Listing 1 - 10 of 11 | << page >> |
Sort by
|
Choose an application
The fiscal position can affect fiscal multipliers through two channels. Through the Ricardian channel, households reduce consumption in anticipation of future fiscal adjustments when fiscal stimulus is implemented from a weak fiscal position. Through the interest rate channel, fiscal stimulus from a weak fiscal position heightens investors' concerns about sovereign credit risk, raises economy-wide borrowing cost, and reduces private domestic demand. The paper documents empirically the relevance of these two channels using an Interactive Panel Vector Auto Regression model. It finds that fiscal multipliers tend to be smaller when fiscal positions are weak than strong.
Business Cycle --- Economic Adjustment and Lending --- Economic Policy, Institutions and Governance --- Finance and Financial Sector Development --- Financial Crisis Management and Restructuring --- Fiscal and Monetary Policy --- Fiscal Multipliers --- Fiscal Position --- Interest Rate Channel --- Macroeconomic Management --- Macroeconomics and Economic Growth --- Public Sector Development --- Ricardian Channel --- State-Dependency
Choose an application
The seven largest emerging market economies-China, India, Brazil, Russia, Mexico, Indonesia, and Turkey-constituted more than one-quarter of global output and more than half of global output growth during 2010-15. These emerging markets, called EM7, are also closely integrated with other countries, especially with other emerging and frontier markets. Given their size and integration, growth in EM7 could have significant cross-border spillovers. The authors provide empirical estimates of these spillovers using a Bayesian vector autoregression model. They report three main results. First, spillovers from EM7 are sizeable: a 1 percentage point increase in EM7 growth is associated with a 0.9 percentage point increase in growth in other emerging and frontier markets and a 0.6 percentage point increase in world growth at the end of three years. Second, sizeable as they are, spillovers from EM7 are still smaller than those from G7 countries (Group of Seven of advanced economies). Specifically, growth in other emerging and frontier markets, and the global economy would increase by one-half to three times more due to a similarly sized increase in G7 growth. Third, among the EM7, spillovers from China are the largest and permeate globally.
Business Cycles --- Em7 --- Emerging Markets --- Externalshocks --- G7 --- Spillovers
Choose an application
This paper presents a systematic analysis of the availability and use of fiscal space in emerging and developing economies. These economies built fiscal space in the run-up to the Great Recession of 2008-09, which was then used for stimulus. This reflects a more general trend over the past three decades, where availability of fiscal space has been associated with increasingly countercyclical (or less procyclical) fiscal policy. However, fiscal space has shrunk since the Great Recession and has not returned to pre-crisis levels. Emerging and developing economies face downside risks to growth and prospects of rising financing costs. In the event that these cause a sharp cyclical slowdown, policy makers may need to employ fiscal policy as a possible tool for stimulus. An important prerequisite for fiscal policy to be effective is that these economies have the necessary fiscal space to employ countercyclical policies. Over the medium-term, credible and well-designed institutional arrangements, such as fiscal rules, stabilization funds, and medium-term expenditure frameworks, can help build fiscal space and strengthen policy outcomes.
Choose an application
Europe is deeply integrated into global value chains and recent trade tensions raise the question of how European economies would be affected by the introduction of tariffs or other trade barriers. This paper estimates the impact of trade shocks and growth spillovers using value added measures to better gauge the associated costs across European countries.
Value added --- Tariff --- International economic relations. --- Economic aspects --- Economic aspects. --- Europe --- Europe. --- Foreign economic relations. --- Added value --- Manufacturing processes --- Economic policy, Foreign --- Economic relations, Foreign --- Economics, International --- Foreign economic policy --- Foreign economic relations --- Interdependence of nations --- International economic policy --- International economics --- New international economic order --- Economic policy --- International relations --- Economic sanctions --- Ad valorem tariff --- Border taxes --- Customs (Tariff) --- Customs duties --- Duties --- Fees, Import --- Import controls --- Import fees --- Tariff on raw materials --- Commercial policy --- Indirect taxation --- Revenue --- Customs administration --- Favored nation clause --- Non-tariff trade barriers --- Reciprocity (Commerce) --- Council of Europe countries --- Eastern Hemisphere --- Eurasia --- Exports and Imports --- Macroeconomics --- Taxation --- Globalization --- Globalization: General --- Trade: General --- Trade Policy --- International Trade Organizations --- Externalities --- Empirical Studies of Trade --- Public finance & taxation --- Global value chains --- Exports --- Tariffs --- Spillovers --- Trade balance --- International trade --- Taxes --- Financial sector policy and analysis --- International finance --- Balance of trade --- United States
Choose an application
Wages have been rising faster than productivity in many European countries for the past few years, yet signs of underlying consumer price pressures remain limited. To shed light on this puzzle, this paper examines the historical link between wage growth and inflation in Europe and factors that influence the strength of the passthrough from labor costs to prices. Historically, wage growth has led to higher inflation, but the impact has weakened since 2009. Empirical analysis suggests that the passthrough from wage growth to inflation is significantly lower in periods of subdued inflation and inflation expectations, greater competitive pressures, and robust corporate profitability. Thus the recent pickup in wage growth is likely to have a more muted impact on inflation than in the past.
Inflation --- Labor --- Macroeconomics --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Price Level --- Deflation --- Wages, Compensation, and Labor Costs: General --- Labour --- income economics --- Labor costs --- Producer prices --- Wage adjustments --- Prices --- Switzerland
Choose an application
The auto sector is macro-critical in many European countries and constitutes one of the main supply chains in the region. Using a multi-sector and multi-country general equilibrium model, this paper presents a quantitative assessment of the impact of global pandemic-induced labor supply shocks—both directly and via supply chains—during the initial phase of the COVID-19 pandemic on the auto sector and aggregate activity in Europe. Our results suggest that these labor supply shocks would have a significant adverse impact on the major auto producers in Europe, with one-third of the decline in the value added of the car sector attributable to spillovers via supply chains within and across borders. Within borders, the pandemic-induced labor supply shocks in the services sector have a bigger adverse impact, reflecting their larger size and associated demand effects. Across borders, spillovers from the pandemic-induced labor supply shocks that originate in other European countries are larger than those that originate outside the region, though the latter are still sizable.
Macroeconomics --- Economics: General --- Labor --- Economic Theory --- Diseases: Contagious --- Industries: Automobile --- Demand and Supply of Labor: General --- Agriculture: Aggregate Supply and Demand Analysis --- Prices --- Externalities --- Health Behavior --- Automobiles --- Other Transportation Equipment --- Related Parts and Equipment --- Economic & financial crises & disasters --- Economics of specific sectors --- Labour --- income economics --- Economic theory & philosophy --- Infectious & contagious diseases --- Transport industries --- Labor supply --- Supply shocks --- Economic theory --- Spillovers --- Financial sector policy and analysis --- COVID-19 --- Health --- Automobile industry --- Economic sectors --- Currency crises --- Informal sector --- Economics --- Labor market --- Supply and demand --- International finance --- Communicable diseases --- Automobile industry and trade --- Slovak Republic
Choose an application
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
Choose an application
The auto sector is macro-critical in many European countries and constitutes one of the main supply chains in the region. Using a multi-sector and multi-country general equilibrium model, this paper presents a quantitative assessment of the impact of global pandemic-induced labor supply shocks—both directly and via supply chains—during the initial phase of the COVID-19 pandemic on the auto sector and aggregate activity in Europe. Our results suggest that these labor supply shocks would have a significant adverse impact on the major auto producers in Europe, with one-third of the decline in the value added of the car sector attributable to spillovers via supply chains within and across borders. Within borders, the pandemic-induced labor supply shocks in the services sector have a bigger adverse impact, reflecting their larger size and associated demand effects. Across borders, spillovers from the pandemic-induced labor supply shocks that originate in other European countries are larger than those that originate outside the region, though the latter are still sizable.
Slovak Republic --- Macroeconomics --- Economics: General --- Labor --- Economic Theory --- Diseases: Contagious --- Industries: Automobile --- Demand and Supply of Labor: General --- Agriculture: Aggregate Supply and Demand Analysis --- Prices --- Externalities --- Health Behavior --- Automobiles --- Other Transportation Equipment --- Related Parts and Equipment --- Economic & financial crises & disasters --- Economics of specific sectors --- Labour --- income economics --- Economic theory & philosophy --- Infectious & contagious diseases --- Transport industries --- Labor supply --- Supply shocks --- Economic theory --- Spillovers --- Financial sector policy and analysis --- COVID-19 --- Health --- Automobile industry --- Economic sectors --- Currency crises --- Informal sector --- Economics --- Labor market --- Supply and demand --- International finance --- Communicable diseases --- Automobile industry and trade
Choose an application
Wages have been rising faster than productivity in many European countries for the past few years, yet signs of underlying consumer price pressures remain limited. To shed light on this puzzle, this paper examines the historical link between wage growth and inflation in Europe and factors that influence the strength of the passthrough from labor costs to prices. Historically, wage growth has led to higher inflation, but the impact has weakened since 2009. Empirical analysis suggests that the passthrough from wage growth to inflation is significantly lower in periods of subdued inflation and inflation expectations, greater competitive pressures, and robust corporate profitability. Thus the recent pickup in wage growth is likely to have a more muted impact on inflation than in the past.
Switzerland --- Inflation --- Labor --- Macroeconomics --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Price Level --- Deflation --- Wages, Compensation, and Labor Costs: General --- Labour --- income economics --- Labor costs --- Producer prices --- Wage adjustments --- Prices
Choose an application
This paper analyzes the relationship between fiscal multipliers and fiscal positions of governments using an Interactive Panel Vector Auto Regression model and a large data-set of advanced and developing economies. The methodology permits tracing the endogenous relationship between fiscal multipliers and fiscal positions while maintaining enough degrees of freedom to draw sharp inferences. The paper reports three major results. First, the fiscal multipliers depend on fiscal positions: the multipliers tend to be larger when fiscal positions are strong (i.e. when government debt and deficits are low) than weak. For instance, the long-run multiplier can be as large as unity when the fiscal position is strong, while it can be negative when the fiscal position is weak. Second, these effects are separate and distinct from the impact of the business cycle on the fiscal multiplier. Third, the state-dependent effects of the fiscal position on multipliers is attributable to two factors: an interest rate channel through which higher borrowing costs, due to investors' increased perception of credit risks when stimulus is implemented from a weak initial fiscal position, crowd out private investment; and a Ricardian channel through which households reduce consumption in anticipation of future fiscal adjustments.
Listing 1 - 10 of 11 | << page >> |
Sort by
|