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Journal Cover OECD Journal : Economic Studies
  [SJR: 0.103]   [H-I: 5]   [14 followers]  Follow
   Full-text available via subscription Subscription journal
   ISSN (Print) 1995-2848 - ISSN (Online) 1995-2856
   Published by OECD Homepage  [80 journals]
  • Incorporating anchored inflation expectations in the Phillips curve and in
           the derivation of OECD measures of the unemployment gap
    • Abstract: Inflation has become much less sensitive to movements in unemployment in recent decades. A common explanation for this change is that inflation expectations have become better anchored as a consequence of credible inflation targeting by central banks. In order to evaluate this hypothesis, the paper compares two competing empirical specifications across all OECD economies, where competing specifications correspond to the "former" and "new" specification for deriving measures of the unemployment gap which underlie the OECD Economic Outlook projections. The former OECD specification can be characterised as a traditional "backward-looking" Phillips curve, where current inflation is partly explained by an autoregressive distributed lag process of past inflation representing both inertia and inflation expectations formed on the basis of recent inflation outcomes. Conversely, the new approach adjusts this specification to incorporate the notion that inflation expectations are anchored around the central bank’s inflation objective. The main finding of the paper is that the latter approach systematically out-performs the former for an overwhelming majority of OECD countries over a recent sample period. Relative to the backward-looking specification, the anchored expectations approach also tends to imply larger unemployment gaps for those countries for which actual unemployment has increased the most. Moreover, the anchored expectations Phillips curve reduces real-time revisions to the unemployment gap, although these still remain uncomfortably large, in the case of countries where there have been large changes in unemployment.JEL classification: C22, E24, E31, J64
      Keywords: Anchored expectations, Phillips curve, equilibrium unemployment, real-time revisions
      PubDate: 2015-12-22T00:00:00Z
  • Does the post-crisis weakness of global trade solely reflect weak
    • Abstract: Global trade growth over the past few years has appeared extraordinarily weak, even in relation to weak global GDP growth. This paper shows that the apparent breakdown in the relationship between global trade and global GDP growth is largely explained by two factors: an inappropriate measurement of global GDP and extraordinary demand weakness in the euro area. As a measure of demand for traded goods, global GDP at market exchange rates is more appropriate than the conventional purchasing power parity-based measure. Moreover, extraordinary demand weakness in the euro area – which is a particularly trade intensive region – has had a substantial negative effect on intra-euro area trade flows, which are commonly counted towards global trade. When global GDP is measured at market exchange rates and intra-euro area flows are removed from the measure of global trade, econometric estimations suggest that over the past 15 years the long-term elasticity of global trade to GDP has been similar to that of the 1990s. Indeed, the overwhelming part of postcrisis trade weakness can be attributed to weak global demand rather than structural changes, according to the econometric estimations in this paper and supporting evidence on changes in global investment, international production fragmentation and protectionism.
      PubDate: 2015-12-22T00:00:00Z
  • Can pro-growth policies lift all boats?
    • Abstract: In a majority of OECD countries, GDP growth over the past three decades has been associated with growing income disparities. To shed some lights on the potential sources of trade-offs between growth and equity, this paper investigates the long-run impact of structural reforms on GDP per capita and household income distribution. Pro-growth reforms can be distinguished according to whether they are found to generate an increase or a reduction in household disposable income inequality. Those that contribute to reduce inequality include the reduction in regulatory barriers to competition, trade and FDI, as well as the stepping-up in job search assistance and training programmes. Conversely, a tightening of unemployment benefits for the long-term unemployed is found to lift mean household income but to lower income among poorer households, thus raising inequality. Several other reforms have no significant impact on income distribution.JEL Classification: 047, D37, E61
      Keywords: Growth, inequality, pro-growth policies
      PubDate: 2015-12-22T00:00:00Z
  • Effects of economic policies on microeconomic volatility
    • Abstract: Economic policies shape how much people earn, as well as how stable their income and jobs are. The level and stability of earnings both matter for well-being. Standard economic aggregates do not measure accurately the economic uncertainty which households are facing. This paper shows that household-level economic instability is only very loosely related to macroeconomic volatility. It uses several household-level databases to document how structural reforms aimed at boosting growth influence household-level economic stability. Movement from less to more productive processes and firms is at the heart of economic growth, which suggests a trade-off between growth and micro-level stability. Certain policy changes boost growth but increase micro-level instability: they include reductions in tax progressivity or social transfers (including unemployment benefits), as well as moves from very to moderately tight restrictions on the flow of goods and services and on the firing of regular workers. However, the analysis also uncovers that moving to highly competitive policies in general reduces micro-level instability. This finding points to a case for comprehensive rather than marginal reform in tightly regulated countries, since a comprehensive agenda can deliver higher growth without the instability costs that a more marginal reform can entail.JEL classification: D12, D22, J08, O40
      Keywords: Stability, households, economic growth, reforms, microdata
      PubDate: 2015-12-22T00:00:00Z
  • The dynamics of social expenditures over the cycle
    • Abstract: This paper studies the cyclical behaviour of public social spending in 20 OECD countries observed over the period between 1982 and 2011. In view of the recent discussion on cutting the budget deficit, the paper pays particular attention to whether social spending is pro-cyclical or countercyclical, whether it changes asymmetrically during expansions and recessions and whether the asymmetric changes in social spending contribute to a drift in social expenditures over time. The links between social spending levels and key economic variables, such as economic growth, provide also a useful context for discussing current social expenditure trends. The estimates, based on a system-GMM estimator, suggest that an upward ratchet effect exists. The effect is robust to a large number of alternative specifications.JEL classification: E32, E62, H50, I00
      Keywords: Fiscal policy, economic cycles, social spending, ratchet effect
      PubDate: 2015-12-22T00:00:00Z
  • Experience and the returns to education and skill in OECD countries
    • Abstract: Using the Survey of Adult Skills (PIAAC), this paper documents how the returns to education and skill change with experience for a sample of 22 OECD countries. It does this within the framework of the Altonji and Pierret (2001) employer learning model, and therefore also tests the relevance of this theory in a wide range of countries using comparable data and a consistent methodology. Significant heterogeneity is found in the experience profiles of the returns to education and skill across countries, and convincing evidence in support of the employer learning theory is only found in a sub-set of the countries analysed. While these countries vary significantly from one another in terms of their labour market institutions and educational systems, the analysis does seem to suggest that employer learning is most common in those countries where employment protection legislation on temporary contracts is weak. This is consistent with a model in which temporary contracts allow employers to test and learn about young workers, and give them the flexibility to adjust wages in line with observed productivity.JEL codes: J24, J32, D83
      Keywords: Employer learning, returns to education, returns to skill
      PubDate: 2015-12-22T00:00:00Z
  • Adult neurogenesis—a reality check
    • Abstract: Abstract It is established beyond doubt that new neurons are born in discrete areas of the adult brain throughout the lifetime of most mammals. Recent findings have shed new light on the regional limitations, regulation, and possible function of adult neurogenesis. This article aims to look critically at the existence and relevance of adult neurogenesis under physiological conditions, based on recent advances in the field. We also evaluate the therapeutic potential of adult neurogenesis and what is realistic to expect from the future. We conclude that, to date, little is known with certainty about why new neurons are generated in the adult brain. Until there is more causal evidence at hand, assumptions about the potential functions of new neurons remain hypothetical. Provided we learn how to safely regulate proliferation, migration, and proper maturation of new neurons, endogenous neurogenesis could be a promising source of new cells for replacement therapies.
      PubDate: 2007-03-01
  • Reconsolidation: the samsara of memory consolidation
    • Abstract: Abstract Memory formation is a complex and very dynamic process. After a learning event, the acquired information undergoes a number of changes that eventually result in memory storage. Stored memories are very malleable. Recent rediscoveries show that after reactivation, for example by retrieval, an established memory can become transiently sensitive to disruption and needs to undergo a process of restabilization, known as reconsolidation, to be maintained. The findings that stabilized memories can become labile have challenged the classical view of how memories are consolidated over time and stored. On the other hand, the reconsolidation process is not fully understood, and theories about the nature and function of memory reconsolidation remain controversial. In this paper, I will present my view on some of the controversial issues of memory reconsolidation and propose a hypothetical model for how this process contributes to memory stabilization. The debated issues that will be discussed are: (1) The term reconsolidation; (2) Temporal constraints of memory reconsolidation; (3) Classical theory of memory consolidation versus theory of memory reconsolidation; (4) Procedural constraints: what is it that needs to be reactivated to produce memory fragility' (5) Functions of memory reconsolidation; (6) Disrupting reconsolidation: an impairment of memory stabilization or retrieval'
      PubDate: 2007-03-01
School of Mathematical and Computer Sciences
Heriot-Watt University
Edinburgh, EH14 4AS, UK
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Fax: +00 44 (0)131 4513327
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