Exports and Capacity Constraints: A smooth transition regression model for six euro-area countries. CEPS Working Document No. 395/May 2014

The significant gains in export market shares made in a number of vulnerable euro-area crisis countries have not been accompanied by an appropriate improvement in price competitiveness. This paper argues that, under certain conditions, firms consider export activity as a substitute for serving domestic demand. The strength of the link between domestic demand and exports is dependent on capacity constraints. Our econometric model for six euro-area countries suggests domestic demand pressure and capacity-constraint restrictions as additional variables of a properly specified export equation. As an innovation to the literature, we assess the empirical significance through the logistic and the exponential variant of the non-linear smooth transition regression model. We find that domestic demand developments are relevant for the short-run dynamics of exports in particular during more extreme stages of the business cycle. A strong substitutive relationship between domestic and foreign sales can most clearly be found for Spain, Portugal and Italy, providing evidence of the importance of sunk costs and hysteresis in international trade.

Social Capital and Individual Happiness in Europe. Bruges European Economic Research (BEER) Papers 25/December 2012

This paper explores the relationship between social capital and happiness both in Europe as a whole, as well as in its four main geographical macro-regions – North, South, East and West – separately. We test the hypothesis of whether social capital, in its three-fold definition established by Coleman (1988) – trust, social interaction, and norms and sanctions – influences individual happiness across European countries and regions. The concept of social capital is further enriched by incorporating Putnam- (1993) and Olson- (1982) type variables on associational activity. Using ordinal logistic regression analysis on data for 48,583 individuals from 25 European countries, we reach three main findings. First, social capital matters for happiness across the three dimensions considered. Second, the main drivers of the effects of social capital on happiness appear to be informal social interaction and general social, as well as institutional trust. And third, there are significant differences in how social capital interacts with happiness across different areas of Europe, with the connection being at is weakest in the Nordic countries.

Explaining Euroskepticism as a function of regional representation. ACES Working Papers No. 3, August 2008

Recent scholarship has suggested that nation-states will gradually fade away in favor of regions and super-regions as the main actors within a European Union characterized by strong regional identities. At the same time, recent developments have shown that citizen support for European integration is essential for any future development of the Union. The puzzle inspiring this paper is the finding that the greatest support for the EU increasingly stems from minority nationalist regions seeking to bypass their central states to achieve their policy goals at the EU level. This paper empirically tests this suggestion, while shedding light on the relationship between the quality of representation of regional interests at the EU level and positive citizen attitudes towards the EU. In particular, it finds two explanations for cross-regional variation in the relationship between Euroskepticism and representation: (1) a cultural explanation, embodied by a difference in the nature and quality of representation between regions that are linguistically distinctive and regions that are not; and (2) an institutional explanation, embodied by a difference in the nature and quality of representation between regions from federal and non-federal member states. The paper uses an eclectic methodological approach, first utilizing multivariate regression analysis, estimating logistic and ordinal logit models that help explain variation in Euroskepticism at the regional level. The results are then complemented by the findings of in-depth elite interviews of regional representatives - more specifically the directors of a selection of the many regional information offices present in Brussels. This paper takes the study of Euroskepticism to a new level, as most previous scholarly work has focused on explanations at the individual or at the member state level. At the same time it strengthens the notion of a growing importance of a "Europe of the regions."