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Report 2001: Department of Economics (ECON)

Research Areas

• Macroeconomics and Economic Policy
  The research area macroeconomics and economic policy is concerned with the interaction between the business sector, the domestic sector and the aggregate markets, such as the financial markets, commodity market and the labour market. The possibilities of influencing the future development of the economy as a whole by use of economic policy is analysed.
  There is both theoretical and empirical research going on within the macroeconomic field. The macroeconomic models are primarily based on aggregation of the optimal production and consumption decisions taken by the individual firms and consumers in the economy. The focus of the research is on the dynamical and structural adjustments of the economy to the politically defined incentives.At the Department macroeconomic research is done in the fields of Public Economics, International Economics, Labour Market Economics, Empirical Macro Theory, Macro Finance and Growth Theory.Research in Public Economics and International Economics is concerned with aspects of the European economic integration (monetary integration, liberalisation of international factor movements, harmonisation of the national tax systems) and its fiscal and financial implications. It is analysed what the optimal tax system would be like in an open economy and research is done concerning privatisation of public enterprises and taxation of capital income. Within Labour Market Economics research is taking place concerning skill acquisition and search behaviour on the labour market and also concerning the interaction between the informal sector, the internal labour market, wages and unemployment. Furthermore work is done concerning the potentials and effectiveness of economic policy under different presumptions about the organisation of the labour market. The research in Empirical Macroeconomic Theory and Macro Finance analyse the interaction between the macro economy, the fiscal conditions and the situation on the financial markets. There are projects about the econometric modelling of stock yields and exchange rates, especially between the USD, EUR and JPY. In economic growth theory research is done concerning the interaction between dynamics, growth and international trade.

• Applied Microeconomics
  Applied microeconomics include (part of) the research of the Department within the fields Industrial Organisation, Public Economics, Environmental Economics and Trade Theory. The aim of the research in this field is to analyse how the structure of public incentives, such as competition regulations and the fiscal policy, should be made in order to optain a satisfactory allocation of resources in an open market economy. Thereby the research contributes to a better understanding of the market processes in a western type competitive society.
  The research within applied microeconomics often has a distinct corporate perspective and frequently has its origin in concrete economic problems. The modelling is often partial (opposite to general) and non-fat in order to focus on the effects of specific institutional conditions and mechanism.Within the field of Industrial Organisation research at the Department is concerned with problems of competition and regulation policy and corporate governance. The research examines the interaction between commodity prices, market structures and competitive regulation, the effect on market competition of increased transparency of prices, discounts etc. and the welfare implications of parallel imports. Also research has been carried out on the implications of various forms of ownership of firms for the organisation and performance of the firms and about the consequences of lobbyism in political systems.Within the area of Public Economics and Trade Theory the Department focuses on what would be an optimal fiscal policy in a country with free international trade in consumption and capital goods and free financial investments, the need for and implications of the EU harmonisation of corporate taxation and interest taxation and the optimal taxation of transfer prices in multinational corporations. The welfare effects for countries in and outside a trade union, if the union extends with more members. Also work is done concerning the welfare theoretical foundation of the cost-benefit analyses and some projects in Health Economics.

• Other Research Areas: East Economics
  East Economics is concerned with the transition in the Eastern European countries from central-plan economies to market economies and the role of private enterprises and the new ownership structure in this transition process. The role and significance of competition policy i the Eastern European economies is analysed. Furthermore the consequences of western countries´ direct foreign investments in Eastern Europe is examined. The research in East Economics is part of the research profile of the Department of Economics and has obvious common themes with other parts of the institute research, most particularly the research on European Economic Integration and Regional Economics (Macroeconomics) and the research on Industrial Organisation and Coorporate Governance (Applied Microeconomics).
  The Department has in 2001 continued its participation in the research group Center for East European Studies (CEES) by lending to the center a researcher from the Department (Niels Mygind) to be research director of the center. From the 1st of July Niels Mygind has been transferred with CEES to the Department of International Economics and Management (INT). A researcher at the Department participates in an international research project on "Multinational Firms and Vertical Restraints in Eastern Europe and EU Enlargement: Problems for Competition Policy", which is supported financially by the Phare ACE progam of The European Commission.