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Using panel data for OECD countries, this study investigates the extent to which changes in government spending on education, health and other areas influence long-term growth.
In many OECD countries, government debt reached levels over recent years that call for reduction over the medium to longer term to ensure public finance sustainability. This paper investigates the international transmission of fiscal consolidation shocks via trade flows.
Urbanisation in China has long been held back by various restrictions on land and internal migration but has taken off since the 1990s, as these impediments started to be gradually relaxed. People have moved in large numbers to richer cities, where productivity is higher and has increased further thanks to agglomeration effects.
The recent crisis has revealed large differences in external competitiveness between euro area member countries. Since nominal exchange rate devaluation is not an option for members of a currency area, governments in troubled member countries have been considering so-called fiscal devaluation, i.e. a shift from employers’ social security contribution to value added tax, as an alternative means to restore competitiveness.
This paper describes the features of the tax, recounts the story of its interplay between fiscal adjustment and helping meet the obligations to raise taxes, and implications for competitiveness and carbon leakage, environmental effectiveness and equity issues, and draws conclusions regarding why it happened, and provides tentative insights for other countries in a similar situation.
Despite sustained efforts made in recent years to rein in budget deficits, a majority of OECD countries still face substantial fiscal consolidation needs. The choices made about which spending areas to curtail and which taxes to hike will have implications for near-term activity and long-term growth as well as for equity and the current account.
This working paper presents the background and the details of the simulations behind Box 1.4 of the May 2013 OECD Economic Outlook. A small simulation model is used to evaluate the contribution that the three pillars of the government’s strategy – fiscal consolidation, growth-boosting structural reforms and higher inflation – could make to reversing the rise in Japan’s public debt ratio.
Mexico has achieved a high degree of decentralisation in public services, but the Mexican fiscal
federal system has important shortcomings. States and municipalities have become heavily dependent on
federal transfers to finance a growing share of public spending.
In the run-up to the financial crisis, indebtedness of households and non-financial businesses rose to historically high levels in many OECD countries; gross debt of financial companies rose dramatically relative to GDP. Much of the debt accumulation appears to have been based on excessive risk-taking and exceptional macro-economic conditions and therefore not sustainable.
This paper develops a simple model-based framework for stress testing fiscal consolidation strategies
under different scenarios of future shocks