-May,he estimated the school and pupil related effects. With Marijn Verschelde, he examined the influence of socialsegregation on student performance in the Netherlands.Next, Kristof De Witte used nonpara metric techniquesto examine the drivers of performance in the drinkingwater sector. Together with David Saal, he decomposedthe profits of drinking water utilities in various price andquantity effects. With Elbert Dijkgraaf he examined thebenefits of mergers in regional mono polistic markets.Rui Marques and Kristof De Witte investigated the useof light handed benchmarking as an alternative regulatoryframework. Finally, Kristof De Witte and Wim Moesenuse a specially tailored non-parametric model andreinterpret the family size as a proxy for preferences onthe size of the public sector.

I Rik Branson Chair “Civil Society”

Erik Schokkaert, Koen Decancq and Tom Truytsanalyzed the motivations of the people that are activein civil society organizations. It turns out that the commit -ment of these volunteers is mainly based on feelings ofwarm glow and “deontological altruism”. Civil societyorganizations can play an important role in sustainingthe social fabric of society. On December 3rd, 2010, a Symposium “Civil Society, Diversity and Solidarity”was organized, with Peer Scheepers (University ofNijmegen) and Erik Schokkaert as keynote speakers.

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I Publications


BOSMANS, K., LAUWERS, L. (2010), Lorenzcomparisons of nine rules, International Journal of Game Theory, accepted.

CANOY, M., LERAIS, F., SCHOKKAERT, E. (2010),Applying the capability approach to policy-making:the impact assessment of the EU-proposal on organdonation, The Journal of Socio-Economics 39, p. 391-399.

CHERCHYE, L., DE ROCK, B., VERMEULEN, F.(2010), The revealed preference approach tocollective consumption behavior: testing and sharingrule recovery, The Review of Economic Studies,accepted.

CHERCHYE, L., DE ROCK, B., VERMEULEN, F.(2010), An Afriat theorem for the collective model of household consumption, Journal of EconomicTheory 145(3), p. 1142-1163.

CHERCHYE, L., DE WITTE, K., OOGHE, E.,NICAISE, I. (2010), Equity and efficiency in privateand public education: a nonparametric comparison,European Journal of Operational Research 202(2), p. 563-573.

CHERCHYE, L., KUOSMANEN, T., LELEU, H.(2010), Technical and economic efficiency measuresunder short run profit maximizing behavior,Recherches Economiques de Louvain - LouvainEconomic Review 76(2), p. 163-173.

CHERCHYE, L., DEMUYNCK, T., DE ROCK, B.(2010), Revealed preference of noncooperativehousehold consumption, The Economic Journal,accepted.

DECANCQ, K., OOGHE, E. (2010), Did the worldmove forward? A robust multidimensional evaluation,Economics Letters 107(2), p. 266-269.

DE WITTE, K., ROGGE, N. (2010), To publish or not to publish? On the aggregation and drivers ofresearch performance, Scientometrics, accepted.

DECOSTER, A., LOUGHREY, J., O’DONOGHUE, C.,VERWERFT, D. (2010), How regressive are indirecttaxes. A microsimulation analysis for five Europeancountries, Journal of Policy Analysis andManagement 29(2), pp. 326-350.

DECOSTER, A., LOUGHREY, J., O’DONOGHUE, C.,VERWERFT, D. (2011), Microsimulation of indirecttaxes, International Journal of Microsimulation,accepted.

DEMUYNCK, T., (2010), An (almost) unbiasedestimator for the S-Gini index, Journal of EconomicInequality, accepted

DE WITTE, K., MARQUES, R. (2010), Designingperformance incentives, an international benchmarkstudy in the water sector, Central European Journalof Operations Research 18(2), p. 189-220.

DE WITTE, K., DIJKGRAAF, E. (2010), Mean andbold? On separating merger economies fromstructural efficiency gains in the drinking watersector, Journal of the Operational research society61(2), p. 222-234.

DE WITTE, K., GEYS, B. (2010), Evaluating efficientpublic good provision: theory and evidence from ageneralised conditional efficiency model for publiclibraries, Journal of Urban Economics, accepted.

DE WITTE, K., ROGGE, N. (2010), Dropout fromsecondary education: all’s well that begins well,European Journal of Education, accepted.

DE WITTE, K., MARQUES, R. (2010), Incorporatingheterogeneity in non-parametric models: a metho -dological comparison, International Journal ofOperational Research 9(2), p. 188-204.

DE WITTE, K., THANASSOULIS, E., SIMPSON, G.,BATTISTI, G., CHARLESWORTH-MAY, A. (2010),Assessing pupil and school performance by non-parametric and parametric techniques, Journal of the Operational research society (61), p. 1224-1237.

DE WITTE, K., MARQUES, R. (2010), Big andbeautiful? On non-parametrically measuring scaleeconomies in non-convex technologies, Journal ofProductivity Analysis, accepted.

DE WITTE, K., SAAL, D. (2010), Is a little sunshine allwe need? On the impact of sunshine regulation on profits,productivity and prices in the Dutch drinking water sector,Journal of Regulatory Economics 37(3), p. 219-244.

DE WITTE, K., MARQUES, R. (2010), Influentialobservations in frontier models, a robust non-oriented approach to the water sector, Annals ofOperations Research 181(1), p. 377-392.

DE WITTE, K., MOESEN, W. (2010), Sizing thegovernment, Public Choice 145(1), p. 39-55.

DE WITTE, K., MARQUES, R. (2010), Towards abenchmarking paradigm in the water and sewerageservices, Public Money & Management 30(1), p. 42-48.

EMROUZNEJAD, A., DE WITTE, K. (2010),COOPER-framework: a unified standard process for non-parametric projects, European Journal ofOperational Research, accepted.

KUOSMANEN, T., KORTELAINEN, M., SIPILAINEN, T.,CHERCHYE, L. (2010), Firm and industry level profitefficiency analysis under incomplete price data: anonparametric apporach based on absolute anduniform shadow prices, European Journal ofOperational Research 202(2), p. 584-594.

MARQUES, R., DE WITTE, K. (2010), Is big better?On scale and scope economies in the Portuguesewater sector, Economic Modelling, accepted.

SCHOKKAERT, E., VAN OURTI, T., DE GRAEVE, D.,LECLUYSE, A., VAN DE VOORDE, C. (2010),Supplemental health insurance and equality of accessin Belgium, Health economics 19(4), p. 377-395.

SIMOES, P., DE WITTE, K., MARQUES, R. (2010),Regulatory structures and operational environment in the Portuguese waste sector, Waste Management30(6), p. 1130-1137.

TALLA NOBIBON, F., CHERCHYE, L., DE ROCK, B.,SABBE, J., SPIEKSMA, F. (2010), Heuristics fordeciding collectively rational consumption behavior,Computational Economics, accepted.

TRUYTS, T. (2010), Social status in economic theory,Journal of Economic Surveys 24(1), p. 137-169.

VAN DIJK, M. and TRUYTS, T. (2011), Ideas, interestsand politics in the case of Belgian corn law repeal,1834-1873, Journal of Economic History, accepted.

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ARTICLES IN OTHER SCIENTIFIC JOURNALS

CLOCHET, J., COSAERT, S., CHERCHYE, L. (2010),Store environment and advertising: investigating two manipulative forces from the supermarket,Review of Business and Economics 55, p. 90-106.

DECOSTER, A., VALENDUC, C., VERDONCK, M.(2010), L’autonomie fiscale des régions en Belgique :evaluation et perspectives, DocumentatiebladMinisterie van Financiën 69(4), p. 167-191.

DECOSTER, A., DE SWERDT, K., ORSINI, K. (2010),A Belgian flat income tax: effects on labour supplyand income distribution, Review of Business andEconomics 55(1), p. 23-54.

OLIVERA, J. (2010), Recuperando la solidaridad enel sistema peruano de pensiones. Una propuesta dereforma, Revista Economía y Sociedad 74, Mayo 2010.

THYSSEN, G., DE WITTE, K., GROOT, W., MAASENVAN BRINK, H. (2010), De stereotypes van hetvroegtijdige schoolverlaten, Impuls voor Onderwijs -begeleiding, accepted.


CHERCHYE, L., DE ROCK, B., VERMEULEN, F.(2010), Revealed preference tests for collectivebehavior, in MOLINA, J. (eds.), Household EconomicBehaviors, Berlin, Germany: Springer Verlag.

DECOSTER, A., VALENDUC, C. (2011), L’impôt et lapolitique fiscale en Belgique. Editions de l’Universitéde Bruxelles, forthcoming.

DECOSTER, A., VALENDUC, C. (2011), Belastingenen fiscaal beleid in België. Leuven: Acco, forthcoming.

DECOSTER, A. (2010), Verdeling en herverdeling, in DECOSTER, A. (eds.), Economie, een inleiding, p. 429-471. Leuven: Universitaire Pers Leuven.

DECOSTER, A., LOUGHREY, J., O’DONOGHUE, C.,VERWERFT, D. (2010), Incidence and welfare effectsof indirect taxes, in COUCH, K., BESHAROV, D.(eds.), European measures of income and poverty:lessons for the U.S. - International Policy ExchangeSeries. New York (USA): Oxford University Press USA.

DECOSTER, A. (2010), Vraag en aanbod, in DECOSTER, A. (eds.), Economie, een inleiding, p. 107-129. Leuven: Universitaire Pers Leuven.

DECOSTER, A. (2010), Waarover en hoe denkeneconomen?, in DECOSTER, A. (eds.), Economie, een inleiding, p. 27-73. Leuven: Universitaire Pers Leuven.

DECOSTER, A. (2010), Elasticiteiten en schokken, in DECOSTER, A. (eds.), Economie, een inleiding, p. 133-172. Leuven: Universitaire Pers Leuven.

DECOSTER, A. (2010), Het BBP doorheen tijd en ruimte,in DECOSTER, A. (eds.), Economie, een inleiding, p. 531-569. Leuven: Universitaire Pers Leuven.

FORNACIARI, D., CALLENS, S., SCHOKKAERT, E.(2010), Ziekenhuizen, mededingingsrecht en recht op kwaliteitsvolle zorg. Antwerpen: Intersentia.

GAERTNER, W., SCHOKKAERT, E. (2010), EmpiricalSocial Choice. Cambridge University Press, forthcoming.

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OLIVERA ANGULO, J. (2010), Recuperando lasolidaridad en el sistema peruano de pensiones. Una propuesta de reforma. Lima (Peru): Consortiumof Economic and Social Research (CIES) - Universityof Piura.

SCHOKKAERT, E. (2010), Mensen, instituties en markten, in DECOSTER, A. (eds.), Economie, een inleiding, p. 75-104. Leuven: Universitaire Pers Leuven.

SCHOKKAERT, E. (2010), De consument, in DECOSTER, A. (eds.), Economie, een inleiding, p. 177-201. Leuven: Universitaire Pers Leuven.

VAN ROMPUY, P. (2010), Measurement and practiceof fiscal flows: the case of Belgium, in BOSCH, N.,ESPASA, M., SOLLÉ OLLÉ, A. (eds.), The politicaleconomy of inter-regional fiscal flow, p. 108-124.Cheltenham (UK): Edward Elgar.

BOOKS, INTERNATIONALLY RECOGNIZED SCIENTIFIC PUBLISHER; AS EDITOR

DECOSTER, A. (2010), Economie, een inleiding.Leuven: Universitaire Pers Leuven.


CASTEELS, M., DANCKAERTS, M., DE LEPELEIRE,J., DEMYTTENAERE, K., LAEKEMAN, G., LUYTEN,P., PATTYN, B., SCHOKKAERT, E., TRUYTS, T.(2010), Het toenemend gebruik van psychofarmaca,Metaforum visietekst 1, 1-28 pp: WerkgroepMetaforum Leuven.

CHERCHYE, L., DEMUYNCK, T., DE ROCK, B.(2010), Testable implications for the Bresnahan-Laumodel of market competition, CES Discussion PaperSeries 10.11, 1-7 pp. Leuven: K.U.Leuven.

CHERCHYE, L., DEMUYNCK, T., DE ROCK, B.(2010), Noncooperative household consumption with caring, CES Discussion Paper Series 10.34, 1-38 pp. Leuven: K.U.Leuven.

CHERCHYE, L., DE ROCK, B., SABBE, J.,VERRIEST, E. (2010), Commitment in intertemporalhousehold consumption: a revealed preferenceanalysis, CES Discussion Paper Series 10.33, 1-43 pp. Leuven: K.U.Leuven.

CHERCHYE, L., DE ROCK, B., VERMEULEN, F. (2010),Married with children: a collective labor supply modelwith detailed time use and intrahousehold expenditureinformation, 1-30 pp, CES Discussion Paper Series10.24. Leuven: K.U.Leuven.

DECANCQ, K. (2010), Copula-based orderings ofmultivariate dependence, CES Discussion PaperSeries 10.08, 1-24 pp. Leuven: K.U.Leuven.

DECANCQ, K., LUGO, M. (2010), Weights in multi -dimensional indices of well-being: an overview, CESDiscussion Paper Series 10.06, 1-29 pp. Leuven:K.U.Leuven.

DECOSTER, A., PROOST, S. (2010), Waarom eensplitsing van de personenbelasting geen goed ideeis, CES Leuvens Economisch Standpunt 2010/133,1-22 pp. Leuven: K.U.Leuven.

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DECOSTER, A., DE SWERDT, K. (2010), Feasibilitystudy: how to integrate labour supply in the Belgiantax benefit model MIMOSIS?, Final Report (Part 3) of the project “Belasting op arbeid en mogelijkearbeidsaanbodreacties” funded by FPS SocialSecurity Leuven, K.U.Leuven CES, 1-11 pp.

DECOSTER, A., DE SWERDT, K., VAN CAMP G.(2010), Modelling labour supply and policy reform inthe Belgian tax benefit model MIMOSIS, Final Report(Part 2) of the project “Belasting op arbeid enmogelijke arbeidsaanbodreacties” funded by FPSSocial Security Leuven, K.U.Leuven CES, 1-33 pp.

DECOSTER, A., DE SWERDT, K., VAN CAMP G.(2010), Effective average and marginal tax rates inthe Belgian tax benefit system, Final Report (Part 1)of the project “Belasting op arbeid en mogelijkearbeidsaanbodreacties” funded by FPS SocialSecurity Leuven, K.U.Leuven CES, 1-59 pp.

DECOSTER, A., HAAN, P. (2010), Empirical welfareanalysis in random utility models of labour supply.CES Discussion Paper Series 10.30, 1-36 pp.Leuven: K.U.Leuven CES and IZA-paper DP 5301.

DECOSTER, A., DE SWERDT, K. (2010), Effectenvan een voorgestelde regionale inkomstenbelastingop de regionale ontvangsten, CES LeuvenseEconomische Standpunten 2010/131, 1-18 pp.Leuven: K.U.Leuven.

FLEURBAEY, M., LUCHINI, S., SCHOKKAERT, E.,VAN DE VOORDE, C. (2010), Evaluation despolitiques de santé: pour une prise en compteéquitable des intérêts des populations, mimeo.

OOGHE, E. (2010), Responsabilisering voor leer achterstand?, CES Leuvense EconomischeStand punten 2010/129, 1-21 pp. Leuven: K.U.Leuven.

OOGHE, E., PEICHL, A. (2010), Fair and efficienttaxation under partial control: theory and evidence,CES Discussion Paper Series 10.32, 1-46 pp.Leuven: K.U.Leuven.

OOGHE, E. (2010), Partial compensation/responsibility, CES Discussion Paper Series10.21, 1-12 pp. Leuven: K.U.Leuven.

SCHOKKAERT, E., VAN DE VOORDE, C. (2010),Belgium’s health care system: should the communities/regions take it over? Or the sickness funds? LeadDiscussion Text Re-Bel.

TRUYTS, T. (2010), Signaling and indirect taxation,CES Discussion Paper Series 10.09, 1-30 pp.K.U.Leuven.

VAN ROMPUY, P. (2010), Het dalend aandeel vanarbeid in het nationaal inkomen: oorzaken en gevolgen,CES Leuvense Economische Standpunten 2010/130.Leuven: K.U.Leuven.


DEMUYNCK, T. (2010), The computational complexityof rationalizing boundedly rational choice behaviour,CES Discussion Paper Series 10.23, 1-27 pp.K.U.Leuven.

DE WITTE, K., ROGGE, N. (2010), Evaluatie vanonderzoeksprestaties, in Economisch StatistischeBerichten 95 (4581), p. 170-173.

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EXTERNAL REPORTS

CASTEELS, M., DANCKAERTS, M., DE LEPELEIRE,J., DEMYTTENAERE, K., LAEKEMAN, G., LUYTEN,P., PATTYN, B., SCHOKKAERT, E., TRUYTS, T.(2010), Het toenemend gebruik van psychofarmaca,Metaforum K.U.Leuven: Visietekst 1.

DECANCQ, K. (2010), Copula-based orderings ofmultivariate dependence, CORE DP 2010/12.

DECOSTER, A., HAAN, P. (2010), Empirical welfareanalysis in random utility models of labour supply, IZADiscussion paper No. 5301, 1-36 pp. Bonn (Germany):Forschungsinstitut zur Zukunft der Arbeit - IZA.

OLIVERA ANGULO, J. (2010), Welfare, inequality and financial consequences of a multi-pillar pensionsystem. A Reform in Peru, ECINEQ WP series 2010-152, 1-28 pp. Palma de Mallorca (Spain): Society forthe Study of Economic Inequality (ECINEQ).

SCHOKKAERT, E., DECOSTER, A., LEFEVRE, J.,PATTYN, B., SCHEERDER, J., SEGERS, Y.,THOMIS, M., VAN DEN BERGH, O., VAN DEVOORDE, C., VANSANT, G. (2010), Socio-economische verschillen in overgewicht, Metaforum K.U.Leuven: Visietekst 3.


LAURENS CHERCHYE is associate editor of Journalof Productivity Analysis.

ERIK SCHOKKAERT is associate editor of SocialChoice and Welfare, Economics and Philosophy,Health Policy and Recherches Economiques de Louvain.


CARINE VAN DE VOORDE, Essays on risk adjustmentin health insurance, September 24, 2010.SUPERVISOR: Erik SchokkaertDOCTORAL COMMITTEE: S. Proost, G. Dhaene, F.Verboven, W. van de Ven, P.-Y. Geoffard

BLANCA ZULUAGA DIAZ, Essays on schoolinginvestment decisions and poverty, September 3, 2010SUPERVISOR: Erik SchokkaertDOCTORAL COMMITTEE: P. De Grauwe, G.Dhaene, A. Decoster, F. Ferreira, J.-M. Baland

JEROEN SABBE, Revealed preference analysis ofconsumption and production behavior: Applicationsof the collective model, December 14, 2010.SUPERVISOR: Laurens CherchyeCO-SUPERVISOR: B De RockDOCTORAL COMMITTEE: R. Blundell, K. Pendakur,O. Donni, E. Schokkaert, F. Vermeulen

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I Research projects

Nonparametric analysis of consumption andproduction behavior: applications of thecollective model, October 2006-October 2010,Doctoral Fellowship of the Research FoundationFlanders ('Aspirant FWO Vlaanderen'), Jeroen Sabbe

Jeroen Sabbe develops methodological tools totest nonparametric revealed preference methodsand the collective model of household behavior onreal-life data. The collective model originated withthe contributions of Chiappori (1988, 1992) andBrowning and Chiappori (1998); the revealedpreference approach has been developed by Varian(1982, 2006), following Samuelson (1948), Afriat(1973), and many others. Cherchye, De Rock andVermeulen (2007) brought these two lines of researchtogether by developing nonparametric testablerestrictions for the collective model. The specificfocus of the PhD project is on the empiricalapplication of both the collective model andnonparametric techniques. This entails developingefficient computer algorithms to test data consis -tency with the behavioral models; extending thesealgorithms to (i) recover information about the differentcomponents of the analyzed choice problem and(ii) predict choice behavior in new situations; andincorporating nonparametric measures for the statis -tical ‘power’ and ‘goodness-of-fit’ of the model(starting from the concepts proposed by Bronars(1987), Andreoni and Harbaugh (2006), and Varian(1985, 1990); see also Cherchye and Vermeulen(2008)). In addition to these research questionssituated in the consumption analysis field, the linktoward production analysis is made by incor poratingthe insights from consumption analysis to the fieldof efficiency analysis (DEA).

Economic Policy and Finance in the Global Economy:Equilibrium Analysis and Social Evaluation:January 2007 – December 2011, IUAP-PAI project fundedby Belgian Science Policy, supervised by E. Schokkaert(other Belgian partners: CORE, IRES, SHERPPA,FUNDP Namur and ECARES; foreign partners: LSE,Marseille, Toulouse, Maastricht).

The general purpose of the project is to develop anduse economic, social-choice, finance and game-theoretical concepts to address the challenges ofglobalization for developed and developing countriesand to normatively evaluate proposed policies.Part I of the project is devoted to the study and thedesign of markets and social mechanisms, involvingnetworks and coalitions, bargaining procedures andconflict resolution. General equilibrium modeling oflong-term issues in a macro and internationalperspective, as well as computation methods forapplications are also included in this part. The secondpart - on social evaluation and public governance- is concerned with normative issues and politicalfeasibility considerations. New equity criteria andtheir compatibility with collective efficiency indifferent types of social situations are considered.This is done in different settings and for differentissues: poverty and social protection, educationalsubsidies, mobility, pollution, multidimensionalinequality and intergenerational equity. The third partis devoted to international economics and finance.It concerns trade policy, competition policy in theEU, the spatial redistribution of economic activitiesand international migration. From an econometricpoint of view, it aims at developing quantitative toolsto analyze investment decisions in the presence ofinterest rate and inflation risk (which may differ betweencountries) and at understanding the differences ofstock market microstructures across competingmarkets (for instance, European markets) as well asthe interrelations between financial variables generatedfrom these markets (for instance the lead-lag effectbetween Asian, American and European markets).

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sThe impact of institutions on firm’s accounting qualityand cost of capital, January 2008 – December 2012,funded by Research Foundation Flanders, supervisedby Ann Gaeremynck and Laurens Cherchye.

The purpose of the study is to investigate the linkbetween the quality of a country’ s institutionalframe work, a firm’ s accounting quality and a firm’ scost of capital. This study contributes to the existingliterature by investigating the effect of institutionalcharacteristics and accounting standards on theaccounting quality and the cost of capital, whereasmost existing studies focus exclusively on either oneof the two. The results of this study will be highlyrelevant for the debate that is currently going on inthe EU; it should help us understand whether anEU-wide adoption of a global standard like IFRS is sufficient to get comparable accounting qualityevery where in the EU or, alternatively, whether afurther alignment of the institutional environment isneeded for that purpose. The original metho dologicalcontribution of this study is that it uses DEA-based(‘benefit-of-the-doubt’) composite indicators formeasuring the degree of (multi dimensional) insti -tutional quality at the country level and the degreeof (multi dimensional) accounting quality at the firmlevel, as we will argue. This should provide a moretransparent overall picture of the relations that wewant to investigate.

Nonparametric analysis of collective consumptionand production behavior: methodological advancesand applications, October 2008 – September 2012,funded by BOF, supervised by L. Cherchye.

The recently developed collective model ofhousehold consumption explicitly accounts for themulti-person nature of multi-person households. It considers observed household consumption asthe Pareto-efficient outcome of a within-householdbargaining process between the different householdmembers. Existing methodology for analyzing collec tive

household consumption is typically parametric innature, and thus builds on (usually non-verifiable)parametric structure that is imposed on the house -hold member utilities and the within-householdconsumption process. This project focuses on thecomplementary nonparametric ‘revealed preference’methodology for empirical analysis, which does notrequire such a priori structure and thus maximallyavoids specification error. Its purpose is twofold:(1) it wants to design new methodological toolsthat reconcile the attractive philosophy of thenonparametric orientation with the complex natureof many real-life choice problems; and (2) it wants toapply the nonparametric metho dology for analyzingreal-life choice behavior, to address specific researchquestions that are relevant from a practical (e.g.policy) point of view. In doing so, it focuses notonly on ‘consumer behavior’ but also on ‘producerbehavior’; the con cep tual analogy between the eco -nomic modeling of the two types of behaviorallows the project to benefit from mutual cross-fertilization. While we intend applications of boththe production and the consumption methodology,we emphasize two specific application areas forcollective con sumption models. First, consumptionapplications that use real-life data will focus onwelfare-related questions that are specific to thecollective model; the few existing studies of theseissues persistently used parametric specificationsof the collective model. Second, consumptionapplications that use experimental data focus onuncovering within-household (or, more generally,within-group) choice mechanics that underlieobserved choice behavior; this complementsexisting studies that typically focus on theindividual behavior of single decision makers.

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Identity, Social Groups and the Welfare State, January2009-December 2012, funded by FWO (ResearchFoundation Flanders), supervised by Erik Schokkaert.

In recent decades the institutions of the welfare statehave come under pressure. In times of globalization,with its economic integration and increased migration,individual identity (social, ethnic, religious, ideological,national, cultural…) seems to play a more prominentrole as a determinant of individual behavior.People tend to identify themselves with one or moresocial groups, and behave according to the rules,norms or behavioral patterns of the groups theybelong to. A variety of empirical evidence suggeststhat cultural or ethnic diversity, at least in somecases, decreases the support for solidarity, trustand the provision of public goods within society.The project seeks to build a solid understanding ofthe dynamics of identity and social groups and theirinteraction with the welfare state, to tackle thechallenges which migration and cultural diversity raisefor social policy and for the welfare state. This projectseeks to study the importance of identity and socialgroup formation for the welfare state at three levels:• how does identity affect the formation and

functioning of social groups and organizations?• how do identity-driven social groups influence

individual behavior in general, and preferencesfor solidarity and the provision of public goodsin particular?

• how does the presence of different social groupsinteract with the welfare state and redistributivepolicy?

The testable predictions, which can be derivedfrom the (game) theoretical models will beempirically verified with data from the EuropeanSocial Survey and the World Values Survey.

Experimental analysis of collective consumptiondecisions, January 2009 – December 2012, fundedby Research Foundation Flanders, supervised byLaurens Cherchye, Sabrina Bruyneel, Bram De Rockand Siegfried Dewitte

This project analyzes group consumption decisionsby means of controlled laboratory experiments. In doing so, we adopt the collective model to analyzethe group decisions. In addition, we apply non -parametric ‘revealed preference’ methodology foranalyzing consumption behavior; it has been arguedthat this nonparametric ‘revealed preference’methodology is especially useful within an experi -mental context. Existing studies that use experimentaldata in combination with nonparametric ‘revealedpreference’ techniques focus on the individualbehavior of single decision makers; we complementthese existing studies by focusing on group behavior.Given the nature of the collective consumption model,our experimental studies will concentrate on thewithin-household (or within-group) choice mechanicsthat underlie the observed choice behavior. Firstly, we want to examine the bargaining processthat underlies the observed group consumption.For example, by experimentally manipulating theso-called ‘distribution factors’, it is possible toinvestigate their effect on the bargaining power ofdifferent group members. Next, a special focuswill be on the collective behavior of children. Forexample, we will study the cooperative (‘efficient’)nature of children’s collective decisions. Finally, wewill explore the usefulness of the collective model,which was originally presented for analyzing thejoint behavior of multiple decision makers, toanalyze the behavior of single decision makers interms of the ‘multiple selves’ approach to modelindividual decision behavior.

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Taxes on labor and possible labor supply reactions(FOD SZ), August 2009 – June 2010, funded by FPSSocial Security, supervised by André Decoster

This project is commissioned by the FPS SocialSecurity and its aim is twofold. The first aim is todescribe in detail the incentive effects inherent inthe Belgian tax-benefit legislation and its evolutionover time by means of effective average and marginaltax rates and participation tax rates. Marginal taxrates provide a measure of the monetary incentiveto increase labor supply for those already activeon the labor market, whereas participation tax ratesindicate the “profitability” of entering the labormarket from a previously inactive state. They areparticularly useful to identify so-called inactivitytraps, i.e. whether someone is financially better offby remaining inactive rather than entering thelabor market. The estimations are based on anadministrative dataset and make use of the micro -simulation model MIMOSIS – developed underAGORA projects AG/01/086 and AG/01/116. The results are compared with results of similaranalyzes for Belgium by the OECD. The secondaim of the project is to estimate labor supplymodels on the same administrative data and todescribe and implement a procedure to directlyintegrate the parameter estimates in the micro -simulation model MIMOSIS.

Testable implications of general equilibrium models:an integer programming approach, October 2009-September 2012, funded by Research FoundationFlanders, Thomas Demuynck

The Sonnenschein-Mantel Debreu theorem statesthat every real valued function of prices thatsatisfies Walras' law, continuity and homogeneityof degree zero is the excess demand function ofsome economy with at least as many agents ascommodities. This celebrated result led to the ratherdepressing viewpoint that general equilibrium isunable to generate falsifiable predictions. Brownand Matzkin (Testable restrictions on the equilibriummanifold, Econometrica, vol 64, 1996), however,showed that if we focus on the equilibriummanifold, and not on the excess demand function,then the pure exchange model has strong empiricalrestrictions. Their result uses the Tarski-Seiden bergtheorem. Although this theorem is very interestingfrom a theoretical perspective, it is not very compu -tational efficient. Moreover, the result of Brown andMatzkin also assumes that incomes are completelyobserved. This research tries to translate theBrown-Matzkin framework to an Integer Program -ming model. Although such a model can becomputationally problematic, it is still much moreefficient then the Tarski-Seidenberg algorithm.Moreover, the IP framework tends to be a veryuseful framework to derive heuristics that give aquick (but possibly inconclusive) answer to whetheror not the data satisfy the general equilibriumrestrictions and to relax the necessity concerningthe observability of the individual incomes. Further, it is also the intention to apply this IP frame -work to models with production, public goods,externalities and other collective choice models.

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Dynamic consumer behavior: collective rationalizationby using a nonparametric approach, October 2009- October 2011, Doctoral Fellowship of the ResearchFoundation Flanders ('Aspirant FWO Vlaanderen'),Ewout Verriest

There is a growing consensus that a realistic modelingof household consumption behavior must takeinto account preference heterogeneity within thehousehold. In many cases, the household decision- making process cannot be explained by therestrictive unitary framework, which models thehousehold as if it were a single decision maker.Many studies reject the empirical validity of theunitary model for multi-person household behavior.In addition, many household decisions are inherentlyintertemporal. For example, such intertemporal inter - dependence typically applies to decisions onfamily savings, investment in human capital,housing purchase, fertility decisions, ... This directlyextends to a consumption setting. In many cases,consump tion today has an impact on consump tiontomorrow and vice versa. This PhD project aims atdeveloping a methodology for revealed preferenceanalysis of intertemporal consumption decisionsof multi-person households. To account for the inter -temporal nature of household decisions, it adoptsthe life cycle model. Next, to account for the non-unitary nature of household decisions, it adoptsthe collective model. This model explicitly recognizesthat a multi-person household consists of multiplemembers (decision makers) with their ownpreferences. The model considers the observedhousehold consumption behavior as the result ofa within-household bargaining process betweenthese members. It (only) assumes that this processyields a Pareto efficient within-household allocation.Essentially, this must obtain a methodology thataims for powerful empirical analysis. The projectsalso aims at demonstrating this potential bymeaningful empirical applications.

FLEMOSI: a tool for ex ante evaluation of socio-economic policies in Flanders, January 2010 –December 2013, funded by IWT, supervised by AndréDecoster

This project is a coordinated effort to developsocio-economic ex ante policy evaluation tools forFlanders. There are mainly two kinds of modelsavailable to help assess the different impacts of apolicy change during its preparatory phase:aggregate economic models and microsimulationmodels (MSM). Aggregate economic models(macro-economic and general equilibrium models)assess the aggregate (or average) impacts of policymeasures on GDP, consumption, welfare etc. A micro-simulation model (MSM) aims to representthe effects of policy measures at the level of theindividual households. Since there is no micro -simulation model available for policy design inFlanders, our project mainly locates within the micro -simulation branch. However, one stream of theproject also explicitly aims to link the micro simulationmodel to a long term general equilibrium model ofthe Flemish economy and to integrate long termdemographic projections within the microsimulationmodel. In Stream 1 of the project we start from anarithmetic MSM which abstracts from behavioralreactions of the agents. An arithmetic MSM allowsthe calculation of taxes and benefits, and hencedisposable income after taxes, for all individualagents in the population. It permits to assess theimpact of the policy change on inequality, at therisk of being in poverty and also produces a firstround net budgetary cost of the reform. In Stream2 of this project we broaden the scope of theMSM by integrating personal income taxes, socialsecurity and indirect taxes into one application;and by including non cash income elements inindividual welfare (such as imputed rents, educationor health services, environmental quality andtransport quality elements).

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In Stream 3 of the project we construct behavioralmodels, such as take-up of social minima, laborsupply reactions, retirement decisions and savingsbehavior. The integration of these behavioral modelsallows one to compare the first round budgetaryimpact effect with the net budgetary effects afterincorporating behavioral feedback and, hence, to estimate the so-called ‘earning-back’ effects ofpolicy changes. Finally, instream 4 of the projectwe build links and feed backs between the MSMand a more general model for the whole economy.A MSM is a partial equilibrium model and assumesmany policy relevant variables as exogenous (e.g.gross wages, technology, demographic structure).We opt for the construction of a suitable CGE-model that can be linked with the MSM and for theinsertion of demographic long term projectionsinside the MSM-framework.

Methods and models for testing the rationality ofrevealed preferences, January 2010 – December2013, funded by Research Foundation Flanders,supervised by Frits Spieksma, Laurens Cherchye andBram De Rock

Revealed preference is a concept that relates theact of purchasing a bundle of goods to expressinga preference for the acquired bundle over otherbundles that were not more expensive. In otherwords, by purchasing a specific bundle, the con -su mer has revealed his or her preference for thisbundle over other, not more expensive, bundles.Revealed preference analysis of a given set ofconsumption data typically addresses four typesof questions: (i) Consistency: do the data satisfyutility maximization (in other words, is the agentrational)?; (ii) Form: are the data consistent withsome specific utility function?, (iii) Recoverability:what set of structural models (e.g. utility functionsrepresenting the preferences) is consistent withthe data?, (iv) Forecasting: when we know the budgets

corresponding to the data, can we forecast demandwhen some new budget is given? In this researchproposal, we focus on developing methods andmodels for addressing these questions when startingfrom observed consumer behavior. This settingimplies that we assume that we are given, as inputdata, the observed prices and bundles (or quantities)acquired at these prices. First, we deal with theconsistency question formulated above. Our goalis to provide insights into the computationaldifficulty of testing rationality; and we will use toolsfrom computational complexity and graph theoryto obtain these insights. Our findings will lead usto understand whether (large) sets of data aresusceptible to testing rationality, how such testscan best be performed, and what the limitations ofspecific tests are. Next, our insights on consistencytesting will provide useful starting points forsubsequently analyzing questions related to form,recoverability, and forecasting. Like before, the primefocus is on the computational difficulty of suchanalysis; and we will propose methods andmodels for practical applications.

I Awards

Javier Olivera Angulo obtained the Inter-AmericanAward for Research on Social Security. CISS, Mexico,2009.

Thomas Demuynck received the prize for the best articlewritten and presented by an economist under the ageof thirty five awarded by: The scientific committee ofthe International Conference in memoriam of MariaConcetta Chiuri on Household, Labor and MigrationEconomics (University of Bari), for the paper “Degreesof cooperation in household consumption: a revealedpreference analysis” (co-authors: L Cherchye and BDe Rock).

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Tom Truyts won the 1st Prize in the poster competitionat the European Science Days on Signaling Theory,Steyr, Austria.


June, 24-25, 2010, International workshop on ‘education policies: empirics and design’, (organized by Erwin Ooghe joint with ULB & UCL)

December 3, 2010: Colloquium Rik BransonLeerstoel Civil Society "Maatschappelijk Middenveld,diversiteit en solidariteit" with Peer Scheepers(Nijmegen) and Erik Schokkaert.

The Public Economics Seminar, organized byAndré Decoster and Erwin Ooghe met as followed:

March 2, 2010: FRANK VANDENBROUCKE,Long term strategic choices for social policies

March 23, 2010: ANDREAS PEICHL (IZA Bonn),Labor supply Elasticities in Europe

April 6, 2010: TOM TRUYTS (CES), On big fishes in small ponds: network formation withrelative concerns

April 13, 2010: MATHIEU LEFEBVRE (ULg), On the convergence of social protectionperformance in the European Union

April 20, 2010: PHILIPPE VAN KERM (CEPS),Generalized measures of wage differentials

May 4, 2010: JAVIER OLIVERA (CES), Old agesupport and demographic change. A culturaltransmission model

May 25, 2010: THOMAS DEMUYNCK (Kulak),Degrees of cooperation in household consumptionmodels: A revealed preference analysis

June 1, 2010: JEAN PIERRE VERHAEGHE(voorzitter LOP Gent BaO), The Ghent centralstudent enrolment system: how efficient is it really?

June 8, 2010: JEROEN SABBE (Kulak),Expansion paths and collective rationality: e-bounds and best tests for the collectiveconsumption model

June 15, 2010: IDES NICAISE (HIVA Leuven),Quasi-markets and segregation in Flemishschools

June 29, 2010: MANUDEEP BHULLER(Statistics Norway), The distributional impact of public services when needs differ

The Public Economics & ETE Seminar, organizedby André Decoster, Erwin Ooghe & Stef Proost, metas followed:

October 28, 2010: SOFIE CABUS (TIER), Doesschool time matter? On the impact of compulsoryeducation age on school dropout

November 3, 2010: ANTOINE LOEPER (KelloggSchool of Management, NorthwesternUniversity), Ongoing negotiations withendogenous status quo

November 18, 2010: FRANK VANDENBROUCKE& BEA CANTILLON (CSB), The social investmentstate, inequalities and poverty: is there aparadox?

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I External visiting

Kristof De Witte visited from April untill September the ‘Top Institute for Evidence Based EducationResearch’ at Maastricht University. Since September2009, Kristof De Witte is guest researcher at theAmsterdam School of Economics, University ofAmsterdam (UvA).

André Decoster was a short term visitor at theResearch Department of Statistics Norway in Osloand at DIW Berlin.

Xavier Jara visited the Institute for Social and EconomicResearch (ISER) at the University of Essex (Colchester,UK) from August to October. His stay was financed bythe European Centre for Analysis in the SocialSciences (ECASS).

Javier Olivera was a Visiting Lecturer at the Universidadde Piura (Peru), where he lectured on Growth Theory.

Erik Schokkaert is research director of CORE (Universitécatholique de Louvain) for the period September 2009- August 2011.

Tom Truyts was a short term visitor at the Universityof Modena e Reggio Emilia and at the Free Universityof Berlin.

Koen Decancq was a short term visitor at the Universityof Verona and CEPS/INSTEAD in Differdange (Luxembourg).

Tom Truyts was a short term visitor at Queens College,Belfast, Ireland.

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Quantitative Economic History

FACULTY MEMBERS:

Erik Buyst

EMERITI:

Herman Van der Wee

RESEARCHERS:

Kristof LowyckPeter Van der HallenRien van de WallFrank Vastmans

ASSOCIATE RESEARCHERS:

Eline Poelmans

Erik Buyst is mainly interested in business history, macro-economic history, the history of economic thought, and inpolicy-oriented economic research.

I Business history

Erik Buyst and Kristof Lowyck continued the researchproject regarding the inventory of source material about theVlaamse Milieumaatschappij (VMM). This involved furtherin-debt interviews with shareholders and further researchin archives and literature on Flemish environmental policyover the past 20 to 30 years. Based on this extended research,they wrote a publication on the history of the VMM, stressingthe growth of the Flemish budget since 1990, the rapidprofessionalization of the environmental sector, the importanceof the European legislation and the strategic decisionsmade within the agency. Beginning in December 2010,they equally started a new research project on the historyof what once was the biggest savings bank in the World,the ASLK-CGER (1935-1998). This project embodiedinterviews with key-players and historical research, both inthe central Fortis archives and the Labor Union archives ofthe ASLK-CGER.

Peter Van der Hallen continued his research for his doctoraldissertation on the food industry in Belgium at the end ofthe nineteenth and the beginning of the twentieth century.He assessed the industrial dynamics of the different sectorsin the food industry, making use of data gathered in theindustrial censuses that were held on various times inBelgium in the nineteenth and twentieth century He alsoused these data to gain insight in the location factors of theindustry by performing a shift and share analysis on theBelgian food industry during the aforementioned period.

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I Macro-economic history

The Great Contraction of 2008-2009 provoked renewedinterest in the Great Depression of the 1930s. Erik Buystanalyzed the effects of the crisis on the various branchesof industry in a European context. Besides the changingrelative position of sectors attention was also devoted tothe rising importance of national and international cartels.Erik Buyst also continued his research on historicalregional accounts. He used the Geary and Stark methodto estimate GDP per capita per province during the firsthalf of the 20th century. These results confirm the generalpicture of a ‘poor’ Flanders and a ‘prosperous’ Walloniaaround 1900 and the existence of a catching-up processafterwards (presented at the Universitat de Barcelona).

Eline Poelmans continued working on the topic of her PhD(The history of Competition Policy in Continental Europe.Case Study: agreements and concentrations in the ECSC(1952-1967)). She broadened her research on the steelindustry to a longer time period. During the academic year2009-2010, she worked as a lecturer-researcher at theSocial School Department (Sociale School Heverlee) of theUniversity College Leuven (Katholieke Hogeschool Leuven),where she taught the courses ‘Introduction to Economics’and ‘Social History’. From January until August 2010, she was working at the same department of UniversityCollege Leuven on a project entitled “Research into therelation welfare - education in the approach of children withbehavioral problems in complicated and multi-complicatededucational situations”. Since September 2010, she isworking at the Hogeschool-Universiteit-Brussel (HUB) as alecturer-researcher in international economics. Apart fromteaching, she is currently working on the economic historyof beer. In this respect, she wrote an article together withProfessor Jo Swinnen about the economic history of beer

that is scheduled to be published in a book on the Economicsof Beer in 2011. She also presented a paper at the conferenceof the Economic and Business Historical Society (EBHS) inBraga, Portugal. In addition, she presented a paper at thejoint international workshop of the Leuven Center for IrishStudies (LCIS) and the International Network for EconomicResearch (INFER) on Recent Issues in Economic Geography.Since December 2010, she is an associate researcher ofthe quantitative economic history research group.

Rien van de Wall continued his analysis of regional economicpolicy in Belgium from 1959 onward. He wrote the firstchapter of his future doctoral dissertation, which consistsof a historical overview of regional development theory. It explores the main tendencies in academic theorizing onthis topic since the beginning of the twentieth century. As there are strong interrelationships and mutual influencebetween theory and policy in this field, this chapter willserve as a useful framework for the remaining chapters.

Next, Rien has been focusing on the Belgian context whiledoing research on the first decades of Belgian regionalpolicy; both the process of political maturation of the ideaand the set up of institutions to execute and embody the policy.

During the second half of 2010, Rien prepared and assistedin a seminar for master students in history. The studentsdid research on regional economic policy in eight Europeancountries, and their results will be incorporated in aseparate chapter in order to be able to situate the Belgianevolutions in a larger perspective.

Quantitative Economic History

I Publications


BUYST, E. (2010), Reversal of fortune in a small,open economy: regional GDP in Belgium, 1896-2000, Rivista di Storia Economica 26(1), p. 75-92.

VAN DE PUTTE, B., BUYST, E. (2010), Occupationaltitles? Hard to eat, easy to catch, Belgisch Tijdschriftvoor Nieuwste Geschiedenis 40(1-2), p. 7-31.

OTHER PUBLISHED BOOKS; AS AUTHOR

DE DECKER, P., RYCKEWAERT, M., VANDEKER-CKHOVE, B., PISMAN, A., VASTMANS, F., LE ROY, M.(2010), Ruimte voor wonen. Trends en uitdagingen.Antwerpen: Garant.

BOOKS, INTERNATIONALLY RECOGNIZED SCIENTIFIC PUBLISHER; AS EDITOR

BUYST, E. (2010), Economie voor mensweten-schappers. Leuven: Acco.


BUYST, E. (2010), Europa en de wereldeconomie inhet interbellum, in KOK, J., VAN BAVEL, J. (eds.),De Levenskracht der bevolking. Sociale en demo -grafische kwesties in de lage landen tijdens hetinterbellum, p. 25-47. Leuven: Universitaire Pers Leuven.Q

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I Analysis of housing policy

Frank Vastmans continued his research inhousing economics. Different topics are covered:Flemish housing market model (estimation of theneed for new dwellings), a financial explanation ofhousing and land prices, a hedonic analysis of rentalprices in Flanders, the calculation of a new Flemishrental index, the socio-economic impact of culturalheritage, the life cycle cost of building projects. For most of this research, the interest rate plays aparticular role. Part of this research is done withinthe policy research centre for spatial planning andhousing. This resulted in different presentations,papers and book contributions.

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BUYST, E., FRANASZEK, P. (2010), Sectoral developments, 1914-1945, in BROADBERRY, S.,O’ROURKE, K. (eds.), The Cambridge economic history of modern Europe, p. 208-231. Cambridge(UK): Cambridge University Press.


BUYST, E., VAN DOREN, J. (2010), De Walloniseringvan Vlaanderen?, in VIVES - Briefings, 9-11. Leuven:K.U.Leuven.

BUYST, E., JENNES, G. and REYNAERTS, J. (2010),Update van de berekening van de stromen van over-heidsmiddelen tussen de gewesten voor het jaar2007, VIVES-Beleidspaper 13. Leuven. K.U.Leuven.

EXTERNAL REPORTS

VASTMANS, F., DE TROYER, F., VANDEVYVERE, H.(2010), Life Cycle Cost Analysis als instrument omverantwoorde keuzen te maken bij ontwerp en keuzevan systemen voor de realisatie van bouwprojectenvoor welzijns- en gezondheidsvoorzieningen.Onderzoek in opdracht van het Vlaams Infra struc -tuur fonds voor Persoonsgebonden Aangelegenheden.

VASTMANS, F., BUYST, E., DE VRIES, P. (2010), Het Vlaams woningmarktmodel, Leuven: SteunpuntRuimte en Wonen, forthcoming.

VASTMANS, F., BUYST, E., VANDEKERCKHOVE, B.,DEBAERDEMAKER, M. (2010), Sociaal-economischeimpact van onroerend erfgoed(beleid) in Vlaanderen,Onderzoek in opdracht van Vlaamse overheid,Departement Ruimtelijke Ordening, Woonbeleid enOnroerend Erfgoed, Afdeling Stedenbouwkundigbeleid en Onroerend Erfgoedbeleid, forthcoming.

I Editorial activities:

Erik Buyst is member of the editorial board ofEconomies et Sociétés and of the ExecutiveCommittee of the ESF Research NetworkingProgramme ‘Globalizing Europe Economic HistoryNetwork’ (Globaleuronet).

I Research projects

Policy Research Centre Spatial Planning and Housing,January 2007 – December 2011, funded by FlemishCommunity, supervised by E. Buyst.

The Housing research team within the PolicyResearch Centre consists of experts of five academicinstitutes in Belgium and the Netherlands plus aprivate consultancy firm. Its main task is to assessfrom various perspectives the quality of thehousing stock and the expectations of housingconsumers in Flanders. This information will beused to construct indicators for the Flemish housingmarket and to estimate the housing needs with aneconometric model. The research team will alsodo research on specific, policy-oriented topics.

Vastgoed in centrumsteden, December 2010 –November 2011, funded by Flemish Community,supervised by E. Buyst.

Life Cycle Cost Analysis, January 2010 – June 2010,funded by Flemish Community, supervised by E. Buyst.

Sociaal-economische analyse en de ontwikkelingvan een indicatorenkorf voor het meten van desociaal-economische impact, March 2010 –December 2010, funded by Sumresearch, supervisedby E. Buyst.

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Scenarioanalyses van een te onderhandelen finan -cierings wet, July 2010 – July 2010, funded by VOKA,supervised by E. Buyst.

De geschiedenis van de ASLK, 1935-1998,October 2010 – September 2011, funded by Fortis,FPIM / SFPI, AGEAS, AG-INSURANCE, supervised byE. Buyst.

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I Centre for Economic Studies Seminar Series 2010

THE CENTRE FOR ECONOMIC STUDIES SEMINAR, ORGANIZED BY THE RESEARCH GROUPS, MET AS FOLLOWS:

January 28, 2010:ANDREW BERNARD (Tuck School Darthmouth), Multi-product firms and trade liberalization.

February 11, 2010:ERWIN OOGHE (CES, K.U.LEUVEN), School accountability: (how) can we reward schools and avoid cream-skimming?

February 18, 2010:MATTHEW TURNER (University of Toronto), The fundamental law of road congestion: evidence from US cities.

February 25, 2010:JAN BOUCKAERT (University of Antwerp): The failing firm defense vs. subsidies in declining markets.

March 4, 2010:GARTH FRAZER (University of Toronto), Cell phones and growth in Africa.

March 18, 2010:RONALD ALBERS (European Commission, ECFIN), Major crisis: historical comparisons tot the Great Depressionand the classical Gold Standard.

April 1, 2010:MARC FLEURBAY (PARIS, DESCARTES), The tyranny of aggregation vs the tyranny of non-aggregation: a real dilemma?

April 8, 2010:FRANCISCO FERREIRA (WORLD BANK), Distributions in motion: growth and the dynamics of poverty and inequality.

April 22, 2010:ØYVIND THOMASSEN (CES, K.U.LEUVEN), Automobile engine variants and price discrimination.

April 29, 2010:GINGER ZHE JIN (University of Maryland), Learning by doing with asymmetric information.

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May 27, 2010:IVAN PETRELLA (CES, K.U.Leuven), Loss aversion and the transmission of monetary policy.

September 29, 2010:ROBERT GIBBONS (MIT Sloan), Happens: relation adaptation in contracts, firms, and other governance structures.

October 7, 2010:FRANCOIS MANIQUET (CORE-UCL), Why vote for center parties? A study of strategic voting under proportionalrepresentation.

October 28, 2010:RALP WINTER (University of British Columbia), Exclusionary contracts.

November 4, 2010:PASCALIS RAIMONDOS-MOLLER (Copenhagen Business School), True profit shifting.

December 2, 2010:BERT WILLEMS (Tilburg University), Regulation of investments in network capacity, an experimental approach.

December 9, 2010:MICHELLE GOEREE (University of ZURICH), Do research joint ventures serve a collusive function?

December 16, 2010:JOE THARAKAN (Université de Liège), International trade with endogenous mode of competition in general equilibrium.

JOINT CES-VIVES Seminar

March 11, 2010:GIOVANNI FACCHINI (Erasmus Rotterdam), Electoral concerns, special interests and illegal immigration.

Mai 20, 2010:BRUNO VANDERLINDEN (Université Catholique de Louvain), Monitoring and sanctions in a nonstationary structural job search model.

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JOINT CES-LICOS Seminar

October 21, 2010:STEPHAN MARETTE (INRA Paris), Tax, minimum-quatlity standard, and label for regulating environmental quality: a welfare.

November 22, 2010:ANDREW J. OSWALD (Warwick Business School), Happiness and productivity.

JOINT CES-MSI Seminar

February 4, 2010:TOMASO DUSO (WZB & Humboldt University Berlin), Research networks as a collusive tool: an empiricalassessment.

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