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This paper illustrates how convergence equations can be used to analyse the dynamics of the income distribution using a simple extension of standard techniques. Using data for a sample of OECD countries, I estimate an equation that relates growth in income per capita to the standard growth theory variables, government size and labour market performance indicators. The estimated model and the underlying data are then used in a convergence accounting exercise that yields quantitative estimates of the contribution of each of these variables to the relative growth performance of each country and to observed convergence in the sample. [ABSTRACT FROM AUTHOR]

This paper adds to the literature studying how fiscal variables affect long-term interest rates. Using a sample of sixteen OECD countries over the period 1980-2007, we show that a one-year increase in the maturity of the public debt lowers the long-term interest rate by on average 20-30 basis points. This negative effect is found for both static and panel vector autoregressive specifications. Country sample splits suggest that it is present in particular for low-maturity or high-inflation countries. [ABSTRACT FROM AUTHOR]

In this paper we evaluate empirically the impact of fiscal policy on two key determinants of long-term growth, i.e., private investment and productivity growth. We mostly focus on a panel of 20 OECD economies from 1970 to 2009, although we also present some estimates based on data for 80 developing economies. Our findings suggest that high public debt adversely affects both aggregate investment spending and productivity growth, through distortions related to the size of the public sector. We also find weak evidence of some non-linear effects on productivity, with government debt becoming more detrimental in advanced economies when above 85-90% of GDP. [ABSTRACT FROM AUTHOR]

In this paper we analyse how the availability of credit influences the relationship between government size as a proxy for fiscal stabilization policy and the amplitude of business cycle fluctuations in a sample of advanced OECD countries. Interpreting relatively low loan-to-value ratios as an indication of tight credit constraints, we find that government size exerts a stabilizing effect on output and consumption growth fluctuations only when credit constraints are relatively tight. Our results provide support for the hypothesis that credit market frictions play a crucial role in the transmission of fiscal policy. [ABSTRACT FROM AUTHOR]

This paper uses an overlapping generations framework to analyse the implications of different financing regimes in the education sector for human capital formation and economic welfare. Agents privately invest in education after they have received a noisy information signal about their abilities. The incentives of individuals to invest in education are determined by the financing regime under which the economy operates. We analyse and compare three financing regimes. Under each regime, the payback obligation of an educational loan is contingent, to some extent, on an individual's future income. [ABSTRACT FROM AUTHOR]

The paper provides robust normative comparisons of 12 OECD countries based on their distributions of disposable income and access to two regional public goods: infant mortality and pupil–teacher ratios at public schools. Comparisons are performed using two and three-dimensional dominance criteria that coincide with the unanimity of utilitarian judgments taken over specific classes of utility functions. The criteria succeed in ranking conclusively about 30% of all possible comparisons in the two-dimensional case, compared with 67% for one-dimensional income-based comparisons and 6% for three-dimensional ones. Introducing local public goods seems to worsen the relative standing of Anglo-Saxon countries. [ABSTRACT FROM AUTHOR]

This article presents a multi-country study of unemployment growth, focusing on OECD countries from 1956-1984. Unemployment has risen markedly in most of the OECD countries during the past decade or so. Is this the result of supply or demand factors? Our answer is that it is six of one and half a dozen of the other. The estimated wage and employment equations confirm the view that for most countries both demand and the level of real wages affect employment. The decline in demand, relative to potential, seems to have been an important proximate cause of the rise in unemployment, especially in the European Community. However, it is clear that supply-side factors have also played a significant role. This is a broad conclusion that seems to be shared by many of the authors who have contributed to this volume, even if the details are often different. The evidence also seems to support the notion that structural differences in labor markets can be related to national differences in institutional and social characteristics. In particular, wages seem to be more responsive to labor market disequilibrium and less responsive to tax and import price shocks, and the labor market as a whole seems to adjust more quickly in economies that are more corporatist in nature. However, our analysis of international differences in labor market performance is perforce very crude.

Shocks on FDI of some parent country in a host affect the same parent's FDI in other hosts. Shocks on a parent's FDI in some host affect other parents' FDI in the same host. In general equilibrium, shocks on FDI between any country pair will affect all country pairs' FDI. Using cross-sectional data on FDI among 22 OECD countries in 2000, we use a spatial estimation framework to allow for all three modes of interdependence simultaneously, thereby distinguishing between market-size-related and remainder interdependence. Our results highlight the complexity of multinational enterprises' investment strategies and the interconnectedness of the world investment system. [ABSTRACT FROM AUTHOR]