OECD Economic Studies No. 24, 1995/I

Health care reform: controlling spending and increasing efficiency

Howard Oxley and Maitland MacFarlan

This paper first assesses the reasons for the substantial increase in health spending as a share of GDP over the past thirty years; and then discusses policy options that may help countries to contain expenditures and reach health objectives more effectively. It is argued that much of the increase in spending stems from incentives facing providers of health services rather than from demand-side pressures. Hence, health sector reforms should focus on improving microeconomic aspects of the provision of services. In particular, agencies which fund health care should become more active and selective purchasers of health services.

Speed limit and asymmetric inflation effects from the output gap in the major seven economies

Dave Turner

This paper examines the empirical evidence for "speed limit" and asymmetric effects from the output gap on inflation. The empirical evidence for these effects is not clear-cut across all the major seven OECD economies. Nevertheless, allowing for asymmetric inflation effects does lead to some improvement in fit for a majority of countries. Moreover, such effects are shown to provide a rotionale for the importance which is often attached to timeliness in taking macroeconomic policy actions, and which is athenvise difficult to justify on the basis of a linear model.

The impact of trade and capital movements on labour evidence on the French case

Patrick A. Messerlin

This paper examines the impact of trade and capital movements on French employment and relative wages. It provides three results. Firsf trade has a modest impact on total employment. Second, trade has a strong impact on relative wages; the paper provides evidence supporting the saying that liberal trade is associated with better jobs rather than more jobs. Lostly, the paper shows that outword FDI is essentially done by exporting sectors and that inward FDI (which is broadly the same magnitude) occurs in the downsizing industries as well as in the exporting sectors.

Turning points in the international business cycle: an analysis fo the OECD leading indicators for the G-7 countries
M. J. Artis, R.C. Bladen-Hovell, and W. Zhang

This paper examines the performance of leading indicators for predicting turning points in industrial production of the G7 countries. The analysis is based upon leading indicator information and a chronology of industrial production turning points compiled by the OECD. Sequential probability models are applied to the prediction of turning points. This requires that a learning process be specified both for the conditional densities and for the transitional probabilities incorporated in the model. The results of the study indicate that in general, the time taken for the sequential probability to cumulate to a point where a turning point in industrial production is signalled is relatively stable across countries. The signal lead time, however, varies both across countries and between peaks and troughs for individual countries.

Potential output, output gaps and structural budget balances

Claude Giorno, Pete Richardson, Deborah Roseveare and Paul van den Noord

This paper reviews the methods used for estimating potential output in OECD countries and the use of the resulting output gaps for the calculation of structural budget balances. The "split time trend" method for estimating trend output that was previously used for calculating structural budget balances is compared with two alternative methods, smoothing real GDP using a Hodrick Prescott filter and estimating potential output using a production function approach. It is concluded that the production function approach for estimating potential output provides the best method for estimating output gaps and for calculating structural budget balances.