Département des Affaires économiques

Policy Papers

 

This series makes available, to a wider audience, selected studies which the Department has prepared for use within OECD.

See also:

>> Economic Policy Notes

>> Economics Department working paper series

 

Strengthening Economic Resilience: Insights from the Post-1970 Record of Severe Recessions and Financial Crises
Aida Caldera-Sánchez, Alain de Serres, Filippo Gori, Mikkel Hermansen & Oliver Röhn

Considering the deep and long-lasting impact of severe recessions, such as the 2008-09 financial crisis, it is important that measures be taken to minimise the risk of such event. But in doing so the benefits need to be balanced against the potential costs in terms of lower average growth that some of the actions to lower vulnerabilities to bad events could entail. 

Enhancing Economic Flexibility: What Is in It for Workers?
Boris Cournède, Oliver Denk, Paula Garda, Peter Hoeller

Reforms that boost growth by enhancing economic flexibility often meet strong opposition related to concerns that they may imply adverse consequences for categories of workers. This study investigates how making product or labour market regulation more flexible changes workers’ risks of moving out of employment and jobless people’s chances of becoming employed. 

Cardiac arrest or dizzy spell: Why is world trade so weak, what can policy do about it?
David Haugh, Alexandre Kopoin, Elena Rusticelli, David Turner and Richard Dutu

World trade growth was rapid in the two decades prior to the global financial crisis but has halved subsequently. There are both structural and cyclical reasons for the slowdown. A deceleration in the rate of trade liberalisation post 2000 was initially obscured by the ongoing expansion of global value chains and associated rapid emergence of China in the world economy. Post the financial crisis global value chains started to unwind and, possibly associated with this, Chinese and Asian trade weakened markedly. These structural changes were compounded by insipid demand due to anaemic growth of global investment, as well as intra-euro area trade, both of which are trade intensive. The slowdown in world trade growth post crisis, if sustained, will have serious consequences for the medium-term growth of productivity and living standards. 

Does Fiscal Decentralisation Foster Regional Convergence? 
By Hansjörg Blöchliger, David Bartolini and  Sibylle Stossberg

Across the OECD, GDP per capita is converging. In contrast, regional disparities – or differences in GDP per capita across jurisdictions – are rising, mainly as a result of widening productivity differences. Fiscal decentralisation could help reduce them again. According to new OECD research, assigning more ownsource revenue to sub-national governments dampens regional GDP disparities and underpins regional convergence. In more decentralised settings, catching-up regions appear to adopt policy innovations more rapidly and their policy innovations have a stronger impact. 

The economic consequences of Brexit: A taxing decision
by Rafal Kierzenkowski, Nigel Pain, Elena Rusticelli and Sanne Zwart

Membership of the European Union has contributed to the economic prosperity of the United Kingdom. Uncertainty about the outcome of the referendum has already started to weaken growth in the United Kingdom. A UK exit (Brexit) would be a major negative shock to the UK economy, with economic fallout in the rest of the OECD, particularly other European countries. In some respects, Brexit would be akin to a tax on GDP, imposing a persistent and rising cost on the economy that would not be incurred if the UK remained in the EU. 

Achieving prudent debt targets using fiscal rules‌‌
by Falilou Fall, Debbie Bloch, Jean-Marc Fournier and Peter Hoeller

Debt targets can serve as a fiscal policy anchor to ensure the sustainability of fiscal policy and that there is sufficient policy room to cope with adverse shocks. Prudent debt targets provide the commitment tool that re-assures markets and thereby diminishes risk premia and the cost of active fiscal policy.

‌Finance and inclusive growth: How to restore a healthy financial sector that supports long-lasting, inclusive growth?
by Boris Cournède, Oliver Denk and Peter Hoeller

Finance is a vital ingredient for economic growth, but there can also be too much of it. This study investigates what fifty years of data for OECD countries have to say about the role of the financial sector for economic growth and income inequality and draws policy implications.


Structural reforms and income distribution
by Orsetta Causa, Alain de Serres and Nicolas Ruiz

Many growth enhancing structural reforms are found to deliver stronger income gains for households at the lower end of the distribution compared with the average household, an indication that they may reduce inequality in disposable incomes.

Effects of Pro-Growth Policies on the Economic Stability of Firms, Workers and Households
by Boris Cournède, Paula Garda and Peter Hoeller

Economic policies shape how much people earn but also how stable their income and jobs are. The level of earnings and the degree of economic stability both matter for well-being. Micro-level data indicate that, across OECD countries, economic instability is much greater at the level of individuals than at the aggregate level. Movement from less to more productive processes and firms is at the heart of economic growth, which suggests possible trade-offs between growth and micro-level stability.

‌Vulnerability of Social Institutions
by Falilou Fall, Mauro Pisu, Jon Pareliussen and Debbie Bloch

Future generations will pay a high price if we fail to reform pension, health care and unemployment schemes. Social institutions will be tested in the coming years by ageing and slowing growth that threaten their sustainability and the adequacy of their deliveries, undermining the risk sharing that social institutions provide. In the face of these challenges, social institutions need to be reformed and adjusted regularly to adapt to trend changes and to shocks with-long lasting effects.

‌Policy Challenges for the Next 50 Years
by Henrik Braconier, Giuseppe Nicoletti, Ben Westmore

Global Trade and Specialisation Patterns Over the Next 50 Years
by Åsa Johansson, Eduardo Olaberría

More than five years after the onset of the financial and economic crisis the world economy is still weak, with growth in most key regions remaining below pre-crisis levels.
As the effects of the crisis eventually subsides, the coming 50 years will likely see a major shift of economic balance towards emerging economies, particularly those in Asia, with the share in world GDP of non-OECD countries rising well beyond that of the current OECD area by 2060.

‌Growth Policies and Macroeconomic Stability
by Douglas Sutherland, Petter Hoeller

Macroeconomic shocks as severe and protracted as those since 2007 warrant a reconsideration of the role growth-promoting policies play in shaping the vulnerability and resilience of an economy to macroeconomic shocks. Against this background, this paper looks at a vast array of policy recommendations by the OECD that promote long-term growth – contained in Going for Growth and the Economic Outlook –and attempts to establish whether they underpin macroeconomic stability or whether there is a trade-off.

Choosing fiscal consolidation instruments compatible with growth and equity
by Boris Cournède, Antoine Goujard, Álvaro Pina, Alain de Serres

Consolidation instruments (increases in particular taxes and cuts in specific spending areas) can be ranked according to their effects on short- and long-term growth, income distribution and current accounts, with the rankings taking into account country circumstances. Based on these rankings, illustrative consolidation packages to optimise the side-effects of consolidation on other policy objectives can be drawn up for each country.

Public Spending on Health and Long-term Care
by Christine de la Maisonneuve, Joaquim Oliveira Martins

Differences in health and long-term care spending emerge across OECD countries partly reflecting differing demographic trends as well as initial levels of income and informal long-term care supply. Korea, Chile, Turkey and Mexico, for example, are projected to experience above average increases in public health expenditures. By contrast, the Nordic countries, as well as the United States and the United Kingdom, display lower than average growth over the next 50 years.‌‌

Judicial Performance and its Determinants
by Giuliana Palumbo, Giulia Giupponi, Luca Nunziata, Juan S. Mora-Sanguinetti

In the OECD area the average length of civil proceedings is around 240 days in first instance, but in some countries a trial may require almost twice as many days to be resolved. Final disposition of cases may involve a long process of appeal before the higher courts, which in some cases can average more than 7 years. ‌

Knowledge-Based Capital, Innovation and Resource Allocation
by Dan Andrews, Chiara Criscuolo

Investment in knowledge-based capital (KBC) – assets that lack physical embodiment, such as computerised information, innovative property and economic competencies – has been rising significantly. This has implications for innovation and productivity growth and requires new thinking on policy. 

Looking to 2060:  Long-Term Global Growth Prospects
by Åsa Johansson, Yvan Guillemette, Fabrice Murtin, David Turner, Giuseppe Nicoletti, Christine de la Maisonneuve, Guillaume Bousquet, Francesca Spinelli

The next 50 years will see major changes in country shares in world GDP. On the basis of 2005 purchasing power parities (PPPs), China is projected to surpass the Euro Area in a year or so and the United States in a few more years, to become the largest economy in the world, and India is projected to surpass Japan in the next year or two and the Euro area in about 20 years.

Capital flows and financial fragility
by Rudiger Ahrend, Antoine Goujard, Cyrille Schwellnus

The experience of recent years has underlined the need for reducing financial fragility and the risk of financial crises. As with earlier episodes of financial crises, countries that were severely hit via their external account during the global financial crisis had for the most part previously seen a substantial run-up in the share of debt in total external liabilities.

Fiscal Consolidation
by Douglas Sutherland, Peter Hoeller, Rossana Merola

The economic and financial crisis was the catalyst for a fiscal crisis that engulfs many OECD countries. Consolidating public finances in order to address the consequences of the crisis, underlying weaknesses and also future spending pressures creates important challenges. Fiscal consolidation requires choices to be made about how much consolidation is needed, how fast it should be implemented and which instruments should be used.

 

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