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This paper discusses the short- and medium-term fiscal implications of government wage bill spending. Working with a sample of 137 advanced, emerging and low-income countries, we use a panel VAR approach to identify differences in the dynamic behavior of revenues, nonwage expenditures, and the overall fiscal balance in response to changes in the wage bill. We show that the interaction between wage bill changes and these three fiscal items is alike and varies overtime. Higher wage bill spending does not revert in the medium term, but the initial worsening of the fiscal balance associated with it, though it persists, eventually halves as revenues increase while non-wage spending remains broadly unchanged. We also show that countries differ in how these three fiscal variables behave following wage bill changes and seek to explain this variation by a set of country characteristics, including the level of development, access to natural resources and public indebtedness levels.

Econometric models. --- Wages --- Econometrics --- Mathematical models --- Labor --- Macroeconomics --- Public Finance --- Natural Resources --- Employment --- Unemployment --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Fiscal Policy --- National Government Expenditures and Related Policies: General --- Wages, Compensation, and Labor Costs: General --- Agricultural and Natural Resource Economics --- Environmental and Ecological Economics: General --- Labour --- income economics --- Public finance & taxation --- Environmental management --- Wage adjustments --- Expenditure --- Natural resources --- Fiscal stance --- Fiscal policy --- Environment --- Expenditures, Public --- Congo, Democratic Republic of the

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Zonder onderwerpscode: financiewezen

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This Staff Discussion Note looks at the stark fiscal challenges posed by the decline and aging of populations between now and 2100. It finds that without reforms, pensions and health spending would rise to 25 percent of GDP by end-century in more developed countries (and 16 percent of GDP in less developed countries), with potentially dire fiscal consequences. Given the uncertainty underlying the population projections and associated large fiscal risks, a multi-pronged approach will be required. This could include entitlement reform—starting now but at a gradual pace; policies that affect demographics and labor markets; and better tax systems and more efficient public expenditure.

Public Finance --- Demography --- Emigration and Immigration --- International Migration --- National Government Expenditures and Related Policies: General --- Forecasts of Budgets, Deficits, and Debt --- Demographic Trends, Macroeconomic Effects, and Forecasts --- Economic Growth and Aggregate Productivity: General --- National Government Expenditures and Health --- Economics of the Elderly --- Economics of the Handicapped --- Non-labor Market Discrimination --- Demographic Economics: General --- Social Security and Public Pensions --- Population & demography --- Public finance & taxation --- Migration, immigration & emigration --- Pensions --- Health care spending --- Aging --- Migration --- Population and demographics --- Pension spending --- Expenditure --- Expenditures, Public --- Population aging --- Emigration and immigration --- Population --- United States

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CESEE countries lag in terms of infrastructure compared to the EU15, and deficient infrastructure is often cited as a constraint to growth and convergence. Investing in infrastructure is therefore an important long-standing policy issue for the region. In the context of the Covid-19 pandemic, infrastructure investment has also gained some ground as economies look to support activity in the recovery phase once the virus has been contained. Against this backdrop, this project seeks to benchmark infrastructure in CESEE, assess the macro impact of higher infrastructure investment, and discuss policies issues to maximize such impact. First, we benchmark infrastructure in the region versus the EU15, across various infrastructure sectors and using different methodologies. Second, deploying empirical estimates and model-based simulations, we analyze the macroeconomic impact of boosting infrastructure investment. Third, we present an in-depth analysis of policy issues: enhancing public investment management, managing fiscal risks, and mobilizing private sector participation.

Foreign Exchange --- Infrastructure --- Investments: General --- Public Finance --- National Government Expenditures and Related Policies: Infrastructures --- Other Public Investment and Capital Stock --- Investment --- Capital --- Intangible Capital --- Capacity --- Public finance & taxation --- Macroeconomics --- Currency --- Foreign exchange --- Public investment and public-private partnerships (PPP) --- Public investment spending --- Private investment --- Purchasing power parity --- National accounts --- Expenditure --- Saving and investment --- Public-private sector cooperation --- Public investments --- Czech Republic

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This paper describes recent work to strengthen nowcasting capacity at the IMF’s European department. It motivates and compiles datasets of standard and nontraditional variables, such as Google search and air quality. It applies standard dynamic factor models (DFMs) and several machine learning (ML) algorithms to nowcast GDP growth across a heterogenous group of European economies during normal and crisis times. Most of our methods significantly outperform the AR(1) benchmark model. Our DFMs tend to perform better during normal times while many of the ML methods we used performed strongly at identifying turning points. Our approach is easily applicable to other countries, subject to data availability.

Macroeconomics --- Economics: General --- Intelligence (AI) & Semantics --- Diseases: Contagious --- Forecasting --- Econometrics --- Monetary Policy --- Multiple or Simultaneous Equation Models: Models with Panel Data --- Forecasting and Other Model Applications --- Technological Change: Choices and Consequences --- Diffusion Processes --- Health Behavior --- Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data) --- Classification Methods --- Cluster Analysis --- Principal Components --- Factor Models --- Economic & financial crises & disasters --- Economics of specific sectors --- Machine learning --- Infectious & contagious diseases --- Economic Forecasting --- Economic growth --- Econometrics & economic statistics --- Technology --- COVID-19 --- Health --- Economic forecasting --- Business cycles --- Factor models --- Econometric analysis --- Currency crises --- Informal sector --- Economics --- Communicable diseases --- Econometric models