Is backward-looking behavior in pricing or imperfect credibility of stabilization efforts responsible for the failure of inflation rates to decline to targeted levels during many disinflation programs? This paper assesses the relative importance of these two factors during a number of disinflation attempts in developing and transition economies. Using survey data, we find that expectations of future inflation play a much more important role than past inflation in shaping the inflation process. We also find that an improvement in primary fiscal balances significantly reduces inflation expectations. This suggests that during stabilization episodes, priority should be given to building fiscal credibility by strengthening public finances.
{"title":"Obstacles to Disinflation: What is the Role of Fiscal Expectations?","authors":"Oya Celasun, Gastón Gelos, A. Prati","doi":"10.2139/ssrn.574841","DOIUrl":"https://doi.org/10.2139/ssrn.574841","url":null,"abstract":"Is backward-looking behavior in pricing or imperfect credibility of stabilization efforts responsible for the failure of inflation rates to decline to targeted levels during many disinflation programs? This paper assesses the relative importance of these two factors during a number of disinflation attempts in developing and transition economies. Using survey data, we find that expectations of future inflation play a much more important role than past inflation in shaping the inflation process. We also find that an improvement in primary fiscal balances significantly reduces inflation expectations. This suggests that during stabilization episodes, priority should be given to building fiscal credibility by strengthening public finances.","PeriodicalId":236508,"journal":{"name":"Wiley-Blackwell: Economic Policy","volume":"220 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2004-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124357769","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2004-04-01DOI: 10.1111/j.1468-0327.2006.00163.x
R. Faini
type="main" xml:lang="en"> The appetite for fiscal discipline has been steadily declining among most industrial countries. In the past, fiscal profligacy would have been punished by markets with higher interest rates and, in some cases, also exchange rate depreciation. However, in post-EMU Europe, exchange rate markets no longer discipline the fiscal behaviour of national governments. Perhaps more crucially, even the interest rate punishment to fiscal indiscipline is highly uncertain, with academic opinions being quite divided on this issue. This paper takes a close look at the link between fiscal policy and interest rates in the European context. The key finding is that an expansionary fiscal policy in one EMU member will have an effect both on its spreads and on the overall level of interest rates for the currency union as a whole, with the second effect, however, being quantitatively much more significant. This suggests that there are indeed substantial spillovers, through the interest rate channel, among fiscal policies of member countries. To limit countries’ incentive to run expansionary fiscal policies, a set of rules, like those embedded in the Stability and Growth Pact, is then needed. Some (weak) evidence is also found that after EMU, interest rate spillovers seem to be more significant for high debt countries with unsustainable fiscal policies, reflecting perhaps market concerns about a possible sovereign bail out or the impact of financial distress. There may be a case then for imposing tighter rules on high debt countries. — Riccardo Faini
大多数工业国家对财政纪律的兴趣一直在稳步下降。在过去，财政挥霍会受到市场的惩罚，利率会更高，在某些情况下，还会受到汇率贬值的惩罚。然而，在后欧洲货币联盟时代，汇率市场不再约束各国政府的财政行为。或许更关键的是，就连对财政违规行为的利率惩罚也高度不确定，学术界在这个问题上的意见分歧很大。本文对欧洲背景下的财政政策与利率之间的联系进行了深入研究。关键的发现是，一个欧洲货币联盟成员国的扩张性财政政策将对其息差和整个货币联盟的整体利率水平产生影响，然而，第二种影响在数量上要显著得多。这表明，通过利率渠道，成员国的财政政策之间确实存在巨大的溢出效应。为了限制各国实施扩张性财政政策的动机，需要制定一套规则，就像《稳定与增长公约》(Stability and Growth Pact)所规定的那样。一些(微弱的)证据还表明，在欧洲货币联盟之后，利率溢出效应似乎对财政政策不可持续的高债务国家更为显著，这可能反映了市场对可能的主权纾困或金融困境影响的担忧。或许有理由对高负债国家实施更严格的规定。——里卡多·菲尼
{"title":"Fiscal Policy and Interest Rates in Europe","authors":"R. Faini","doi":"10.1111/j.1468-0327.2006.00163.x","DOIUrl":"https://doi.org/10.1111/j.1468-0327.2006.00163.x","url":null,"abstract":"type=\"main\" xml:lang=\"en\"> The appetite for fiscal discipline has been steadily declining among most industrial countries. In the past, fiscal profligacy would have been punished by markets with higher interest rates and, in some cases, also exchange rate depreciation. However, in post-EMU Europe, exchange rate markets no longer discipline the fiscal behaviour of national governments. Perhaps more crucially, even the interest rate punishment to fiscal indiscipline is highly uncertain, with academic opinions being quite divided on this issue. This paper takes a close look at the link between fiscal policy and interest rates in the European context. The key finding is that an expansionary fiscal policy in one EMU member will have an effect both on its spreads and on the overall level of interest rates for the currency union as a whole, with the second effect, however, being quantitatively much more significant. This suggests that there are indeed substantial spillovers, through the interest rate channel, among fiscal policies of member countries. To limit countries’ incentive to run expansionary fiscal policies, a set of rules, like those embedded in the Stability and Growth Pact, is then needed. Some (weak) evidence is also found that after EMU, interest rate spillovers seem to be more significant for high debt countries with unsustainable fiscal policies, reflecting perhaps market concerns about a possible sovereign bail out or the impact of financial distress. There may be a case then for imposing tighter rules on high debt countries. — Riccardo Faini","PeriodicalId":236508,"journal":{"name":"Wiley-Blackwell: Economic Policy","volume":"48 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2004-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125776024","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
What is the future of social systems in OECD countries ? In our view, the answer belongs to the realm of politics. We evaluate how political constraints shape the social security system in six countries - France, Germany, Italy, Spain, the UK and the US - under population aging. Two main aspects of the aging process are relevant to the analysis. First, the increase in the dependency ratio - the ratio of retirees of workers - reduces the average profitability of the unfunded social security system, thereby inducing the agents to reduce the size of the system by substituting their claims towards future pensions with more private savings. Second, an aging electorate leads to larger systems, since it increases the relevance of pension spending on the policy-makers' agenda. The overall assessment from our simulations is that the political aspect dominates in all countries, albeit with some differences. Spain, the fastest aging country, faces the largest increase in the social security contribution rate. When labor market considerations are introduced, the political effect still dominates, but it is less sizeable. Country specific characteristics (not accounted for in our simulations), such as the degree of redistribution in the pension system and the existence of family ties in the society, may also matter. Our simulations deliver a strong policy implication: an increase in the effective retirement age always decreases the size of the system chosen by the voters, while often increasing its generosity. Finally, delegation of pension policy to the EC may reduce political accountability and hence help to reform the systems.
{"title":"Lessons for an Aging Society: The Political Sustainability of Social Security Systems","authors":"V. Galasso, P. Profeta","doi":"10.2139/ssrn.464101","DOIUrl":"https://doi.org/10.2139/ssrn.464101","url":null,"abstract":"What is the future of social systems in OECD countries ? In our view, the answer belongs to the realm of politics. We evaluate how political constraints shape the social security system in six countries - France, Germany, Italy, Spain, the UK and the US - under population aging. Two main aspects of the aging process are relevant to the analysis. First, the increase in the dependency ratio - the ratio of retirees of workers - reduces the average profitability of the unfunded social security system, thereby inducing the agents to reduce the size of the system by substituting their claims towards future pensions with more private savings. Second, an aging electorate leads to larger systems, since it increases the relevance of pension spending on the policy-makers' agenda. The overall assessment from our simulations is that the political aspect dominates in all countries, albeit with some differences. Spain, the fastest aging country, faces the largest increase in the social security contribution rate. When labor market considerations are introduced, the political effect still dominates, but it is less sizeable. Country specific characteristics (not accounted for in our simulations), such as the degree of redistribution in the pension system and the existence of family ties in the society, may also matter. Our simulations deliver a strong policy implication: an increase in the effective retirement age always decreases the size of the system chosen by the voters, while often increasing its generosity. Finally, delegation of pension policy to the EC may reduce political accountability and hence help to reform the systems.","PeriodicalId":236508,"journal":{"name":"Wiley-Blackwell: Economic Policy","volume":"239 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2004-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121280497","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2003-07-01DOI: 10.1111/j.1468-0327.2007.00177.x
Doris Weichselbaumer, R. Winter‐Ebmer
This paper evaluates the impact of economic and legal variables on wage differentials between men and women. Since Becker (1957) economists have argued that competitive markets eliminate discrimination in the long run. On the other hand, practically all countries have enacted some sort of law mandating equal treatment of men and women. This paper uses a new international data set on the gender wage gap, which is constructed via a metaanalysis of existing studies. The findings show that both increased competition and the enactment of equal treatment laws reduce the gender wage gap.
{"title":"The Effects of Competition and Equal Treatment Laws on Gender Wage Differentials","authors":"Doris Weichselbaumer, R. Winter‐Ebmer","doi":"10.1111/j.1468-0327.2007.00177.x","DOIUrl":"https://doi.org/10.1111/j.1468-0327.2007.00177.x","url":null,"abstract":"This paper evaluates the impact of economic and legal variables on wage differentials between men and women. Since Becker (1957) economists have argued that competitive markets eliminate discrimination in the long run. On the other hand, practically all countries have enacted some sort of law mandating equal treatment of men and women. This paper uses a new international data set on the gender wage gap, which is constructed via a metaanalysis of existing studies. The findings show that both increased competition and the enactment of equal treatment laws reduce the gender wage gap.","PeriodicalId":236508,"journal":{"name":"Wiley-Blackwell: Economic Policy","volume":"238 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116181871","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper studies net employment growth across 21 OECD economies since 1980, focusing on the wide range of experiences within the European Union. The initial composition of employment across sectors is relevant in a few countries, but can only partially account for cross-country differences in net employment growth. Institutions play a more important role. A policy package including low dismissal costs and low taxation is significantly associated with high net employment growth and can account for a substantial share of cross-country differences. While the Netherlands' employment miracle is largely accounted for by an increase in part-time jobs for women aged 25-49 in the services sector, we find that in the whole sample part-time jobs largely replace full-time jobs, and temporary jobs replace permanent jobs, with small net effects on hours worked. Continental Europe did not increase employment as much as other OECD countries until the mid-1990s, but later appears to be staging a resurgence of employment growth. We argue that this resurgence is not merely cyclical, is likely related to reforms, and may well be there to stay.
{"title":"Anatomy of Employment Growth","authors":"Pietro Garibaldi, P. Mauro","doi":"10.1111/1468-0327.00084","DOIUrl":"https://doi.org/10.1111/1468-0327.00084","url":null,"abstract":"This paper studies net employment growth across 21 OECD economies since 1980, focusing on the wide range of experiences within the European Union. The initial composition of employment across sectors is relevant in a few countries, but can only partially account for cross-country differences in net employment growth. Institutions play a more important role. A policy package including low dismissal costs and low taxation is significantly associated with high net employment growth and can account for a substantial share of cross-country differences. While the Netherlands' employment miracle is largely accounted for by an increase in part-time jobs for women aged 25-49 in the services sector, we find that in the whole sample part-time jobs largely replace full-time jobs, and temporary jobs replace permanent jobs, with small net effects on hours worked. Continental Europe did not increase employment as much as other OECD countries until the mid-1990s, but later appears to be staging a resurgence of employment growth. We argue that this resurgence is not merely cyclical, is likely related to reforms, and may well be there to stay.","PeriodicalId":236508,"journal":{"name":"Wiley-Blackwell: Economic Policy","volume":"24 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2002-05-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126822488","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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