Stéphanie Guichard

Understanding the World Trade Collapse

The collapse in world trade volumes at the end of 2008 and beginning of 2009 was exceptional by historical standards. This paper shows that world demand (to which trade has become more responsive in recent decades) can explain most of the collapse in world trade, but that tight credit conditions have likely amplified the short-term trade response. Credit tightening likely accelerated the trade decline through trade finance constraints and its relatively larger impact on trade-intensive sectors. A portion of the trade decline remains unexplained, which may reflect a possible breakdown in global supply chains. Looking ahead, the pace of normalisation in financial conditions and the future evolution of global supply integration will affect the speed of recovery in trade and global output.

MEDIUM-TERM DETERMINANTS OF INTERNATIONAL INVESTMENT POSITIONS: THE ROLE OF STRUCTURAL POLICIES

This paper provides an empirical investigation of the medium-term determinants of international investment positions for a large sample of advanced and emerging economies. In addition to the usually considered drivers of foreign assets and liabilities, the analysis focuses on the role of structural policy indicators. Using cross-section and panel regression techniques the results suggest that structural policy settings are important medium-term drivers of capital flows, having a relatively large impact on gross and net foreign capital positions and on their composition. In particular, the results suggest that certain kinds of structural policy reform could help to narrow global imbalances, and to modify the composition of international capital flows towards more stable and productive sources.

The Reform of the Health Care System in Portugal

An ambitious reform to increase efficiency of the Portuguese health care system was launched in 2002. In contrast to previous attempts of gradual reforms, which were never fully implemented, the strategy has been to create a big bang in the health sector, making changes essentially irreversible. The reform has two main aims: to deliver better-quality public health services than at present but at no higher cost; and to reduce the underlying growth rate of public health-care spending over the medium term. New legislation approved includes the separation of the functions of regulation, financing and provision of health care services; setting up new models of financing for providers, which impose harder budget constraints; the introduction of incentives towards productivity, management and quality improvements; the possibility for the private sector to play a larger role in service provision; and the promotion of generic drugs. After assessing the strengths and weaknesses of the ... La reforme du systeme de sante au Portugal Une reforme ambitieuse a ete engagee en 2002 au Portugal pour accroitre l’efficience du systeme de sante. Contrairement aux tentatives precedentes de reformes graduelles, qui n’ont jamais ete totalement mises en œuvre, la strategie consiste a susciter un big-bang dans le secteur de la sante, rendant les efforts de reforme pour l’essentiel irreversibles. Cette reforme a deux objectifs principaux : ameliorer la qualite des services de sante publique sans augmenter les couts et reduire le taux de croissance sous-jacent des depenses de sante publique a moyen terme. Les nouvelles legislations incluent: la separation des fonctions de reglementation, de financement et de prestation de services de sante publique ; la mise en place de nouvelles modalites de financement pour les prestataires, qui imposent des contraintes budgetaires plus rigoureuses ; l’introduction d’incitations en faveur de la productivite, de la gestion et de l’amelioration de la qualite; la possibilite pour le secteur ...

What Affects Fiscal Consolidation? – Some Evidence from OECD Countries

Stephanie Guichard, Michael Kennedy, Eckhard Wurzel and Christophe Andre examine the circumstances most commonly related to successful fiscal consolidation. Data are drawn from a dataset covering twenty-four OECD countries since 1978. Based on improvement in the cyclically-adjusted primary balances (CAPB), they detect eighty-five consolidation episodes. First the paper presents descriptive evidence that initial conditions play a major role. In particular, the more negative the CAPB, the larger the ensuing consolidation. In the vast majority of cases, consolidations did not last long and involved only modest gains, and revenue increases accounted for a large fraction of the average improvement. In the second part of the paper, the authors deploy regression analysis to identify a number of macroeconomic conditions that were effective in triggering and sustaining consolidations. The initial budget balance is statistically significant in explaining the starting point, the size and the duration of the adjustment process, while the magnitude and the probability of success of the consolidation programme are affected by cuts in some expenditure items.

10 Years after the Global Financial Crisis: What Have We Learnt About International Capital Flows?

Making the most of international capital flows by allowing countries to reap their benefits while reducing associated risks has always been a challenge and has led to considerable economic research over the past 30 years. This challenge became even more acute following the Global Financial Crisis, as new concerns emerged related to the complexity of global financial relations, their role in shock transmission as well as how to protect countries from financial instability. Against this background, recent research has focussed on understanding better the implications of financial globalization for economic stability and the design of policies. This literature review takes stock of these recent developments including the discussion on the risks associated with corporate foreign indebtedness, the role of the global financial cycle in driving financial instability, new findings on the real impact of international capital flows and ongoing debates on the role of capital controls.

Inflation Responses to Recent Shocks

This paper uses a variety of empirical methods to examine the apparent differences in monetary policy stances as between the United States and other G7 economies, notably those in the euro area, during the period of sharp increases in oil and other commodity prices in the first half of 2008. In particular it asks the question whether observed differences in policy stances could be attributed to differences in economic structures and the vulnerability of different regions to inflationary shocks coming from import prices as opposed to differences in monetary policy objectives. The main conclusion is that although there are a number of differences in the estimated impact and dynamics of commodities, import prices and exchange rates on domestic inflation, which may have contributed to differences in policy stances during the boom in commodity prices, they cannot explain them all.