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This paper proposes an analytical framework for assessing policies for green growth in rapidly growing cities in the emerging world. It builds on Cities and Green Growth: A Conceptual Framework (Hammer et al., 2011) and is adapted to the urban policy context of dynamic Asia. Its three main elements are: i) identification of the key policy strategies for urban green growth in fast-growing Asian cities, highlighting similarities to and differences from OECD cities; ii) opportunities for green growth; and iii) enabling strategies for implementing urban green growth.
This paper assesses the OECD’s projections for GDP growth and inflation during the global financial crisis and recovery, focusing on lessons that can be learned. Growth was repeatedly overestimated in the projections, which failed to anticipate the extent of the slowdown and later the weak pace of the recovery. Similar errors were made by many other forecasters. At the same time, inflation was stronger than expected on average. Analysis of the growth errors shows that the OECD projections in the crisis years were larger in countries with more international trade openness and greater presence of foreign banks. In the recovery, there is little evidence that an underestimate of the impact of fiscal consolidation contributed significantly to forecast errors. Instead, the repeated conditioning assumption that the euro area crisis would stabilise or ease played an important role, with growth weaker than projected in European countries where bond spreads were higher than had been assumed. But placing these errors in a historical context illustrates that the errors were not without precedent: similar-sized errors were made in the first oil price shock of the 1970s. In response to the challenges encountered in forecasting in recent years and the lessons learnt, the OECD and other international organisations have sought to improve their forecasting techniques and procedures, to improve their ability to monitor near-term developments and to better account for international linkages and financial market developments.
JEL classification: E17, E27, E32, E37, E62, E66, F47, G01
Keywords: Forecasting, economic outlook, economic fluctuations, fiscal policy
Despite the increased importance of cyclically-adjusted measures of labour market slack for policymaking, estimates of the NAIRU have become increasingly fragile. Particularly for euro area countries, NAIRU estimates represent a crucial input to compute cyclically-adjusted budget balances adopted to formulate medium-term fiscal objectives under the EU fiscal surveillance framework. However, the apparent reduced sensitivity of inflation to labour market dynamics and unemployment gaps seriously undermines the use of Phillips curve equations in estimating the NAIRU. Estimates of the NAIRU are particularly problematic when changes in unemployment are both very large and rapid as in the aftermath of the global crisis. This paper proposes a refinement to the standard OECD approach of using a Kalman filter to estimate the NAIRU in the context of the Phillips curve. The proposed refinement strengthens the relationship between inflation and labour market developments by considering the risk of hysteresis effects associated with changes in long-term unemployment. Testing the revised methodology on a broad selection of OECD countries gives mixed results. For a group of countries in the euro area periphery (Greece, Ireland, Italy, Portugal and Spain) there is an increase in the magnitude and statistical significance of the unemployment gap, with the NAIRU revised upward by on average 1¾ percentage points. However, the revised methodology provides less improvement to the standard OECD methodology for a second set of countries considered, namely the G7 excluding Italy. The United States is an interesting intermediate case as the statistical evidence for the proposed methodology is marginal, but the policy implications of the revised point estimate of the NAIRU are major.
JEL classification: C32, E24, E31, E32, J64.
Keywords: Long-term unemployment, flattening Phillips curve, NAIRU, euro area periphery, Kalman filter.
Answering these questions is vital for helping governments design and target policies that promote “greener” behaviour. The OECD’s Environmental Policy and Individual Behaviour Change (EPIC) survey is designed to do just that. This large-scale household survey explores what drives household environmental behaviour and how policies may affect household decisions. It focuses on five areas in which households have significant environmental impact: energy, food, transport, waste and water. This policy paper is based on the second round of the EPIC survey, carried out in 2011 (the first was in 2008). The survey collected information from more than 12 000 households in Australia, Canada, Chile, France, Israel, Japan, Korea, the Netherlands, Spain, Sweden and Switzerland.
Against the background of the recent financial crisis that in many countries metastasised into significant fiscal stress, this article reviews the analysis, management and mitigation of fiscal risks. On the basis of the classification of specific, general and systemic types, fiscal risks have been estimated directly, and more recently, through sensitivity tests on baseline macro-fiscal projections. Although still at an experimental stage, valuable insights have been gained for implementation of various stochastic methods. The article draws a number of lessons for improved management and mitigation of fiscal risks from a recent OECD survey of country practices. This suggests scope for improvement on a number of fronts: disclosure and estimation of risks; assignment of such tasks within the public sector; adoption of various insurance schemes; building special-purpose reserves; and enacting well-designed fiscal rules, along with effective no-bailout provisions. At the policy level, it is necessary to adopt a countercyclical policy stance especially during economic booms; to enforce transparent accounting and forecasting practices; and where necessary, to undertake structural reform in key areas. An additional overarching lesson from the financial crisis is the need to assess and prevent systemic fiscal risk through close co-ordination with an independent macroprudential supervisory authority.
JEL classification: H5, H12, H41
Keywords: Fiscal risk, fiscal rules, countercyclical policy, systemic risk, stochastic methods
S'appuyant sur des données harmonisées couvrant les pays de l'OCDE au cours des 30 dernières années, l'analyse économétrique suggère que les inégalités de revenus ont un impact négatif et statistiquement significatif sur la croissance ultérieure. En particulier, ce qui importe le plus est l'écart entre les ménages à faible revenu et le reste de la population. En revanche, aucune preuve n'est trouvée sur le fait que les personnes ayant des revenus élevés s'élevant loin du reste de la population nuit à la croissance. Le document évalue également la «théorie de l'accumulation du capital humain" montrant le capital humain comme un canal par lequel les inégalités peuvent affecter la croissance. L'analyse fondée sur les micro données de l'Enquête sur les compétences des adultes (PIAAC) montre que l'augmentation des disparités de revenus inhibent le développement des compétences chez les personnes dont les parents ont un faible niveau d'instruction, aussi bien sur le plan quantitatif du niveau de scolarité atteint (par exemple, en années de scolarité), qu'en termes de qualité (niveau de compétences). Les résultats scolaires des personnes issues de milieux les plus riches, toutefois, ne sont pas affectés par les inégalités.
Il s'ensuit que les politiques visant à réduire les inégalités de revenus ne doivent pas seulement être poursuivies pour améliorer les résultats sociaux, mais aussi pour soutenir la croissance à long terme. Les politiques de redistribution via les impôts et les transferts sont un outil essentiel pour s'assurer que les bénéfices de la croissance sont plus largement distribués et les résultats suggèrent qu'on ne doit pas forcément s'attendre à ce que la redistribution nuise à la croissance. Mais il est également important de promouvoir l'égalité des chances dans l'accès et la qualité de l'éducation. Ceci implique de mettre l'accent sur les familles avec enfants et les jeunes - car c'est lorsque les décisions sur l'accumulation de capital humain sont prises - par la promotion de l'emploi pour les groupes défavorisés, grâce à des politiques actives du marché du travail, des supports de gardes d'enfants et des prestations d'activité.