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The development of purchasing power parities as converters of national accounts aggregates to comparable volume figures is important for international economic comparisons. This study is primarily concerned with the aggregation of price relativities to basic heading level: that is, the level below which there are no expenditure weights available across all of a given group of countries. Eight possible methods of aggregation to basic heading level are identified and appropriate summary statistics developed to assist in the subsequent practical investigation of these methods. This is undertaken using price data for 37 basic headings in ten OECD countries ...

An increasing amount of empirical evidence documents that city-size distribution within a country follows a power law, often in the form of Zipf’s law. This paper provides new comparative evidence on city size distribution across OECD countries. It uses a database where urban agglomerations are consistently identified across different countries, through an algorithm based on population density and commuting patterns. The paper investigates whether Zipf’s law fits well with data. A robustness check is carried out using a traditional administrative definition of cities. Results show that Zipf’s law describes well city size distribution not only at country level, but also at wider spatial scales. The law does not fit as well with the data when using a traditional administrative definition of cities.

As higher education has grown and state funding has been constrained, the financial sustainability of institutions of higher education has become an issue for policy makers and for those who govern and manage these institutions. The challenge for governments is to ensure that increasingly autonomous institutions respond to public interest agendas while taking a greater responsibility for their own financial sustainability. The challenge for institutions is to manage an increasingly complex portfolio of aims and funding. This report examines the conditions needed to secure financial sustainability for the future from the national (policy) and institutional (management) perspectives.

We analyse the effectiveness of exchange rate interventions for a panel of 18 emerging market economies during the period 2003-11. Using an error-correction model approach, we find that on average intervention is effective in moving the real exchange rate in the desired direction, controlling for deviations from the equilibrium and short-term changes in fundamentals and global financial variables. Our results are robust to different samples and estimation methods. We find little evidence of asymmetries in the effect of sales and purchases, but some evidence of more effective interventions for large deviations from the equilibrium. We also explore differences across countries according to the possible transmission channels and nature of some global shocks.

This paper displays and discusses historical data on sovereign debt prices for two Latin American countries and provides a signalling framework to account for the following phenomena: (a) prices for old (defaulted) and newly-issued debts were the same, but such prices diverge and rise sharply once the countries stopped issuing new foreign debt, and, (b) the price of defaulted and newly issued debts both tend to rise as the latter approaches maturity and the country starts redeeming all its outstanding obligations. The analysis sheds some light on the valuation of different debt instruments in today's secondary market for LDC debt ...

Poverty is typically measured in different ways in developing and advanced countries. The majority of developing countries measure poverty in absolute terms, using a poverty line determined by the monetary cost of a predetermined basket of goods. In contrast, most analyses of poverty in advanced countries, including the majority of OECD countries and Eurostat, measure poverty in relative terms, setting the poverty line as a share of the average or median standard of living in a country. This difference in how social outcomes are measured makes it difficult to share experiences in social policy design and implementation. This paper argues that policy analysis should rely on both relative poverty – measured as a share of the median standard of living – and absolute measures. As countries reduce extreme absolute poverty, concerns of social inclusion, better represented by relative poverty lines, become increasingly relevant. Anchoring the poverty line to median welfare makes the poverty line dependent on distributional parameters beyond the mean, thus allowing for poverty lines that differ across countries with the same level of income per capita. The paper derives and presents relative poverty headcount ratios from publicly available grouped data for 114 countries. An examination of the trends in absolute and relative poverty in Brazil, China and the United States uncovers commonalities that are not apparent if the analysis focuses on national poverty lines or different concepts across countries.

This paper combines development and growth accounting exercises with economic theory to estimate the relative importance of total factor productivity and the accumulation of factors of production in the economic development performance of Latin America. The region’s development performance is assessed in contrast with various alternative benchmarks, both advanced countries and peer countries in other regions. We find that total factor productivity is the predominant factor: low and slow productivity, as opposed to impediments to factor accumulation, is the key to understand Latin America’s low income relative to developed economies and its stagnation relative to other developing countries that are catching up. While policies easing factor accumulation would help improving productivity somewhat, for the most part, closing the productivity gap requires productivity-specific policies.

Both OECD and developing economies have embarked on structural reforms aimed at dismantling regulations and reducing the extent of distortions affecting different sectors of their economies. Regardless of the marked differences, both groups have to deal with the problems of the appropriate sequencing and speed of reforms. This paper first critically reviews the LDC related literature on sequencing and speed of structural reforms drawing out features which are of relevance for OECD economies. The paper then develops a formal framework based on a welfare criterion for evaluating different sequencing scenarios. The framework emphasises the microeconomic or efficiency effects of structural policies paying particular attention to the way in which distortions interact both intra and inter temporally. The framework is then used to discuss some of the important issues such as the sequencing of micro and macro reforms ("competition of instruments"), broad front versus sequential ...

Since the mid 90’s, public transport patronage in Île-de-France (the Paris region) has increased substantially: over the last decade alone a 20% growth was observed. This growth, even though it was an aim of the Sustainable Urban Mobility plan adopted in 2000, was not completely anticipated. Consequently, the capacity is no longer sufficient to meet the demand during the peak hours, particularly on several parts of the network in the dense central area of the region. This results in over-crowded vehicles and long waiting times for passengers at rail platforms and bus stops. The lack of maintenance and modernisation of the transport system causes additional operational difficulties.

In recent years the euro area has shown less resilience to the negative and largely OECD-wide common shocks than the English-speaking countries, but most of the smaller euro area countries have fared better than the large ones. This paper reviews policy issues that are important in fostering a speedy adjustment to shocks. We argue that the small countries are well placed to adjust swiftly to asymmetric shocks, because they are well integrated with the rest of the area. An activist fiscal policy is not needed and also not powerful enough to smooth the cycle. However, asset bubbles are a cause of concern as their limited weight means that the common monetary policy is more likely to be out of line with their cyclical position. Large countries are less well placed to cope with shocks and sluggish adjustment can be expected. Reforms should focus on raising trade linkages via the completion of the single market, on improving wage and price flexibility and on making their housing markets ...

This paper provides an analysis of the diverse range of SME and entrepreneurship policy measures implemented during the course of a year since the start of the COVID-19 crisis, with a view to identify lessons learned and implications for policy going forward, and assist governments build evidence-based policies to support SME recovery and resilience. The paper documents how SMEs were at the centre of the disruptions at the start of the pandemic and that one year later they stand in an even more precarious position, in particular young firms and start-ups, the self-employed, as well as women-led or minority-owned businesses. Governments acted swiftly to put in place ambitious support for SMEs and entrepreneurs, but one year into the pandemic, they are facing a complex dilemma that emergency liquidity support remains essential but at the same time it is not sustainable over the longer term and may have potential negative effects that need to be addressed to support the recovery. This paper formulates 15 lessons learned to help governments address three challenges: First, to continue support measures to avoid a liquidity crisis among SMEs while minimising the negative side effects; Second, to ensure that the gradual phase out of this emergency support does not create an SME solvency crisis; And third, to introduce effective policies that foster SME recovery.

This paper first reviews a number of stylised facts concerning OECD country business cycles over the past four decades. In general, the amplitude of business cycles has fallen, driven mainly by declining fluctuations of domestic demand. As a result, international divergencies of cyclical positions have diminished but, outside the euro area, there is little evidence of increased synchronisation of cycles. The paper then reviews a number of influences on business cycles. The evidence suggests that, on balance, features of macroeconomic policies may have tended to reduce cyclical volatility and structural changes, notably the increased share of the service sector in the economies, have also tended to dampen the cycle. More recently, there are signs that financial market prices have increasingly moved in sympathy across countries, and the final section of the paper illustrates how this could affect the international transmission of cyclical shocks and the associated need for policy ...