Prague Economic Papers 2016, 25(5):560-576 | DOI: 10.18267/j.pep.567

Cross-Border Effects of Car Scrapping Schemes: The Case of the German Car Scrapping Programme and its Effects on the Czech Economy

Petr Maleček1, Ota Melcher2
1 Faculty of Economics, University of Economics, Prague, Czech Republic (petrxmalecek@gmail.com).
2 Faculty of International Relations, University of Economics, Prague, Czech Republic (ota.melcher@vse.cz).

Many countries decided to launch car scrapping schemes during the 2009 crisis in order to support their car industries and to boost domestic demand. Owing to the existence of significant international trade links in the automotive sector, there is also a strong theoretical foundation for cross-border effects of such scrappage programmes. This paper explores spillovers of the German scheme to the Czech economy on the basis of a close mutual trade link between these two countries and the size of the Czech automotive sector. It is demonstrated that the German programme provided for a significant boost for Czech personal car exports, which were also coupled with increased imports due to large import requirements of the Czech automotive segment. Overall, the contribution of first-round effects of the German car scrapping scheme to the Czech real GDP growth in 2009 is estimated to have reached between 0.4 and 0.5 percentage points.

Keywords: input-output tables, vector error correction model, international trade in personal cars, car scrapping scheme
JEL classification: C32, C67, F47, H20

Published: January 1, 2016  Show citation

ACS AIP APA ASA Harvard Chicago IEEE ISO690 MLA NLM Turabian Vancouver
Maleček, P., & Melcher, O. (2016). Cross-Border Effects of Car Scrapping Schemes: The Case of the German Car Scrapping Programme and its Effects on the Czech Economy. Prague Economic Papers, 25(5), 560-576. doi: 10.18267/j.pep.567
Download citation
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Open full article

    References

    1. Adda, J., Cooper, R. (2000), "Balladurette and Juppette: A Discrete Analysis Of Scrapping Subsidies." Journal of Political Economy, Vol. 108, No. 4, pp. 778-806, http://dx.doi.org/10.1086/316096 Go to original source...
    2. Böckers, V., Heimeshoff, U., Müller, A. (2012), "Vorsprung durch Technik: Empirical Evidence of the German Scrappage Program." Paper presented at Jahrestagung des Vereins für Socialpolitik 2012: Neue Wege und Herausforderungen für den Arbeitsmarkt des 21. Jahrhunderts.
    3. Cooper, A., Chen, Y., McAliden, S. (2010), "The Economic and Fiscal Contributions of the Cash for Clunkers Program - National and State Effects." Center for Automotive Research Memorandum.
    4. Copeland, A., Kahn, J. (2013), "The production impact of "Cash-for-Clunkers": implications for stabilization policy." Economic Inquiry, Vol. 51, No. 1, pp. 288-303, http://dx.doi.org/10.1111/j.1465-7295.2011.00443.x Go to original source...
    5. Council of Economic Advisors (2009), Economic Analysis of the Car Allowance Rebate System (Cash for Clunkers), Executive Office of the President Report.
    6. Bundesamt für Wirtschaft und Ausfuhrkontrolle (BAFA) (2010), Abschlussbericht Umweltprämie, November 2010.
    7. Canis, B., Grimmett, J. J., Platzer, M. D., Yacobucci, B. D. (2010), "Accelerated Vehicle Retirement Programs in Japan and South Korea: Background for Congress." Congressional Research Service Report, October 2010.
    8. Hamilton, J. D. (1994), Time Series Analysis. Princeton, New Jersey: Princeton University Press.
    9. Haugh, D., Mourougane, A., Chatal, O. (2010), "The Automobile Industry in and Beyond the Crisis." OECD Economics Department Working Paper No. 74. Go to original source...
    10. Hjalmarsson, E., Österholm, P. (2007), "Testing for Cointegration Using the Johansen Methodology when Variables Are Near-Integrated." IMF Working Paper No. 07/141. Go to original source...
    11. Hummels, D., Yi, K.-M. (1999), "The Nature and Growth of Vertical Specialization in World Trade." Federal Reserve Bank of New York Staff Reports, No. 72, http://dx.doi.org/10.2139/ssrn.163193 Go to original source...
    12. IFEU (2009), Abwrackprämie und Umwelt - eine erste Bilanz. IFEU Heidelberg ad hoc study.
    13. IHS Global Insight (2010), Assessment of the Effectiveness of Scrapping Schemes for Vehicles: Economic, Environmental, and Safety Impacts. March 2010, Final Report.
    14. IMF (2010), France: 2010 Article IV Consultation-Staff Report. International Monetary Fund Country Report No. 10/240. Go to original source...
    15. Jiménez, J. L., Perdiguero, J., García, C. (2011), "Evaluation of Subsidies Programs to Sell Green Cars: Impact on Prices, Quantities and Efficiency." Sèrie de documents de treball de la XREAP, No. 14/2011, http://dx.doi.org/10.2139/ssrn.1948755 Go to original source...
    16. Juselius, K. (2006), The Cointegrated VAR Model. Oxford, New York: Oxford University Press.
    17. Kaul, A., Pfeifer, G., Witte, S. (2012), "The Incidence of Cash for Clunkers: An Analysis of the 2009 Car Scrappage Scheme in Germany." University of Zurich, ECON - Working Papers, Working Paper No. 68, http://dx.doi.org/10.2139/ssrn.2034394 Go to original source...
    18. Li, S., Linn, J., Spiller, E. (2010), "Evaluating "Cash-for-Clunkers": Program Effects on Auto Sales and the Environment." Resources for the Future Discussion Paper No. 39. Go to original source...
    19. Loschky, A., Ritter, L. (2006), "Import Content of Exports." Paper presented at the 7th OECD International Trade Statistics Expert Meeting.
    20. Lütkepohl, H. (2005), New Introduction to Multiple Time Series Analysis. Berlin: Springer. Go to original source...
    21. Mian, A., Sufi, A. (2012), "The Effects of Fiscal Stimulus: Evidence from the 2009 Cash for Clunkers Program." The Quarterly Journal of Economics, Vol. 127, No. 3, pp. 1107-1142, http://dx.doi.org/10.1093/qje/qjs024 Go to original source...
    22. Ng, S., Perron, P. (2001), "Lag Length Selection and the Construction of Unit Root Tests with Good Size and Power." Econometrica, Vol. 69, No. 6, pp. 1519-1554, http://dx.doi.org/10.1111/1468-0262.00256 Go to original source...
    23. OECD (2009), OECD Economic Outlook. Organization for Economic Cooperation and Development, November 2009, Vol. 86.
    24. Romano, A. A., Scandurra, G. (2012), "The Effectiveness of Car Scrapping Schemes in the Italian Market." Metodološki zvezki, Vol. 9, No. 2, pp. 175-190. Go to original source...
    25. Škoda Auto (2010), Škoda Auto Annual Report 2009.
    26. Van Wee, B., Moll, H. C., Dirks, J. (2000), "Environmental Impact of Scrapping Old Cars." Transportation Research Part D: Transport and Environment, Vol. 5, No. 2, pp. 137-143, http://dx.doi.org/10.1016/S1361-9209(99)00030-9 Go to original source...

    This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY NC ND 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.


    Return to the content