Robert W. R. Price

Housing Markets, Wealth and the Business Cycle

The paper examines the linkages between housing markets and the business cycle in OECD countries, focusing on how differences in the degree of resilience to economic shocks can be affected by the structural characteristics of housing and mortgage markets. The paper focuses specifically on: the transmission channel from housing wealth to consumption and on the factors behind house price variability, which help to determine whether the housing sector plays a stabilising role or not. Estimates of the marginal propensity to consume out of housing wealth are presented for ten OECD countries, where it is found that the strongest impact on consumption is in countries that have large, efficient and responsive mortgage markets. Particularly important in this regard is the degree of mortgage market “completeness” -- i.e. the extent to which the market is able to offer a variety of products and to serve a broad range of potential borrowers -- in particular, the extent to which they provide ... Cette etude examine les liens entre les marches immobiliers et le cycle economique dans les pays de l’OCDE, se concentrant sur le role des specificites nationales des marches immobiliers et hypothecaires sur l’inegale resilience face aux chocs economiques. Cette etude s’interesse particulierement au canal de transmission de la richesse immobiliere a la consommation et aux facteurs expliquant la variabilite des prix des logements ; ces deux aspects contribuent a determiner si le secteur immobilier joue un role stabilisateur ou non. Des estimations de la propension marginale a consommer la richesse immobiliere sont presentees pour dix pays de l’OCDE. Ces estimations indiquent que les effets les plus important sur la consummation apparaissent dans les pays ayant des marches hypothecaires de grande taille, efficients et reactifs. Le niveau de « completude » du marche hypothecaire -- la mesure dans laquelle le marche peut offrir une variete de produits et repondre a un large eventail ...

Oil Price Developments: Drivers, Economic Consequences and Policy Responses

This paper analyses the factors influencing the price of oil and its likely evolution over the next quarter century. It begins by investigating the fundamental forces shaping long-term oil price developments, highlighting the importance of growth-led demand for oil, particularly that emanating from fast-growing, energy-intensive developing countries, and the implications of increasingly geographically concentrated oil reserves. The paper presents oil price projections to 2030 and examines the sensitivity of the projections to the assumptions about growth and non-OPEC supply. While certain combinations of factors could lead to a significantly higher oil price, the projections also suggest that the optimal strategy of resource-rich oil producers would be to prevent it rising too far. The paper then documents short-term influences on the oil price, which peaked at

Asset Price Cycles, “One-Off” Factors and Structural Budget Balances

50 a barrel in 2004, and notes that they have probably led to a significant departure from the long-run equilibrium price ... Ce document analyse les facteurs qui influencent le prix du petrole et son evolution probable au cours du prochain quart de siecle. Il examine d’abord les determinants fondamentaux de l’evolution des prix du petrole a long terme, en soulignant l’importance de la demande petroliere alimentee par la croissance, en particulier celle emanant des pays en developpement a forte intensite d’energie et en expansion rapide, ainsi que les consequences de la concentration geographique croissante des reserves petrolieres. Le document presente des previsions des prix du petrole jusqu’a l’horizon 2030 et evalue leur sensibilite aux hypotheses concernant la croissance et l’offre hors OPEP. Tandis que certaines combinaisons de facteurs pourraient se traduire par un prix du petrole nettement plus eleve, les previsions montrent aussi que pour les producteurs petroliers dotes d’abondantes reserves la strategie optimale consisterait a empecher une hausse excessive des cours. L’etude decrit ensuite les ...

Public Spending Efficiency: Institutional Indicators in Primary and Secondary Education

This paper analyses two factors which may cause cyclically-adjusted budget balances to give a misleading picture of underlying fiscal trends. It first explores the implications of recent large asset-market related fluctuations in government revenues for the measurement of structural budget balances. And second, it reviews the impact of the increased recourse to stopgap “one-off” measures to control deficits. The results confirm that since the late 1990s revenues have been more buoyant than would have been warranted by the registered rate of nominal output growth and the impact of tax measures. The study suggests that from 1995 to 2000 the average contribution of “unwarranted” revenues to year-to-year changes in cyclically-adjusted budget positions ranged from negligible to around ½ per cent of GDP, the main countries affected being the United States, the United Kingdom, France and some Nordic countries. Conversely, the subsequent decline in tax receipts has been sharper than could ... Cette etude analyse deux facteurs qui peuvent contribuer a brouiller la lisibilite des positions budgetaires sous-jacentes evaluees par la mesure traditionnelle du solde budgetaire corrige des variations cycliques. Dans un premier temps, elle etudie les implications des recentes fluctuations des recettes fiscals associees aux marches boursiers sur la mesure du solde structurel. Dans un deuxieme temps, cette etude discute des effets du recours accru aux facteurs non-recurrents sur la maitrise des deficits. Les resultants confirment que depuis la fin des annees 1990, les recettes fiscales ont ete plus dynamiques que ne le laissaient suggerer le taux de croissance nominal de l’activite et les effets des mesures fiscales. Entre 1995 et 2000, la contribution moyenne des recettes non-expliquees au changement annuel du solde budgetaire corrigee pour les variations cycliques oscillerait entre zero et ½ pour cent du PIB, les principaux pays concernes etant les Etats-Unis, le Royaume-Uni, la ...

Fiscal Rules for Sub-central Governments

This paper presents composite indicators of the institutional and policy characteristics of educational systems, collated from the questionnaire responses of 26 Member countries. These indicators provide an overview of the institutional framework in the primary and secondary education sector and are constructed so as to be used for the analysis of international differences in spending efficiency. The key features of the institutional setting in the non-tertiary education sector are grouped under three headings: i) the ability to prioritise and allocate resources efficiently (through decentralisation and mechanisms matching resources to specific needs); ii) the efficiency in managing spending at the local level (through outcome-focused policies and managerial autonomy), and iii) the efficiency in service provision (through benchmarking and user choice). For each country, an intermediate indicator is computed for each of these six institutional properties. Composite indicators then combine the six intermediate indicators of spending efficiency into a single, aggregate measure. Results are presented and some of their implications are discussed. Overall, the characteristics of the institutional framework in the non-tertiary public education sector seem to be very favourable, compared to OECD average, in the United Kingdom, Australia, Norway, Denmark and the Netherlands, whereas results are less favourable for the Czech Republic, Greece, Luxembourg, Japan, Turkey, Hungary, Belgium (French speaking community), Switzerland and Austria.

Have Long-term Financial Trends Changed the Transmission of Monetary Policy?

Against a background of mounting demands for spending on services provided by sub-central governments, this paper examines how fiscal rules can help to ensure that pressure on resources is minimised and available resources are used efficiently. Drawing on questionnaire responses and other sources, this paper gives a detailed picture of fiscal rules for sub-central governments in place among a number of OECD countries. The paper examines the rationales for using fiscal rules, the various impacts fiscal rules can have, the factors making for effective implementation and the interactions between the various types of rule. It then constructs a number of synthetic sub-indicators designed to assess the extent to which sub-central government fiscal frameworks exhibit favourable characteristics for the achievement of fiscal objectives. It concludes with the construction of a composite indicator based on the combined impacts in the different areas of fiscal policy.

Interactions Between Monetary and Fiscal Policy

This paper addresses the question of whether and how long-term financial trends may have modified the transmission mechanism from monetary policy decisions to economic activity. The focus is on longterm changes, abstracting from the disruptions created by the 2007-08 financial turmoil which are temporarily affecting the transmission mechanism. The first series of findings is that a number of factors have worked to strengthen the transmission of monetary policy, including more competitive financial markets, higher household indebtedness, greater diversity in the supply of financial products, greater financial integration and more responsive asset pricing mechanisms. However, other factors appear to have simultaneously gone in the direction of weakening transmission of domestic policy, including greater external financial influences, lower exchange-rate pass-through and a broad-based shift towards fixed-rate assets and liabilities. On balance, monetary policy appears to remain a powerful tool for guiding aggregate demand, but a number of changes that have worked to support the strength of transmission have also increased risks to financial stability. Les tendances de fond des marches financiers ont-elles modifie la transmission Cette etude aborde la question de savoir dans quelle mesure les tendances de fond des marches financiers ont pu modifier la transmission de la politique monetaire. L’accent est porte sur les changements de long-terme en faisant abstraction des modifications temporaires du mecanisme de transmission qui resultent des troubles financiers observes en 2007-08. Une premiere serie de resultats indique que plusieurs facteurs ont joue dans le sens de renforcer la transmission de la politique monetaire. Ces facteurs incluent l’intensification de la concurrence sur les marches financiers, l’accroissement de l’endettement des menages, la diversification de l’offre de produits financiers et la plus grande reactivite des prix des actifs. Cependant, d’autres facteurs ont agi de maniere concomitante dans le sens de reduire la puissance du mecanisme de transmission de la politique monetaire interieure. Ces facteurs incluent l’accroissement des influences financieres exterieures, la plus faible transmission des mouvements de change et le plus grand recours aux emprunts et titres a taux fixe. Au final, il apparait que la politique monetaire demeure un outil puissant d’orientation de la demande agregee, mais une partie des changements qui ont preserve la force du mecanisme de transmission se sont effectues au prix de risques accrus pour la stabilite financiere.

Oil Price Developments

This paper assesses how and in what circumstances, fiscal consolidations are affected by monetary conditions, using data covering 24 OECD countries over the past 25 years, Focusing on fiscal consolidation “episodes”, it is found that these tend to occur when large budget deficits threaten sustainability and usually when other macroeconomic indicators -- inflation, the exchange rate and unemployment -- suggest a “crisis” situation. After controlling for these factors, the paper finds strong econometric evidence that consolidation efforts are more likely to be pursued and to succeed if the monetary policy stance is eased in the initial stages of the episode, thus contributing to offsetting the contractionary impact of fiscal tightening. However, the link is far from mechanical and there are also counter-examples where monetary easing was followed by aborted consolidation efforts. Central bank independence explicitly precludes direct responses of monetary policy to fiscal actions. However, the paper also provides evidence that the indirect reaction of monetary policy and financial markets to fiscal consolidation may be influenced by the quality of fiscal adjustment, as short and long-term interest rates are more likely to fall during episodes characterised by greater reliance on current expenditure cuts. While this means that causality runs both ways, the paper provides evidence that, even after controlling for this proxy of fiscal adjustment quality, changes in monetary stance do affect the chances that a fiscal retrenchment plan will be successfully pursued.

Strategies for Countries with Favourable Fiscal Positions

This paper analyses the factors influencing the price of oil and its likely evolution over the next quarter century. It begins by investigating the fundamental forces shaping long-term oil price developments, highlighting the importance of growth-led demand for oil, particularly that emanating from fast-growing, energy-intensive developing countries, and the implications of increasingly geographically concentrated oil reserves. The paper presents oil price projections to 2030 and examines the sensitivity of the projections to the assumptions about growth and non-OPEC supply. While certain combinations of factors could lead to a significantly higher oil price, the projections also suggest that the optimal strategy of resource-rich oil producers would be to prevent it rising too far. The paper then documents short-term influences on the oil price, which peaked at

Éléments à l'origine de la faiblesse des taux d'intérêt à long terme

50 a barrel in 2004, and notes that they have probably led to a significant departure from the long-run equilibrium price ...