Claude Giorno

The Macroeconomic Implications of Ageing in a Global Context

This study was prepared in the Economics Department as a contribution to the Organisation -wide study of the economic consequences of population ageing. It presents a number of long-term scenarios illustrating the likely domestic and international macroeconomic effects of ageing across the OECD and policies which might ameliorate or reverse underlying tensions. This work draws together the broad range of elements involved within a consistent framework, based on the Secretariat’s new international dynamic general equilibrium macroeconomic model (MINILINK). A “business-as-usual” case is examined in which, without improvements in labour market performance or specific policy adjustments to allow for the pressures of ageing, economic growth is projected to slow significantly over the next 50 years in nearly all OECD countries; world real interest rates remain stable at current levels or even rise, because of the effects of ageing on private savings and the possible build-up of public ... Ce travail constitue une contribution du Departement economique a l’etude realisee au niveau de l’ensemble de l’Organisation sur les consequences economiques du vieillissement des populations. Il presente un certain nombre de scenarios de long-terme illustrant d’une part les effets macroeconomiques probables du processus de viellisssement sur les plans national et international, sur les flux internationaux entre les regions OCDE et non OCDE et d’autre part le role des politiques economiques pour limiter ou eliminer les tensions generees par ce processus. Cette etude integre dans un meme cadre coherent, base sur le nouveau modele international d’equilibre general dynamique du Secretariat (MINILINK), un large ensemble d’elements constitutifs du phenomene de vieillissement. Le cas d’une scenario “a politique inchange” est analyse. Il met en evidence qu’en l’absence d’amelioration des performances du marche du travail ou d’ajustement specifique des politiques pour faire face aux ...

Improving the Performance of the Public Health Care System in Greece

Greek health outcomes compare favourably with the OECD average. However, the health care system is seen as not working well by the population. One source of dissatisfaction is the high proportion of private household spending on health, including informal payments, while public health spending relative to GDP is one of the lowest in the OECD. This situation leads to inequities in access to certain medical services. Also, there is a weakening of efficiency of the system, which should be addressed sooner than later in view of a rising demand for medical services, which is going to intensify in the coming decades, and the need to keep government health care spending in check. This calls for reforms in four areas: (i) reviewing the excessively fragmented structure of the health care system and its governance; (ii) enhancing the quality of public primary health care services; (iii) modernising hospital administration; and (iv) further tightening control over pharmaceutical expenditure. Ameliorer la performance du systeme public de sante en Grece Les resultats de la Grece dans le domaine de la sante se comparent favorablement avec la moyenne de l’OCDE. Cependant, le fonctionnement du systeme de soins n’est pas satisfaisant selon la population. Une source d’insatisfaction concerne la proportion elevee des depenses privees de sante des menages, y compris des paiements informels, alors que les depenses medicales publiques en proportion du PIB sont parmi les plus faibles de l’OCDE. Cette situation conduit a des problemes d’equite d’acces a certains services medicaux. On observe aussi une baisse d’efficacite du systeme a laquelle il import de remedier au plus tot compte tenu de la hausse de la demande de soins, qui devrait s’intensifier au cours des prochaines decennies et du besoin de controle sur la croissance des depenses publiques de sante. Ceci milite en faveur d’une reforme dans quatre domaines : (i) reviser la structure tres fragmentee du systeme de soins et sa gouvernance; (ii) ameliorer la qualite des services publics de soins primaires ; (iii) moderniser l’administration hospitaliere ; et (iv) renforcer davantage le controle sur les depenses pharmaceutiques.

The Concept, Policy Use and Measurement of Structural Unemployment

The structural rate of unemployment and associated non-accelerating inflation rate of unemployment (the NAIRU) are of major importance to the analysis of macro and structural economic developments, although in practice these concepts are not well defined and there is considerable uncertainty and controversy concerning their measurement and policy use. The present paper reviews a range of conceptual and analytical issues and related empirical studies to examine the usefulness and limitations of such concepts. A reduced-form Phillips curve approach is found the most suitable conceptual framework for representing the NAIRU as currently used by the OECD in its policy analysis and surveillance work. Three distinct classes of NAIRU concept are identified, distinguished by the time-frame in which they are defined, which map directly into the broad requirements for macro and structural policy analysis. In line with a number of recent empirical studies, this general approach is applied ... Les concepts de taux de chomage structurel et NAIRU (non accelerating inflation rate of unemployment) jouent un role important pour l’analyse macro-economique et des developpements structurels de l’economie, meme si, en pratique, ces concepts ne sont pas definis precisement, leur estimation est entachee d’incertitude et leur utilisation pour la politique economique souvent controversee. Ce papier presente une revue des concepts, discussions analytiques et etudes empiriques lies au NAIRU, afin de definir l’utilite eventuelle de ces concepts et leurs limites. Dans le cadre d’analyse des politiques economiques et travaux de surveillance menes par l’OCDE, le concept de NAIRU derive d’une courbe de Phillips de forme reduite apparait le plus utile. Trois notions de NAIRU peuvent etre distinguees, suivant l’horizon temporel de reference, et qui peuvent etre directement reliees a des cadres d’analyse de politique macro-economique et structurelle. Suivant les developpements recents de la ...

Technical Progress, Factor Productivity and Macroeconomic Performance in the Medium Term

This paper examines the possible short- and medium-term macroeconomic consequences of changes in trend factor productivity growth for the major OECD economies. The analysis includes a range of different scenarios based on the recently re-estimated OECD INTERLINK model, in particular its supply-side properties, which illustrate a range of uncertainties and the sensitivity of the adjustment mechanisms to macroeconomic and structural factors. Overall the results suggest that a rise in trend factor productivity will lead to higher levels of production and real income, but employment adjustment will depend on the extent to which the long-run equilibrium of an economy is affected. Though unemployment could rise temporarily, there are important mechanisms present which, if functioning correctly, should prevent any permanent increase in unemployment. The degree of market flexibility is, however, seen as being crucial to the adjustment process, with higher rigidities tending to lengthen the ... Cet article examine les possibles consequences macro-economiques a court et moyen termes de changements du rythme de croissance de la productivite tendancielle des facteurs de production dans les principales economies de l’OCDE. L’analyse, qui inclue un ensemble de scenarios realises a l’aide du modele INTERLINK de l’OCDE qui a recemment ete reestime, illustre le degre d’incertitude et de sensibilite des mecanismes d’ajustement, qui entrent alors en jeu, a un certain nombre de facteursmacro-economiques et structurels. Dans l’ensemble, les resultats suggerent qu’une hausse de la productivite tendancielle des facteurs permet d’atteindre des niveaux de production et de revenus reels plus eleves, mais que l’ajustement de l’emploi depend de la mesure dans laquelle l’equilibre de long terme de l’economie est affecte. Bien que le chomage puisse croitre temporairement, d’importants mecanismes existent, qui, s’ils fonctionnent correctement, doivent empecher toute hausse permanente du nombre ...

Stock Market Fluctuations and Consumption Behaviour

This paper examines the likely influence of recent stock market fluctuations on major OECD economies, focusing on wealth effects and consumption. After reviewing the relevant theoretical framework and available empirical evidence, consumption functions are estimated for the US including the influence of financial wealth. The resulting estimates of the marginal propensity to consume out of financial wealth are extrapolated to other G7 countries, allowing for differences in stock market capitalisation, and compared with ones obtained more directly from consumption functions that include stock market prices as an explanatory variable. Simulations are then carried out to assess the potential world impact of a major fall in stock market prices in the G7 countries using a version of the OECD INTERLINK model which embodies the latter equations. The overall effects are found to be significant, particularly when relevant international linkage mechanisms are taken into account ... Ce papier analyse les effets richesses potentiels generes par les fluctuations recentes des marche d’actifs financiers des principals economies de l’OCDE. Apres une presentation rapide des fondements theoriques et des resultats empiriques recents, des fonctions de consommation incluant une variable de richesse financiere sont estimees pour les Etats-Unis, permettant de calculer des propensions marginales a consommer les gains de richesse financiere. Celles-ci sont alors extrapolees pour les autres pays du G7, en tenant compte des differences de ratio de capitalisation boursiere. Elles sont ensuite comparees a des propensions estimees a partir de fonctions de consommation incluant le prix des actifs boursiers. Ces dernieres sont integrees au modele INTERLINK de l’OCDE, ce qui permet de simuler l’impact potentiel sur l’activite reel d’un crash financier dans les pays du G7. Les effets sur l’economie globale sont significatifs, particulierement lorsque sont pris en compte les ...

Predicting the Evolution and Effects of the Asia Crisis from the OECD Perspective

Over the past two years, the key trading economies in SE Asia experienced major economic crises, involving financial turbulence, large capital outflows and currency depreciations. These, in turn, resulted in severe financial constraints and business failures and required major domestic adjustments and massive swings in their currentaccount balance of payments positions. The associated economic recessions had major effects on the economies in question and, because of constraints on their capacity to invest and import, a significant impact on the rest of the world, so that world trade and output growth slowed significantly and world commodity markets weakened substantially over the period.This paper looks at the wider macroeconomic consequences of the Asia crisis and their predictability from the perspective of the OECD countries. In doing so it examines some of the major aspects of the Asia crisis, its effects on the world situation and their predictability, assisted by the OECD’s ... Au cours des deux dernieres annees, les economies d’Asie du sud-est les plus importantes du point de vue des echanges commerciaux ont connu des crises economiques majeures qui se sont traduites par de fortes perturbation de leurs marches financiers, des sorties de capitaux importantes et des depreciations de taux de change. Celles-ci ont entraine de severes contraintes financieres et des faillites d’entreprises et necessite des ajustements substantiels de demande interieure et des modifications massives des positions des balances des paiements courants dans ces pays. Les recessions economiques qui ont suivi ont eu des effets tres importants sur les economies en question et, du fait des contraintes qui ont affecte leur capacite d’investir et d’importer, ont eu un impact significatif sur le reste du monde. Ainsi, le commerce et la production mondiale ont ralenti significativement tandis que les marches internationaux des produits de base se sont affaiblis substantiellement au cours ...

Product Market Competition and Economic Performance in Switzerland

The strength of product market competition plays an important role in ensuring dynamic economic growth. This paper examines product market competition and its link with economic performance in Switzerland whose growth has been weaker than in most OECD countries since 1980. It shows that substantial progress in reforming product markets can be made in many areas, which would contribute to reduce the excessive price differential vis-a-vis other countries and stimulate growth. These reforms should focus on the legal framework of competition, the network industries, the health sector, the revision of the Domestic Market Act, agriculture, the restriction on parallel imports and, more generally, the opening up of services to foreign competition ...

Overheating in Small Euro Area Economies

This paper reviews first the fiscal policy recommendations by the EU, the IMF and the OECD for Finland, Greece, Ireland, Luxembourg, the Netherlands, Portugal and Spain. All these countries had inflation above the euro area average in early 2001, some by a considerable margin. The fiscal policy prescriptions deviate little, the EU, the IMF and the OECD generally recommending an active use of fiscal policy. There are some exceptions, however. The next section examines indicators of excess demand in these countries. This is followed by a review of the factors that help or hinder market-based adjustment, including simulations to gauge their effect. Market-based adjustment to demand shocks depends critically on whether the effect of a lower real interest rate is strong relative to the loss in competitiveness, on the size of wealth effects, on wage and price setting behavior, on the supply response and on the strength of trade integration. Simulations suggest that market-based ... Surchauffe dans les petites economies de la zone euro : La politique budgetaire devrait-elle reagir ? Cet article passe d’abord en revue les recommandations de politique budgetaire de l’UE, du FMI et de l’OCDE concernant la Finlande, la Grece, l’Irlande, le Luxembourg, les Pays-Bas, le Portugal et l’Espagne. Tous ces pays avaient une inflation superieure a la moyenne de la zone euro au debut de 2001, dans certains cas de facon tres marquee. Dans ce contexte, les prescriptions de politique economique de l’UE, du FMI et de l’OCDE a ces pays ne different guere et recommandent en general une utilisation active de l’instrument budgetaire. Des exceptions existent cependant. La deuxieme partie de cet article examine les indicateurs d’exces de demande dans ces pays. Elle est suivie d’une revue des facteurs qui favorisent ou empechent un ajustement de l’economie grâce aux mecanismes de marche a partir notamment de simulations evaluant l’importance de leurs effets. En cas de choc de demande, l’ajustement induit par les forces de marches depend de facon cruciale de l’importance relative de ...

Nothing Ventured, Nothing Gained

The recent reform of the Stability and Growth Pact provides more leeway for EU governments to temporarily breach the 3% deficit limit if this facilitates the implementation of initially expensive reforms. But the implementation of this principle is not obvious as budgets would need to specify the initial and multi-annual budgetary cost and benefit profile of reforms. Budgets should also be explicit about the fiscal cost of inaction to allow a balanced judgment of countries? trade-offs between the various options available. This paper first assesses the information requirements to implement this new form of flexibility built into the Stability and Growth Pact. It then provides simulation exercises to highlight the positive budgetary effects of coordinated structural reforms in the euro area as well as the need for an adequate monetary policy response to make sure that demand adjusts to the improved supply conditions swiftly. The budgetary gains would still depend on the type of reform and their impact on employment and productivity. On the other hand, national policy initiatives by a single country may only have a limited impact, especially in the short term and in the case of a large country. Indeed, in monetary union, the strength of endogenous adjustment mechanisms appears to be weaker in larger countries. Finally, the experience of New Zealand and Australia has shown that the longer-term benefits of reforms both in terms of the budget and overall economic performance are significant. Even so, it is not easy to disentangle the various forces at play. Fundamentally, structural reform and the implementation of smart fiscal frameworks tend to go hand in hand ? indeed may be two sides of the same coin.

Concurrence sur les marchés de produits et performance économique en Suisse

Une concurrence vigoureuse sur le marche des produits constitue un element essentiel pour assurer une croissance economique dynamique. Cette etude examine les conditions de la concurrence en liaison avec les performances economiques de la Suisse, dont la croissance a ete plus faible que dans la plupart des pays OCDE depuis 1980. Elle montre que d’importants progres de la reforme des marches des produits sont possibles dans un vaste ensemble de domaines, ce qui pourrait contribuer a reduire l’ecart excessif de prix par rapport aux autres pays et renforcer la croissance. Ces reformes devraient concerner le cadre reglementaire de la concurrence, les industries de reseaux, le secteur de la sante, la revision de Loi sur le marche interieur, les marches publics, l’agriculture, les restrictions sur les importations paralleles et plus generalement l’ouverture des services a la concurrence etrangere ...