Showing papers by "Directorate-General for Economic and Financial Affairs published in 2005"

Labour Market Institutions and Labour Market Performance: A Survey of the Literature

Abstract: This paper presents a selective survey of the recent literature on labour market institutions. It describes the different empirical approaches used to explore the nexus between labour market institutions and labour market performance. It stresses that the effect of institutions is complex in both stock and flow models and that it is also crucial to take into account the interactions they generate among themselves and with macroeconomic shocks. While their importance in explaining labour market performances is uncontroversial, there is no full consensus on their actual impact and the precise transmission channels. In addition, rather than taking institutions for granted, a new branch of research attempts to understand them as the result of an endogenous process. The paper also briefly discusses the relationships between the efficiency of the redistributive policies (via taxation) and the type of protection provided (on the job or in the market). Lastly, the paper examines the key issue of efficient policy design both at the macro- and micro-level.

Monitoring and Forecasting Annual Public Deficit. The Case of France

Abstract: This paper presents and evaluates a new approach, temporal aggregation of models, to forecast annual budget deficits using montly information. Using French monthly data on central government revenues and expenditures, the method we propose consists of: 1) estimating monthly ARIMA models for all items of central government revenues and expenditures; 2)inferring the annual ARIMA models from the monthly models; 3) using the inferred annual ARIMA models to perform one-step-ahead forecasts for each item; 4) compounding the annual forecasts of all revenues and expenditures to obtain an annual budget deficit forecast. The major empirical benefit of this technique is that as soon as new monthly data becomes available, annual deficit forecasts are updated. This allows us to detect in advance possible slippages in central government finances. For years 2002, 2003 and 2004, forecasts obtained following the proposed approach are compared with a benchmark method and with official predictions published by the French government. An evaluation of their relative performance is provided.

The Impact on the U.S. Dollar of the Conflict between the American Locomotive's Model and the Emerging Economies' Autopoietic Growth

Abstract: The purpose of this paper is to put the future of the US dollar into a logical framework which comprises the global development mechanism. Two models of growth collide: the US 'locomotive,' based on the international use of the dollar, and which requires exogenous pushes coming permanently from the foreign deficit and periodically from the public deficit, and the 'endogenous,' or 'autopoietic.' The engine of autopoietic growth is the process of globalization, alimented by foreign investments and the emerging economies' domestic demand, which in turn require the establishment of an international monetary standard. In absence of a real international cooperation, the conflict of the two models might bring a global currency crisis and a fall in the global growth rate, with a possible negative impact in foreign relations and policies at the global level.