D’Agostino, Antonello, Modugno, Michele, Osbat, Chiara, (2016), “A global trade model for the euro area”, European Central Bank, 9 December We propose a model for analyzing euro area trade based on the interaction between macroeconomic and trade variables. First, we show that macroeconomic variables are necessary to generate accurate short-term trade forecasts; this result can be explained by the high correlation between trade and macroeconomic variables, with the latter being released …Read More

Aiyar, Shekhar, Ebeke, Christian, Shao, Xiaobo, (2016), “The Impact of Workforce Aging on European Productivity”, IMF Working Paper WP/16/238, December The age-distribution of Europe’s workforce has shifted towards older workers over the past few decades, a process expected to accelerate in the years ahead.. This paper studies the effect of the aging of the workforce on labor productivity, identifies the main transmission channels, and examines what policies might mitigate the effects …Read More

Gaspar, Vitor, Jaramillo, Laura, Wingender, Philippe, (2016), “Political Institutions, State Building, and Tax Capacity : Crossing the Tipping Point”, IMF Working Paper WP/16/233, November An empirical finding by Gaspar, Jaramillo and Wingender (2016) shows that once countries cross a tax-to-GDP threshold of around 12¾ percent, real GDP per capita increases sharply and in a sustained manner over the following decade. In this paper, we attempt via four case studies—Spain, China, Colombia, …Read More

Gaspar, Vitor, Jaramillo, Laura, Wingender, Philippe, (2016), “Tax Capacity and Growth: Is there a Tipping Point?”, IMF Working Paper WP/16/234, November Is there a minimum tax to GDP ratio associated with a significant acceleration in the process of growth and development? We give an empirical answer to this question by investigating the existence of a tipping point in tax-to-GDP levels. We use two separate databases: a novel contemporary database covering 139 …Read More

Gali, Jordi, (2015), “Hysteresis and the European unemployment problem revisited”, ECB Forum on Central Banking, May The unemployment rate in the euro area appears to contain a significant non-stationary component, suggesting that some shocks have permanent effects on that variable. I explore possible sources of this non-stationarity through the lens of a New Keynesian model with unemployment, and assess their empirical relevance. Relevant Posts Fatás, Antonio, Summers, Lawrence,  (2016), “Hysteresis and fiscal …Read More

D. Gibson, Heather, G. Hall, Stephen, S. Tavlas, George, (2016), “Self-fulfilling dynamics:  the interactions of sovereign spreads, sovereign ratings and bank ratings during the euro financial crisis”, Bank of Greece, 30 November During the euro-area financial crisis, interactions among sovereign spreads, sovereign credit ratings, and bank credit ratings appeared to have been characterized by selfgenerating feedback loops. To investigate the existence of feedback loops, we consider a panel of five …Read More

Fournier, Jean-Marc, (2016), “The positive effect of public investment on potential growth”, OECD Economics Department Working Paper No. 1347, 22 November An estimated baseline convergence model capturing the long-term effect of human capital and physical investment on potential output for a panel of OECD countries is augmented with public investment and its components. The estimations suggest that public investment has a positive effect on long-term growth and on labour productivity. …Read More

Mourougane, Annabelle, Botev, Jarmila, Fournier, Jean-Marc, Pain Nigel, Rusticelli, Elena, (2016), “Can an increase in public investment sustainably lift economic growth?”, OECD Economics Department Working Paper No 1351, 24 November This paper seeks to identify the conditions under which raising public investment can sustainably lift growth without deteriorating public finances. To do so, it relies on a range of simulations using three different macro-structural models. According to the simulations, OECD governments …Read More

Hermansen, Mikkel, Ruiz, Nicolas, Causa, Orsetta, (2016), “The distribution of the growth dividends”, OECD Economics Department Working Papers No. 1343, 17 November Widespread increases in inequality over the past three decades have raised the question of the distribution of the growth dividends. This paper finds that there is no single answer to this question. The mechanisms that link growth and income inequality are found to differ depending on the sources of …Read More