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R&D, innovation and the total factor productivity slowdown
A. Steven Englander, Robert Evenson and Masaharu Hanazaki
What happened to the pace of innovation during the 1970s? This article presents evidence from patents data, regression analysis and stock market data suggesting that the pace of innovation slowed in most industries during this period, despite remarkable advances in some areas, such as information technology. Such a slowdown in innvoation could partially account for the observed slowing in total factor productivity ITFP) growth. The paceof innovation may have accelerated in the early 1980s, and could contribute to a resurgence of TFP growth in the years ahead.
A cross-country analysis of private consumption, inflation and the "debt neutrality hypothesis"
Giuseppe Nicoletti
Do expectations of future financing burdens lead the public to save more when the government runs large deficits? This paper analyses the impact of "fiscal expectations" on consumption in eight OECD countries. Estimates of a dynamic demand system, based on an extended life-cycle model embodying fiscal expectations, are reported. The results suggest that: i) the government's inflation-tax is anticipated by consumers; and ii) while private savings do not adjust fully to changes in government deficits and hence debt is not neutral in its effects on spending, expectations of future policy corrections depress private consumption quite noticeably when public debt is explosive.
The disinflation of the 1980s
David T. Coe, Martine Durand and Ulrich Stiehler
The disinflation of the 1980s has been one of the outstanding achievements of macroeconomic policies in OECD countries. After reviewing aggregate price developments between 1980 and 1987, this article discusses and quantifies the main influences which contributed to falling inflation rates. Based on simulations carried out with the OECD INTERLINK model, the main reasons for improved inflation performance are analysed. This full-model approach shows that restrictive monetarypolicy between 1980 and 1983 was the principal factor accounting for the return to more stable price levels in OECD countries. Declines in oil prices also played an important role in sustaining the process after 1985.
Unemployment as a hiring problem
Robert J. Flanagan
This paper analyses the role of increasing maladjustment in the labour market as a source of high unemployment, particularly in Europe. After reviewing and dismissing several labour-supply explanations, the paper focuses on the role of changes in employer hiring decisions. It argues that the reluctance of European employers to hire is related to specific economic and institutional developments, such as pa y compression and greater output uncertainty, that have altered hiring incentives. It demonstrates both the development of a general reluctance to hire and specific effects tied to these incentives in some countries.
Import barriers: an analysis of time-series cross-section data
Luca Barbone
This note provides evidence from pooled time-series cross-section data on the extent of non-tariff trade barriers in OECD countries. This is accomplished through the estimation of "normal" import shares in GDP and of deviations from average values for individual OECD countries. Natural barriers to trade - distance and cost of transportation - are assessed through econometric estimates of a relationship linking cif-fob margins to distance. Finally, a discussion is provided regarding the issue of underimporting in sub-categories of total imports.
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