N°
947
09 Mar 2012
Do House Prices Impact Consumption and Interest Rate? Christophe André, Rangan Gupta, Patrick T. Kanda
This paper investigates the existence of significant spillovers from the housing sector onto the wider economy for the seven major OECD countries using Uhlig's (2005) agnostic identification procedure. This method allows a housing demand shock to be identified in a six-variable VAR model by...
N°
946
09 Mar 2012
Assessing the Sensitivity of Hungarian Debt Sustainability to Macroeconomic Shocks under Two Fiscal Policy Reactions Pierre Beynet, Edouard Paviot
Hungarian debt level has steadily increased since 2001, with the debt-to-GDP ratio reaching about 84% at end-2011. This high level combined with significant volatility of macroeconomic variable influencing potential future debt paths – GDP growth, exchange rate and interest spreads – put...
N°
945
09 Mar 2012
Non-Keynesian Effects of Fiscal Consolidation Szilárd Benk, Zoltán M. Jakab
Using an estimated DSGE model for Hungary, the paper identifies the possible non-Keynesian channels through which a fiscal consolidation may manifest as expansionary. Simulations show that fiscal consolidation policies are typically contractionary. Nevertheless, taking into account some...
N°
944
09 Mar 2012
Work Incentives and Recent Reforms of the Tax and Benefit System in Hungary Tímea Ladányi, Rafal Kierzenkowski
Reducing the extent of inactivity and promoting labour supply is essential to foster labour market outcomes in Hungary in the medium term. Notwithstanding specific factors linked to education, the pension system or family and disability policies, financial disincentives play an important role...
N°
943
08 Feb 2012
Building Blocks for a Better Functioning Housing Market in Chile Aida Caldera Sánchez
Chile has made good progress in improving housing conditions, but still around 10% of the population lives in
either overcrowded houses, or of inadequate quality and/or with poor access to basic services. Improving further
housing conditions of the poor is important for curbing poverty and...
N°
942
07 Feb 2012
The Impact of Changes in Second Pension Pillars on Public Finances in Central and Eastern Europe Balázs Égert
This paper studies the impact of recent changes in second pension pillars of three Central and Eastern European Countries on the deficit and implicit debt of their full pension systems. The paper seeks to answer the following questions: i) what is the impact on the sustainability of Poland’s...
N°
941
27 Jan 2012
Improving Energy System Efficiency in the Czech Republic Artur Radziwill
A carbon intensive energy system in the Czech Republic contributes to one of the highest ratios of greenhouse gas (GHG) emissions to GDP in the OECD. While EU emission reduction commitments provide the most visible and binding motivation for changing the way in which the country produces and...
N°
940
03 Feb 2012
Structural Change and the Current Account Fabrizio Coricelli, Andreas Wörgötter
Using empirical evidence from panel analysis of current account dynamics and of bilateral trade balances, the paper argues that the large German current account surplus during the 2000s can be explained by an increasing gap between productivity growth in manufacturing vis-à-vis services. Such a...
N°
939
27 Jan 2012
Reforming Education in England Henrik Braconier
Despite significant increases in spending on child care and education during the last decade, PISA scores suggest that educational performance remains static, uneven and strongly related to parents’ income and background. Better educational performance could improve labour market outcomes,...
N°
938
09 Jan 2012
The Nature of Financial and Real Business Cycles Balázs Égert, Douglas Sutherland
This paper takes a fresh look at the nature of financial and real business cycles in OECD countries using annual data series and shorter quarterly and monthly economic indicators. It first analyses the main characteristics of the cycle, including the length, amplitude, asymmetry and changes of...
N°
937
10 Jan 2012
Fiscal Consolidation: Part 6. What Are the Best Policy Instruments for Fiscal Consolidation? Robert Hagemann
OECD countries face daunting fiscal challenges following the substantial surge in debt-GDP ratios during the past four years, from already high levels in many cases. Fiscal consolidation is now the order of the day, and it takes on greater urgency against the backdrop of imminent budgetary...
N°
936
10 Jan 2012
Fiscal Consolidation: Part 5. What Factors Determine the Success of Consolidation Efforts? Margit Molnar
The global economic and financial crisis exacerbated the need for fiscal consolidation in many OECD countries. Drawing lessons from past episodes of fiscal consolidation, this paper investigates the economic environments, political settings and policy measures conducive to fiscal consolidation...
N°
935
16 Feb 2012
Fiscal Consolidation: Part 4. Case Studies of Large Fiscal Consolidation Episodes Hansjörg Blöchliger, Dae-Ho Song, Douglas Sutherland
This paper provides an analysis of large and sustained fiscal consolidation episodes in OECD countries implemented between 1980 and 2000. It reviews how fiscal policy variables evolved during these episodes, how consolidation was influenced by the wider economic environment, and how the...
N°
934
10 Jan 2012
Fiscal Consolidation: Part 3. Long-Run Projections and Fiscal Gap Calculations Rossana Merola, Douglas Sutherland
During the economic and financial crisis, fiscal positions across the OECD countries deteriorated sharply. This raises the question of what level of primary deficit would ensure long-term sustainability and what degree of consolidation is needed. The purpose of this paper is to gauge the scale...
N°
933
22 Feb 2012
Fiscal Consolidation: Part 2. Fiscal Multipliers and Fiscal Consolidations Ray Barrell, Dawn Holland, Ian Hurst
This paper looks at various aspects of fiscal consolidation in 18 OECD economies. The prospects for fiscal consolidation depend upon the problems the country may face with its debt stock, the political will to deal with these problems and on the costs of consolidation. The analysis is based on...
N°
932
10 Jan 2012
Fiscal Consolidation: Part 1. How Much is Needed and How to Reduce Debt to a Prudent Level? Douglas Sutherland, Peter Hoeller, Rossana Merola
The economic and financial crisis was the catalyst for a fiscal crisis that engulfs many OECD countries. In most countries, budget deficits soared as a result of the economic slump, weaker revenues and the policy response to the crisis. Consolidating the public finances is an important...
N°
931
03 Apr 2012
Less Income Inequality and More Growth – Are they Compatible? Part 8. The Drivers of Labour Income Inequality – A Literature Review Rafal Kierzenkowski, Isabell Koske
Despite a general trend of increasing labour income inequality, there have been differences in the timing, intensity and even direction of these changes across OECD countries. These stylized facts have led to numerous studies about the main determinants of labour income inequality and, as a...
N°
930
09 Jan 2012
Less Income Inequality and More Growth – Are they Compatible? Part 7. The Drivers of Labour Earnings Inequality – An Analysis Based on Conditional and Unconditional Quantile Regressions Jean-Marc Fournier, Isabell Koske
Unconditional and conditional quantile regressions are used to explore the determinants of labour earnings at different parts of the distribution and, hence, the determinants of overall labour earnings inequality. The analysis combines several household surveys to provide comparable estimates...
N°
929
09 Jan 2012
Less Income Inequality and More Growth – Are they Compatible? Part 6. The Distribution of Wealth Kaja Bonesmo Fredriksen
The wealth distribution within OECD countries is very concentrated and much more so than the income distribution. Wealth dispersion is especially high in the United States and Sweden. The latter illustrates that the most wealth unequal countries are not necessarily the most income unequal....
N°
928
09 Jan 2012
Less Income Inequality and More Growth – Are they Compatible? Part 5. Poverty in OECD Countries Mauro Pisu
Poverty is an important policy issue in OECD countries and the recent crisis has made it even more pressing. This paper highlights poverty rate differences across countries and reviews the various policies to tackle it. The OECD-wide poverty rate has drifted up, reaching around 11% in the late...
N°
927
09 Jan 2012
Less Income Inequality and More Growth – Are they Compatible? Part 4. Top Incomes Peter Hoeller
Over the past decades, top incomes have soared, especially in the English-speaking countries. Despite a considerable amount of research on top income developments, there is still substantial disagreement about the causes for their rapid increase. Potential explanations include changes in...
N°
926
10 Jan 2012
Less Income Inequality and More Growth – Are They Compatible? Part 3. Income Redistribution via Taxes and Transfers Across OECD Countries Isabelle Joumard, Mauro Pisu, Debra Bloch
Taxes and transfers reduce inequality in disposable income relative to market income. The effect varies, however, across OECD countries. The redistributive impact of taxes and transfers depends on the size, mix and the progressivity of each component. Some countries with a relatively small tax...
N°
925
10 Jan 2012
Less Income Inequality and More Growth – Are They Compatible? Part 2. The Distribution of Labour Income Isabell Koske, Jean-Marc Fournier, Isabelle Wanner
This paper explores the role of macroeconomic factors and structural policies in shaping the distribution of labour income. Technological change and globalisation play at least some role in driving inequality patterns, but structural policy can also have an important influence on inequality...
N°
924
10 Jan 2012
Less Income Inequality and More Growth – Are They Compatible? Part 1. Mapping Income Inequality Across the OECD Peter Hoeller, Isabelle Joumard, Mauro Pisu, Debra Bloch
Countries differ widely with respect to the level of labour income inequality among individuals of working age. Labour income inequality is shaped by differences in wage rates, hours worked and inactivity rates. Individual labour income inequality is the main driver of household market income...
N°
923
21 Dec 2011
Current Issues in Managing Government Debt and Assets Lukasz Rawdanowicz, Eckhard Wurzel, Patrice Ollivaud
The management of government debt and assets has important implications for fiscal positions. Debt managers aim to secure non-interrupted funding at lowest medium-term costs subject to risks. Massive crisis-related increases in government debt in most OECD countries and increased risks on the...
N°
922
21 Dec 2011
Public Spending Efficiency in the Czech Republic Zuzana Smidova
The Czech fiscal position is generally sound and policy making is prudent. However, the fiscal framework was not strong enough to contain spending in the upturn and it would benefit from independent budget oversight. An anchor for the fiscal policy would be helpful, in the form of an explicit...
N°
921
21 Dec 2011
Exploring Determinants of Subjective Wellbeing in OECD Countries Sarah Fleche, Conal Smith, Piritta Sorsa
The paper explores issues with assessing wellbeing in OECD countries based on self-reported life satisfaction surveys in a pooled regression over time and countries, at the country level and the OECD average. The results, which are in line with previous studies of subjective wellbeing, show...
N°
920
19 Dec 2011
Russia: Progress in Structural Reform and Framework Conditions Yana Vaziakova, Geoff Barnard, Tatiana Lysenko
In the 16 years since the OECD began conducting Economic Surveys of the Russian Federation, a great many policy recommendations relating to structural reform and framework conditions have been made. This paper, expanding on Annex 1.A1 in the 2011 OECD Economic Survey of the Russian Federation,...
N°
919
19 Dec 2011
Explaining the Interest-Rate-Growth Differential Underlying Government Debt Dynamics David Turner, Francesca Spinelli
The differential between the interest rate paid to service government debt and the growth rate of the economy is a key concept in assessing fiscal sustainability. Among OECD economies, this differential was unusually low for much of the last decade compared with the 1980s and the first half of...
N°
918
19 Dec 2011
Reassessing the NAIRUs after the Crisis Stéphanie Guichard, Elena Rusticelli
The financial crisis has resulted in a substantial increase in unemployment in the OECD. This paper shows that this increase has reversed the reduction in structural unemployment which has been estimated to have occurred in most OECD countries since the late 1990s. Structural unemployment is...
N°
917
16 Dec 2011
Employment Protection Legislation and Plant-Level Productivity in India Sean Dougherty, Verónica Frisancho Robles, Kala Krishna
Using plant-level data from the Annual Survey of Industries (ASI) for the fiscal years from 1998-99 through
2007-08, this study provides plant-level cross-state/time-series evidence of the impact of employment protection
legislation (EPL) on total factor productivity (TFP) and labour...
N°
916
11 Dec 2012
Systemically Important Banks and Capital Regulation Challenges Patrick Slovik
Bank regulation might have contributed to or even reinforced adverse systemic shocks that
materialised during the financial crisis. Capital regulation based on risk-weighted assets encourages
innovation designed to circumvent regulatory requirements and shifts banks’ focus away from their...
N°
915
13 Dec 2011
Improving Educational Outcomes in Slovenia Mehmet Eris
Overall, the education system fares well by international comparison. Slovenia has one of the highest shares of the population aged 25 to 64 to have completed at least upper secondary education, and ranks high in international educational achievement tests. Nevertheless, in some areas, reforms...
N°
914
06 Dec 2011
Addressing Challenges in the Energy Sector in Israel Philip Hemmings
Offshore natural-gas discoveries have released Israel from complete reliance on imported primary fuels and are allowing for a cleaner energy mix. Furthermore, additional production will soon come on stream, and there is a reasonable chance of new commercially viable gas finds, and possibly of...
N°
913
06 Dec 2011
Issues in Private-Sector Finance in Israel Philip Hemmings
The 2008-09 global financial crisis did not result in the failure of any major financial institution in Israel, but it did reveal vulnerabilities in the non-banking sector . particularly in the corporate-bond market. Conservative regulation of the banking sector helped this segment avoid a...
N°
912
06 Dec 2011
How to Improve the Economic Policy Framework for the Housing Market in Israel Philip Hemmings
Israeli house prices have risen by over 50% over the past three years. In part this reflects the fact that for several years housing construction had not kept pace with increases in the number of households. In response to these developments, hitherto sluggish planning-approval processes are...
N°
911
02 Dec 2011
Fiscal Prospects and Reforms in India Richard Herd, Sam Hill, Vincent Koen
Substantial fiscal consolidation was achieved under the aegis of the 2003 Fiscal Responsibility and Budget Management Act. While deficits widened anew in 2008 and 2009, against the backdrop of the global financial and economic crisis, efforts to reduce them have resumed since. To ensure...
N°
910
02 Dec 2011
Structural Reforms to Reduce Unemployment and Restore Competitiveness in Ireland Álvaro Pina
After a recession of historic proportions, an export-led recovery is gaining traction in Ireland. The pace of recovery, however, varies sharply across sectors. While export-oriented manufacturing and services, led by large multinationals, have reached record-high levels of output,...
N°
909
02 Dec 2011
Getting Back on Track: Restoring Fiscal Sustainability in Ireland David Haugh
Ireland’s banking crisis, one of the most severe in the OECD area, and the associated economic recession have taken a heavy toll on public finances. Large public deficits have accumulated since 2008 and net public debt, which had been eliminated, has soared once again. The rapid deterioration...
N°
908
21 Dec 2011
A Welfare Analysis of Climate Change Mitigation Policies Alain de Serres, Fabrice Murtin
This paper assesses some welfare consequences of climate change mitigation policies. In the same vein as Becker, Philipson and Soares (2005), a simple index of economic progress weighs in the monetary cost induced by mitigation policies as well as the health benefits arising from the reduction...
N°
907
22 Nov 2011
Overcoming the Banking Crisis in Ireland Muge Adalet McGowan
Ireland is recovering from an extremely large banking crisis born of over-exuberant property lending. The government has taken a wide range of measures to tackle the crisis over the past 3 years. Larger bad property loans have been transferred to a government controlled "bad bank", NAMA, and...
N°
906
22 Nov 2011
Macroeconomic and Structural Policies to Further Stabilise the Mexican Economy Cyrille Schwellnus
Improvements in the macroeconomic policy framework over the past two decades and prudent regulation of the financial system have contributed to reduce output volatility in Mexico relative to other OECD countries. The sharp recession in 2008-09 illustrated that output volatility has nonetheless...
N°
905
22 Nov 2011
Reaping the Benefits of a Transition to Greener Growth in Slovakia Caroline Klein
The transition to a greener economy supported by international environmental commitments and national policies will entail structural changes in consumption patterns and industry structures, resulting in a reallocation of resources in and between countries. Slovakia will need to build an...
N°
904
14 Nov 2011
Fiscal Reform for a Stronger Fairer and Cleaner Mexican Economy Nicola Brandt, Rodrigo Paillacar
With slow growth and high inequality Mexico needs investments in infrastructure, education and social policies. Mexico has increased spending in all of these areas. This was easily financed thanks to fiscal reforms in 2007 and 2009 as well as high oil prices in recent years. Oil revenues, which...
N°
903
05 June 2012
International Capital Mobility and Financial Fragility - Part 2. The Demand for Safe Assets in Emerging Economies and Global Imbalances Rudiger Ahrend, Cyrille Schwellnus
Mismatches between the supply and the demand of safe financial assets in fast-growing emerging
countries have been singled out by economic theory as drivers of international capital flows and,
ultimately, global current account imbalances. This paper assesses empirically the contribution of...
N°
902
05 June 2012
International Capital Mobility and Financial Fragility - Part 1. Drivers of Systemic Banking Crises Rudiger Ahrend, Antoine Goujard
This paper examines whether the composition of a country’s external liabilities and assets has an
incidence on its risk of suffering financial turmoil. Particular emphasis is put on the role of international
financial integration, using newly-constructed measures of contagion shocks. These new...
N°
901
21 Oct 2011
Explaining the Appreciation of the Brazilian real Annabelle Mourougane
This paper seeks to identify factors explaining the appreciation of the Brazilian real observed since 2003, which was temporarily interrupted only during episodes of financial turbulence. Net foreign assets and the productivity differential relative to Brazil’s main trade partners are found to...
N°
900
21 Oct 2011
Raising Investment in Brazil Jens Arnold
Low investment rates are limiting Brazil’s future potential growth rate. This paper analyses a number of potential reasons for these low investment rates and discusses policy options to achieve faster capital accumulation. A shortage of domestic saving appears to be a major constraint to higher...
N°
899
21 Oct 2011
Refining Macroeconomic Policies to Sustain Growth in Brazil Annabelle Mourougane
This paper identifies refinements to the macroeconomic framework that will help Brazil to achieve strong performance in a new environment in which population will age at a rapid pace, heavy reliance on oil resources will increase public revenue volatility and uncertainties regarding the...
N°
898
21 Oct 2011
Promoting Infrastructure Development in Brazil Annabelle Mourougane, Mauro Pisu
Brazil under-invested in infrastructure for over three decades, and infrastructure investment rates have come up only slowly since 2007. Infrastructure needs are sizeable in almost all sectors. It is likely that at its current stage of development the country will benefit from large pay-offs...
