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This report looks at the policies and programmes Chile has been putting in place over the past few decades to foster the development of public transport in remote communities. In particular, it has been taking a regional approach and encouraging private investment in transport.

Consumption taxes are only rarely assessed for their impact on the economic well-being of individuals. This paper reviews various studies on this issue. It first describes the large differences in the size and structure of these taxes among OECD countries, and then reviews the types of assumptions that are typically made when estimating the redistributive impact of these taxes. Based on this review, the paper advocates the wider adoption of the methodology that is currently adopted by government statisticians in Australia, Canada and the United Kingdom – based on input-output tables and on the modelling of a large part of the consumption taxes levied on various types of final expenditures and production inputs. The paper argues that, beyond methodological differences, all studies agree that consumption taxes have a significant regressive impact on the distribution of household disposable income. Illustrative simulations – based on applying the detailed findings on the incidence of consumption tax in one country (Australia) to the tax structure and income distribution of other OECD countries suggests that omission of consumption taxes affects estimates of the overall size of the redistribution achieved through the tax system and of how this differ across countries and evolves over time.

As a result of the massive growth of higher education in Turkey, the most pressing priority for this sector today is to meet the new space requirements for an increasing number of students. Now a subject of public attention more than ever before, the second largest item of expenditure for universities is the construction of physical spaces. This article sets out the key trends and presents the findings of a questionnaire conducted in 2005.

This paper reviews the simulation properties of a recent version of the OECD Secretariat's international macroeconomic model, INTERLINK, a version which embodies much of the empirical work reported in recent Working Papers and summarised in a separate companion paper ESD Working Paper No. 46. The material presented is intended to provide a general overview of model properties and some of the key mechanisms involved ...

While the philosophy behind the supply block has not changed since its initial version, each of the block's behavioural equations as well as the parameters of the production functions have been substantially modified. These modifications have been motivated, in general, by a wish to improve the consistency of the block and to relax some of the constraints imposed. Consistency has been improved via a minor modification to the procedure for estimating the parameters of the production function, as well as from the inclusion of a measure of "normal" inventory growth in the demand term in the output equation. In the new version, the equilibrium stock/output ratio is no longer treated as a constant; tax considerations and domestic price effects are now included in the business energy price equations, and the dynamic adjustment of the factor demand equations has been made more general. Finally, some research on potential output, based on the revised production model, is reported ...

This Working Paper studies ways to stimulate the private rental sector (PRS) of the housing market – and compares experiences with policies and reforms in Germany, the Netherlands, Finland and the Czech Republic. Although in many countries the PRS has decreased in importance since the Second World War, there are signs of a growing importance and possible ‘revival’ of the PRS. A well-functioning PRS and neutrality in housing policies can improve the functioning of the housing market – by promoting residential mobility, increasing housing options for households and generating competitive supply and affordable prices. The PRS can have positive effects on the economy and labour mobility and reduce inefficiencies and risks of owner-occupied and social housing. Trade-offs between goals in housing policies, and regulatory impediments to a level playing field between segments of the housing market (owner-occupancy, social rental, private rental) are analysed. The article outlines policy options in promoting a well-functioning PRS: lessons are drawn on tenancy security, rent-setting regulations, social housing, demand subsidies, fiscal measures for rental and owner-occupied housing and barriers for PRS supply. Experiences from the countries show that it is hard to create a level playing field – there are inefficiencies in all four countries. Nonetheless, there are many positive experiences of stimulating the PRS: reforms in Finland and the Czech Republic stimulated the PRS to become a competitive and important part of the housing market, and Dutch policies are adapted to stimulate a level playing field. The ‘resilience’ of the German housing system during the economic crisis shows that the large PRS and tenure neutrality have important stabilising effects on the German economy.

This paper discusses the initiatives and procedures necessary for the successful development of large-scale transportation PPP projects from a developer’s point of view...

Hungary’s Belvárosi Tanoda Secondary School offers an informal, flexible environment and alternative teaching methods for students who have had problems in other schools. The Belvárosi Tanoda (which translates as downtown school) is a second chance school for students who have dropped out of upper secondary education. It has been providing alternative education for 16- to 25-year-olds since 1990. While most Hungarian schools are run by their local government, Belvárosi Tanoda is maintained by a private foundation, with the state covering about half of its operating costs. The school charges no tuition fees since most of its students are in financial need.

This paper develops a simple model-based framework for stress testing fiscal consolidation strategies under different scenarios of future shocks. A baseline scenario assuming a gradual debt consolidation is presented and by assuming different future developments (e.g. lower potential growth) and/or model specification in terms of a fiscal rule confidence bands around the baseline are obtained. Trade-offs between costs and benefits are evaluated, in terms of cumulative output loss and primary surpluses, as well as political difficulty of fiscal strategies and risk of failed consolidation. The model is applied to Austria, Czech Republic and Germany. This working paper relates to the 2013 OECD Economic Surveys of Austria, Czech Republic and Germany. (www.oecd.org/eco/surveys)

This paper uses a simple dynamic stochastic general equilibrium model to explore the qualitative impact of productivity shocks on current account positions via their impact on the saving behaviour of households. The analysis shows that the direction of the impact is ambiguous from a theoretical point of view. This impact depends in particular on consumer’s willingness to shift consumption over time relative to their willingness to shift consumption between different types of goods, on whether they believe the shock to be temporary or permanent, and on the sector in which the shock occurs.

This paper presents a simulation model of the main budget aggregates of federal, provincial and territorial governments in Canada. The general approach is to use a cyclical indicator (output gap), estimate the sensitivity of government revenue and expenditure to this cyclical indicator using historical data, and use projections of the cyclical indicator to simulate budgetary outcomes under various economic scenarios. Provincial/territorial annual output gaps are estimated going back to 1984. These are used to jointly estimate for all governments the historical sensitivities of the main revenue and expenditure categories to provincial/territorial economic cycles using Seemingly Unrelated Regressions. Projections of potential output by province and territory are then made to 2020 and a multitude of paths for the evolution of provincial/territorial output gaps are generated to 2020. These output gap paths serve as bases for simulating medium-term fiscal outcomes under a variety of possible economic scenarios, allowing the construction of probability densities for fiscal outcomes. The paper also contains an analysis of the cyclicality of Canadian governments’ fiscal policies between 1984 and 2007. Several jurisdictions are found to have had pro-cyclical fiscal policies over this period.

How and to what extent can a high degree of global financial integration help the fast-ageing OECD benefit from the delayed ageing process in the non-OECD area? The question is being raised with increasing urgency as it is slowly understood that even fully funded pension schemes will not escape demographic pressures in the absence of considerable capital flows between the ageing OECD and the younger part of the world.

A simulation with a two-region neo-classical economic-demographic model reaches two basic conclusions of importance to policy makers. First, capital flows from fast-ageing, mostly OECD countries to slowly ageing, mostly developing countries can only slightly attenuate, but not reverse, the consequences of an ageing population on falling returns to capital. Second, significant distributional effects are likely to arise from the interaction of population ageing and financial integration. Global financial integration benefits elderly lifetime savers, but hurts elderly ...

This paper describes the OECD’s new small global forecasting model for the three main OECD economic regions: the United States, the euro area, and Japan. The key variables – which include output, inflation, the trade balance, and import prices – are driven by monetary and fiscal policy, exchange rates, and world demand. The projections from the model are used as a starting point to help animate the early stages of the OECD’s forecasting round. The model is essentially a demand-side model with a particular focus on the impact of global linkages and the transmission of influences between regions ...

The share of the tertiary sector in China’s value added has increased steadily, overtaking the share of the secondary sector in 2013. With increasing incomes, the share of services is expected to grow further as at higher incomes a larger share of income is spent on services. In addition to final demand, intermediate demand can be another driving force for service industries. As liberalisation leads to a greater role for the market in allocating resources, service industries are expected to become more competitive and therefore it may become cheaper to outsource services than to produce them in-house. Liberalisation will likely also lead to greater specialisation to remain competitive, thereby making specialised services available for outsourcing. This will likely spur the development of some high value-added logistics services such as warehousing or order handling. By the same token, professional services such as accounting or engineering are also likely to benefit from a greater reliance on the market and greater competition. In the envisaged transition from “made in China” to “created in China”, the service sector is expected to play a prominent role. To that end, the service sector is gradually being provided a more even playing field as privileges for manufacturing industries are being withdrawn and a more equal treatment of producers across sectors is being adopted. This paper provides a snapshot of the service sector, its size, the ownership of its firms, and productivity across types of firms depending on ownership, sector, age, size and geographical region. This Working Paper relates to the 2015 OECD Economic Survey of China www.oecd.org/eco/surveys/economic-survey-china.htm.

This paper forms part of an OECD project which addressed the issue of the structure and change in the distribution systems of seven OECD countries.

The paper gives an overview of the structure of the Japanese distribution system and discusses its economic performance, both on the grounds of efficiency and market access. Next, a detailed analysis of the Japanese distribution sector is carried out, on the basis of which policy recommendations are drawn ...

Sub-national governments are key players for public investment, as they are responsible on average for 62% of total public investment in OECD countries. This article analyses the different factors affecting sub-national governments’ fiscal space for public investment. It proposes an indicator for measuring this fiscal space and analyses the evolution of its different components over 2007-2012. The article shows that the global financial crisis and the ensuring consolidation drive have reduced sub-national governments’ fiscal space for public investment, through a downward pressure on revenues, increased expenditure obligations, and constrained capacity to borrow or issue debt on financial markets.

Sub-national governments (SNGs) are key players for public investment in OECD countries, responsible for nearly two-thirds of it. At the same time, both the well-being of the population and economic performance depend on an adequate provision of public services, which require public facilities and thus public investment. Ensuring that sub-national governments command the resources for necessary public investment is hence important. While in the immediate, the fiscal space of a SNG for public investment is basically determined by its current fiscal capacities, in a longer-term perspective the evolution of fiscal space comes to depend increasingly on the institutional context. This includes the national framework of fiscal relations across levels of government, the nature and characteristics of SNGs’ revenue sources and spending responsibilities, SNGs resilience to crises, and their structural ability to borrow. This paper explores the institutional ability of SNGs to influence their fiscal space for public investment. In this context, it also analyses the main challenges to be faced by SNG finances in the decades to come, as well as recent reforms implemented by SNGs to tackle these specific issues.

This paper surveys various estimates of the macroeconomic implications of reducing greenhouse gas emissions. Most available studies focus on policies to reduce CO2 emissions and are limited to the costs of such policies. The survey first examines the key factors shaping baseline emission scenarios. It then looks at the aggregate cost of emission reductions, as shown by both global and country-specific models, and discusses the key determinants of the model outcomes. The paper also briefly reviews other options for reducing greenhouse gas emissions and draws some more general lessons for the policy response to the threat of climate change ...