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An assessment of financial reform in OECD countries
Malcolm Edey and Ketil Hviding
This paper addresses the issue of whether financial liberalisation has led to improved welfare. The benefits of improved allocation of resources and increased eficiency have to be weighed against the possible effects of deregulation on financial stability. While there is no strong evidence of any trend increase in financial volatility in key markets, there have been a number of episodes of instability apparently linked to financial deregulation. However, the analysis of individual crises suggests that inappropriate macroeconomic policies, deficiencies in prudential policies, and microeconomic distortions affecting incentives in the financial sector, were important contributing factors to the crises.
Deregulation and privatisation in the service sector
Jens Hoj, Toshiyasu Kato and Dirk Pilat
This paper discusses the impact of regulatory reforms and privatisation across the OECD area in enhancing competition in the service sector. After discussing the broad trends in regulation and deregulation, the main focus is on the experience in the distribution, construction, road transport, telecommunication and airline sectors. It appears that countries with a high degree of regulation in these sectors tend to have poorer performance. Moreover, the effects of regulatory reforms - and their design and implementation - depend critically on the character of competition within each sector. The analysis suggests that the deregulation process has induced sizable gains in economic performance.
Real long-term interest rates: The evidence from pooled-time-series
Adrian Orr, Malcolm Edey and Michael Kennedy
In this paper a model is presented and estimated that explains real long-term interest rates in terms of developments in low-frequency and high-frequency economic factors in a multi-country framework, for 17 OECD countries since the early-1980s. The results indicate that the low-frequency component of real rates is determined by fundamentals such as the rate of return on business capital, portfolio risk, inflation uncertainty, and indicators of future saving and investment balances. Influences on the high-frequency component include monetary policy actions and shocks to inflation.
Establishing financial discipline: Experience with bankcruptcy legislation in Central and Eastern European countries
Jean-Marc Burniaux
One major challenge of economic transition in Central and Eastern European countries is to set up the institutional framework without which markets are unable to operate. In most countries, this has implied reviving the bankruptcy legislation inherited from their pre-Communist era. This paper compares the design, operation and outcomes of bankruptcy legislation in Hungary, Poland, the Czech Republic and Russia. It analyses the reasons why these laws have not been effective so far in solving the widespread insolvency of former state-owned companies, and draws some broad guidelines about desirable features of bankruptcy procedures in economic transition.
Technical progress, factor productivity and macroeconomic performance in the medium-term
Claude Giorno, Pete Richardson and Wim Suyker
This paper analyses the macroeconomic effects of changes in trend factor productivity for the major OECD economies. Medium-term simulations with the OECD INTERLINK model are used to illustrate key uncertainties and sensitivities of adjustment mechanisms to macroeconomic and structural factors. The results suggest that a rise in trend factor productivity leads to higher levels of real income, but the duration of unemployment effects depends crucially on structural factors. If markets are flexible, then the adjustment period may be relatively short-lived, with no permanent effect on the rate of unemployment.
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