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Economics and the environment: a survey of issues and policy options
Jon Nicolaisen, Andrew Dean and Peter Hoeller
Concerns over the pace, scope and causes of environmental degradation have led to a renewed interest in the way environmental and economic policies interact. This paper first reviews the main causes for excessive use of environmental resources in a market economy, focusing also on economy-wide implications. The merits of different policy instruments to counter environmental degradation are then discussed, and the information needed for the successful conduct of environmental policy is reviewed. The paper also considers the policy options to cope with uncertainties surrounding cost and benefit estimates. Finally, the paper highlights some policy issues concerning international co-operation on regional and global issues.
Macroeconomic implications of reducing greenhouse gas emissions: a survey of empirical studies
Peter Hoeller, Andrew Dean and Jon Nicolaisen
This paper surveys various estimates of the macroeconomic implications of reducing greenhouse gas emissions. Most available studies focus on policies to reduce CO2 emissions and are limited to the costs of such policies. The survey first examines the key factors shaping baseline emission scenarios. It then looks at the aggregate cost of emission reductions, as shown by both global and country-specific models, and discusses the key determinants of the model outcomes. The paper also briefly reviews other options for reducing greenhouse gas emissions and draws some more general lessons for the policy response to the threat of climate change.
Business investment: recent performance and some implications for policy
Robert Ford and Pierre Poret
Growth of the capital stocks of OECD countries has flagged in the 1980s, despite a rebound in gross business fixed investment. This has raised concerns of a shortage of capital and focused attention on government policies to further raise investment. The evidence presented in this article does not provide support for the standard theories of investment demand, on which such policies are based. Thus, there is little evidence that government incentives will raise capital accumulation.
International economic linkages and the international debt situation
Peter Dittus, Paul S. O'Brien and Hans J. Blommestein
Since the early 1980s the third-world debt crisis has contributed to fragility in parts of the OECD financial system, brought to a halt growth in many indebted countries, and reduced regional and world trade flows. To investigate the role international linkages between large debtor countries and OECD countries have played in the evolution of the debt situation, purpose-built macroeconomic models of major Latin American economies, integrated with the OECD's INTERLINK system for analysing OECD macroeconomic developments, have been developed. These models are used to show the relationship between debt indicators and OECD fiscal and monetary policy, exchange rate and price developments, as well as to assess the contribution of domestic factors and of various overall strategies of dealing with debt - including the role of new money and debt reduction packages.
Is convergence a spontaneous process? the experience of Spain, Portugal and Greece
Bénédicte Larre and Raymond Torres
Levels of productivity in the OECD countries have become more uniform since the early 1960s; however, the process is uneven and hard to explain from the theoretical point of view. In neo-classical analysis of growth, catch-up occurs spontaneously as a result of the spread of technological progress and capital accumulation. In this paper, developments in three southern European countries are discussed in an effort to throw some light on the factors involved. Catch-up appears not to be spontaneous; the acquisition of technology and efficient capital accumulation depend largely on the degree of development of market mechanisms and the quality of social and economic infrastructures.
The impact of the minimum wage on earnings and employment in France
Stephen Bazen and John P. Martin
Throughout the 1970s and 1980s, the real value of the minimum wage in France has risen due to its frequent up-rating. However, unlike in the United States where the minimum wage is increased infrequently, studies of the French youth labour market have been unable to identify a significant impact of the minimum wage on youth employment. One possible reason for this is that the standard model used to analyse the relationship between the minimurn wage and youth employment is inappropriate. Using an alternative approach, increases in the minimum wage are found to increase real wages of youth, while the impact on adult wages is much smaller. It proved very difficult, however, to derive robust estimates of the impact of real wages on youth and adult employment. But such evidence as there is suggests long-run minimum wage elasticities of youth employment of -0.1 to -0.2, similar to those found in the North American literature, and zero for adult employment.
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