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What are the economic effects of implicit bank debt guarantees and who ultimately benefits from them? This paper finds that “financial excesses” – situations where bank credit reaches levels that reduce economic growth – have been stronger in OECD countries characterised by larger values of implicit guarantees and where bank creditors have not incurred losses in bank failure resolution cases. Also, implicit bank debt guarantees benefit financial sector employees and other high-income earners in two ways, increasing income inequality. First, implicit guarantees are likely to raise financial sector pay. This is consistent with the observation of “financial sector wage premia”, or financial sector employees earning in excess of their profile in terms of age, education and other characteristics. Second, implicit guarantees are likely to result in more and cheaper bank lending. If so, well-off people tend to benefit relatively more since household credit is more unequally distributed than income.
JEL classification: D63, E43, G21, G28, O47
Keywords: Bank funding costs, implicit guarantees for bank debt, bank failure resolution, finance and growth, finance and income inequality
This paper studies the internal consistency of professional forecasts on a micro level using three alternative data sets. The analysis is mainly based on the ECB Survey of Professional Forecasts for the euro area, but for comparison we also study the Consensus Economics survey and Survey of Professional Forecasts for the US. Forecast uncertainty is explored using two alternative measures, the conventional standard deviation of individual point forecasts and the mean uncertainty based on subjective probability distributions of survey respondents. Our analysis indicates that individual forecasters’ price and real GDP expectations are positively related, but that forecasters deviate systematically from each other. We also find clear evidence that individual forecasters form expectations according to the hybrid specification of the New Keynesian Phillips curve. On a micro level, inflation uncertainty seems to be closely related to output uncertainty. However, the relationship between alternative measures of uncertainty is relatively weak.
- When choosing a school for their child, parents in all participating countries value academic achievement highly; but they are often even more concerned about the safety and environment of the school and the school’s reputation.
- The children of parents who consider academic achievement very important score 46 points higher in mathematics than the children of parents who consider it not important.
OECD’s Recommendation of the Council on Budgetary Governance makes a substantial contribution to discussion of good budgetary practice by synthesising much common understanding while updating it to recognise some lessons from the experience of the Great Recession. Yet its implicit understanding of the purposes of budget processes has weaknesses both as policy and political analysis. The policy understanding overemphasises the importance of budget totals relative to budget details. The political understanding is as top-down as the policy view. Although budgets might be seen as contracts between citizens and the state, in a representative system they are better seen as treaties among citizens negotiated through politics. The Recommendation barely recognizes the existence of and challenges from political conflict.
JEL classification: H00, H60, H61
Keywords: Balance, fiscal policy, information, representation, top-down, United States
- While PISA reveals large gender differences in reading, in favour of 15-year-old girls, the gap is narrower when digital reading skills are tested. Indeed, the Survey of Adult Skills suggests that there are no significant gender differences in digital literacy proficiency among 16-29 year-olds.
- Boys are more likely to underachieve when they attend schools with a large proportion of socio‑economically disadvantaged students.
- Girls – even high-achieving girls – tend to underachieve compared to boys when they are asked to think like scientists, such as when they are asked to formulate situations mathematically or interpret phenomena scientifically.
- Parents are more likely to expect their sons, rather than their daughters, to work in a science, technology, engineering or mathematics field – even when their 15-year-old boys and girls perform at the same level in mathematics.