Measuring the effects of oil price and Euro-area shocks on CEECs business cycles

Assessing the cyclical alignment of national business cycles with the Euro-area one is of great importance in order to guide policy decisions concerning the enlargement of the Euro area. To this end, in this paper we aim to measure the effects of external macroeconomic shocks on business cycles of Central and Eastern European Countries, not yet Euro-area members. Using quarterly data from 1999 to 2015 and the structural near-VAR methodology, we focus on the effects of Euro-area monetary policy and global oil price shocks on prices and output of the analyzed countries. Results show that business cycle fluctuations are mainly explained by domestic shocks in the short run, while monetary policy and oil price shocks play an increasing role in the medium run. Adding domestic fiscal shocks, the overall picture does not change significantly, since fiscal policy turns out to be a minor driver of business cycle fluctuations in CEECs. In the whole, our findings do not support an Euro-area enlargement at short horizons.     

Are government wages interlinked with private sector wages?

The ongoing fiscal and financial crisis with significant macroeconomic imbalances in the euro area raises the question in how far public–private wage interaction and even wage spirals contribute to fiscal and competitiveness problems. In this vain we analyse empirically whether the evolution of public sector wages is decoupled from that of the private sector. Using data for number of OECD countries, we find: (i) a strong and extremely robust positive annual contemporaneous correlation of public and private sector wages over the business cycle; (ii) evidence of co-movement of these variables over the medium and long run. From a policy perspective, the findings of this study suggest public wage restraint and private wage flexibility coupled—where needed—with institutional reform to prevent or break public–private wage spirals.     

And yet they Co-move! Public capital and productivity in OECD

In this paper, we add to the debate on the public capital–productivity link by applying very recent developments in the panel time series literature that take into account cross sectional correlation in non-stationary panels. In particular, we evaluate the productive effect of public capital by estimating various production functions on a panel of 21 OECD countries over the period 1975–2002. Our results suggest that public capital has a positive long run impact on output, with elasticities that range between 0.05 and 0.15, depending on model specification. These findings are robust to the existence of spillover effects from public capital investments in other countries and to the inclusion of other productivity determinants, like human capital, the stock of patents and R&D capital. Finally, we do not find any important effect of public capital on GDP in the short run: this suggests that public infrastructure investments might not be a powerful countercyclical policy instrument.     

Output gap and non-linear economic convergence

We apply unit root tests in a multivariate TAR model with bootstrapping simulations to assess the influence of short-run economic conditions on long-run economic convergence and to extract economic policy implications. We use two different groups of countries whose members share important business cycle characteristics over the period 1953–2010. We show that per capita income convergence is not uniform along the business cycle and our analysis reveals that, apart from growth-led actions and structural reforms to avoid the evolution towards different national stationary states – especially within the euro zone – short-run stabilisation policies are vividly advised to guarantee long-run economic convergence.     

A model for the coordination of recovery policies in the OECD region

The paper presents a world econometric model of the LINK type, which is then applied to the study of the recovery prospects of the OECD economies. Specifically, several policy packages coordinated at the international level are assessed for the period 1978–1980.The model includes country specific macroeconomic structures for eight developed economies, and different type structures for five additional developing countries. The obvious policy and behavioral differences that exist between these two groups of countries are highlighted through the specification, in one case, of demand-oriented Keynessian models able to capture short-term cyclical phenomena. The supply orientation with several resource gaps (savings, foreign exchange, etc.) prevails for the developing economies. The two sections after the introduction review broadly the main modeling features of the project, including the international comparison of structural parameters. In the following sections several policy experiments are attempted. The underlying behavioral assumptions stress the community of interest that prevails among OECD economies. These experiments consider the case of stimulative policies adopted in (1) the United States alone, (2) three engine countries (United States, Federal Republic of Germany, and Japan), and (3) several developed countries that are part of the OECD system. Other experiments assume additional policy packages to correct present current account imbalances. The general conclusion of the study is that the prospects for economic recovery in the OECD area depend to a crucial extent on the ability of the member countries to agree on policies able to make the major economic indicators of each economy converge toward levels that are domestically manageable and mutually supporting.     

The Multicultural Welfare State: International Experience and North American Narratives

Contemporary debates are increasingly pessimistic about the impact of ethnic diversity on support for the welfare state. A growing number of analysts argue that greater ethnic diversity in Western democracies is weakening public support for redistribution, and that this underlying tension is exacerbated by the adoption of robust multiculturalism policies. The purpose of this essay is to summarize early findings from several studies that bear on the questions at the heart of such debates. These studies analyse the implications of immigration and multiculturalism policies for the welfare state across OECD countries, and also focus more closely on the experience of two distinctively multicultural countries, the United States and Canada. The evidence points to more complex relationships than often assumed. OECD countries with large foreign‐born populations have not had more difficulty in sustaining their welfare states than other countries. The extent of change does seem to matter, however, as countries in which immigrant communities grew rapidly between 1970 and the late 1990s did experience lower rates of growth in social spending. But despite the warnings of some critics, robust multiculturalism policies do not systematically exacerbate this tension. Moreover, the United States and Canada reflect different patterns. In the US racial diversity does weaken support for redistribution; but Canadian experience suggests that immigration, multiculturalism policies and redistribution can represent a stable political equilibrium. These contrasting narratives from North America stand as a warning against premature conclusions based on the US experience alone. There is no inevitability at work, and policy choices do seem to matter.     

Housing and the business cycle in South Africa

This paper examines the housing-output growth nexus in South Africa by accounting for the time variation in the causal link with a bootstrapped rolling Granger non-causality test. We use quarterly data on real gross domestic product, real house prices, real gross fixed capital formation and number of building plans passed. Our data span 1971Q2–2012Q2. Using full sample bootstrap Granger causality tests, we find a uni-directional causality from output to number of building plans passed; a uni-directional causality from real house price to output and a bi-directional causal link between residential investment and output. However, using parameter stability tests, we show that estimated VARs are unstable, thus full-sample Granger causality inference may be invalid. Hence, we use a bootstrap rolling window estimation to evaluate Granger causality between the housing variables and the growth rate. In general, we find that the causality from housing to output and, vice versa, differ across different sample periods due to structural changes. Specifically speaking, house price is found to have the strongest causal relationship with output compared to residential investment and number of building plans passed, with real house price showing predictive ability in all but one downward phase of the business cycle during this period.     

Financing of health service systems: Recent developments and reforms

Health systems everywhere have been undergoing profound changes since 1980. The major OECD countries (with the exception of the United States and France) have brought their health spending under control, modified the methods for determining health sector incomes, and introduced competition and financial incentives. In eastern Europe the question of which new health systems to adopt is firmly on the agenda. In the former USSR there have been experiments similar to those carried out in the United States and the United Kingdom, while France has remained largely on the sidelines. The author considers the various options.     

OECD国家家庭福利政策实践与启示

家庭福利政策作为OECD国家政策体系的有机组成部分,在稳定家庭功能、提高家庭福祉等方面发挥了重要作用。税收优惠是国外家庭福利供给的主要手段,美国近一半的家庭福利、日本近40%的家庭福利来自税收优惠。在经济体制深刻变革、社会结构深刻变动、利益格局深刻调整、思想观念深刻变化的形势下,我国传统家庭功能正在经受严重冲击,家庭互助、家庭照料、社会融合等婚姻家庭新问题不断凸显。文中系统梳理近20个OECD国家的家庭税收优惠措施,提出在我国工薪所得税中率先探索家庭税收优惠政策,提高家庭发展能力。     

Educational disparities across regions: A multilevel analysis for Italy and Spain

In this paper, a multilevel analysis is applied to the OECD-PISA2006 data with the aim to compare factors affecting students’ achievement across Italy and Spain. The findings show that both countries are affected by strong internal regional heterogeneity, where some regions have achievement scores well above the OECD mean and other are placed among the worst performers in the OECD area. Although regional governments are more autonomous about educational policy-making in Spain, regional indicators exert a higher influence on educational results in Italy where educational system is strictly regulated by the national government.     

Minsky and Keynes on speculation and finance

Is Hyman Minsky's “Financial Instability Hypothesis” actually an interpretation of Keynes General Theory? Yes and no. Yes, they both describe an economy dominated by monetary forces in which employment and output dance to the expectations of financial players via speculation. But, no, they do not contain the same analytical structure. Keynes' theory specifies static positions of equilibrium. Minsky's analysis investigates the dynamic processes of the business cycle. Minsky's work might be viewed as the business cycle theory Keynes hinted at, but never completed.     

Price controls, trade protectionism and political business cycles in the U.S. steel industry

The U.S. steel industry is subject to a microeconomic political business cycle resulting from U.S. Presidents designing protectionist policies on behalf of the steel industry; experiencing complaints from consumers and foreign producers as a result of the policy; modifying the policy which results in complaints from the steel industry; and finally, maneuvering policy back in favor of the industry to achieve re-election. Using a cointegrating vector error correction framework, this paper tests the hypothesized political business cycle for its effect on steel prices. We find that trade protectionism does not seem to have succeeded in its primary objective of supporting prices. By expending so much political capital on ineffective trade protection, the steel industry may have lost the opportunity to focus on more substantive issues that might have restrained factor cost and enhanced its competitive ability. The devolution of the steel industry, ironically, may have resulted from it's persistent pleas for protection. Political business cycles in the steel industry, with all its attendant negative consequences, would not occur if the steel industry did not continually lobby for protection.     

Comparing the Pension Promises of 30 OECD Countries

This paper takes a microeconomic approach to compare prospective pension benefits in the 30 OECD countries. It shows entitlements gross and net of taxes and social security contributions for male and female single workers based on 2002 pension rules and parameters. The models cover all public and private mandatory sources of retirement income for full‐career private‐sector workers across a broad earnings range. The paper shows that average earners in OECD countries can expect a post‐tax pension of about 70 per cent of their earnings after tax. The average minimum retirement benefit is just under 29 per cent of national average earnings.     

A simple test on the convergence of social security transfer in OECD countries

The growing trend toward globalization not only has aggravated international competition but also has increased interdependence among countries, inducing the need for harmonization and convergence of socioeconomic policies across countries. This paper examines whether the convergence phenomenon holds for social security transfers as a percentage of GDP in OECD countries, applying the traditional methodology of σ- and β-convergence.     

The institutional design of the Australian Welfare State

This paper seeks to compare and contrast the character of social policy in Australia with that in other OECD countries by focusing on the distinctive design features of the institutions constituting the wider context of Australian social policy provision. The three substantive sections of the paper successively summarize the distinguishing features of the institutional design of Welfare State provision in continental western Europe, Scandinavia and Australia; outline the wider institutional context of social policy in Australia; and examine the extent to which the distinctiveness of the institutional design of the Australian Welfare State has led to different patterns of policy outcomes from those in other nations.     

Differences in wage determination in the Eurozone: A challenge to the resilience of the common currency

Different developments in wages and unit labor costs across countries can reduce the synchronization of business cycles within a currency area and therefore be a potential source of asymmetric shocks and/or asymmetric response to a common shock. In this paper, we use novel econometric methods to identify differences and similarities in wage determination across Eurozone countries. Results show that wages have different determinants across euro area countries, among which two relatively distinct groups can be identified. In particular, wages in Germany, Austria, Belgium, Luxembourg, the Netherlands and Finland behave more similarly, are less sticky and respond more to macroeconomic conditions than those in the group composed of Italy, Spain, Portugal, France and Ireland. Moreover, the equilibrium wage has been affected by a structural change contemporaneous to the international financial crisis. Finally, structural reforms since the euro crisis have contributed to make labor market structures in Eurozone countries more similar, which contributed to improve the resilience of the Eurozone, but the job is not completed yet.     

The Contributions of the Health Decommodification Typologies to the Study of the East Asian Welfare Regime

Since Esping‐Andersen presented the three worlds of welfare typology thesis, the study of the classification of welfare regimes has been dominated by his work and the debates surrounding it. This article is concerned with two important responses to his work. The first response is the development of welfare typologies based on the principle of decommodification. The second response is the concern that East Asian countries are underrepresented in the 18 members of the Organisation for Economic Co‐operation and Development (OECD) studied by Esping‐Andersen. As a result, there are calls for expanding the scope of the studies on the classification of welfare regimes to those in East Asia. This article makes contributions to these two responses by presenting two analytical tasks. The first task is to develop two health decommodification typologies based on two different methods (cluster analysis and Esping‐Andersen's index‐based regime construction). Both of them cover the 18 OECD members studied by Esping‐Andersen and four tiger economies (Hong Kong, Taiwan, South Korea and Singapore). The second task is to demonstrate that the two health decommodification typologies provide important information for the debate on the existence of two essential preconditions for the development of an all‐encompassing East Asian welfare regime, namely the existence of significant differences in the welfare systems between the East Asian countries and the 18 OECD countries studied by Esping‐Andersen (1990 ) and the existence of significant similarities in the welfare systems between East Asian countries.     

Paid parental leave and other supports for parents with young children: The United States in international comparison

The United States is at a crossroads in its policies for families and women. Currently, the United States provides basic support for children, fathers, and mothers in the form of unpaid parental leave, child‐related tax breaks, and limited public child care. In contrast, the other member states of the Organisation for Economic Co‐operation and Development (OECD) empower families through paid parental leave and comprehensive investments in infants and children. The potential gains from strengthening these policies in the United States are enormous. Paid parental leave and subsidized child‐care help to get and keep more women in the workforce, contribute to economic growth, offer cognitive and health benefits to children, and give parents options in defining their preferred work‐life strategy. Indeed, the United States has been falling behind the rest of the OECD in many social and economic indicators by not adequately investing in children, fathers and mothers. Given the significant payoffs to these family supports, this article focuses on issues of reconciling work and care commitments for families with young children, and, in particular, on paid parental leave policies within the OECD and the United States.     

Social security pensionable ages in OECD countries: 1949-2035

This paper examines the pensionable or early retirement age in social security in 23 OECD countries over the years 1949‐2035. The policies for future years are those in current law, with some not being fully effective until 2035. The paper documents a pattern of decreasing pensionable ages that reversed in the 1990s, with many countries raising pensionable ages since the beginning of that decade, though generally with future effective dates. Pensionable‐age policy provides insight into broader issues in social policy, such as whether social policies across countries have converged over time. The paper also examines the time pattern in the movement toward gender equality in social programmes.     

The benefits to Caribbean Basin countries from the U.S. CBI tariff eliminations

The Caribbean Basin Economic Recovery Act eliminates U.S. tariffs on many exports of countries in the Caribbean Sea and Central America. This paper estimates the short-run effects of these tariff eliminations on the export earnings and economic welfare of the beneficiary countries. It is found that the tariff eliminations increase annual export earnings of beneficiaries by at most $81 million and provide annual welfare gains to these countries of $15 million to $24 million. The benefits are concentrated in agricultural products (particularly sugar, beef, and tobacco) and in products assembled from U.S. components for export to the United States (particularly electronic equipment). The countries that benefit most are the Dominican Republic, Panama, and Guatemala.