Search

This paper assesses the impact of government fiscal policies on income inequality in Asia. It discusses the role and effectiveness of redistributive fiscal policies and quantifies the effects of taxation and government expenditure on income distributions. Panel estimation for 150 countries with data between 1970 and 2009 confirms international empirical findings for Asia. Tax systems tend to be progressive but government expenditures are a more effective tool for redistributing income. Moreover, the results suggest some distinctive differential distributive effect for government expenditure on social protection in Asia. Social protection spending appears to increase income inequality, whereas it reduces it in the rest of the world. Also, adversely affecting the distribution of income in Asia is government expenditure on housing. Some options for improving the effectiveness of fiscal policies in Asia are discussed.

This paper examines the effects of fiscal policy, measured by changes in government spending and net tax (government tax revenue less transfer payments), on New Zealand GDP. The framework of analysis is a structural vector autoregression (VAR) model of the New Zealand economy, employing and extending estimation techniques used by Blanchard and Perotti (2002). This model is then used to examine the dynamic effects of changes in government spending, taxes and transfers on GDP and the contributions of discretionary fiscal policy to New Zealand business cycles.

graph. Darst., Tab.

The purpose of this paper is to compare New Zealand's production structure in the mid-1990s to that in other OECD countries using input output analysis. Comparable inter industry transactions tables to the New Zealand data are available for Australia, Belgium, Denmark, Finland, Germany, Norway and the United Kingdom. The composition of total supply and value added is examined across countries. Backward and forward linkages, indices of industry interconnectedness, a value added production multiplier, a cumulated primary input coefficient for compensation of employees and a measure of import content of final demand output are calculated, taking into account direct and indirect transactions. New Zealand's industrial structure is broadly similar to that in other OECD countries. Some differences arise as certain industries are more important in some countries. New Zealand's exports appear to be more diversified and have a large value added content. Moreover, the return to capital, as measured by the share of gross operating surplus in value added, is high.

Macroeconomic models currently used by policy makers generally assume that the workings of financial markets can be fully summarised by financial prices, because the Modigliani and Miller (1958) theorem holds. This paper argues that these models are too limited in describing how monetary policy (and other) shocks are transmitted to the economy and points to new directions. The models are too limited because they disregard an information asymmetry between borrowers and lenders and the importance of financial intermediaries not only for individual depositors but the economy as a whole. Incorporating financial market interactions into macroeconomic models will enhance the understanding of the transmission mechanisms of monetary policy and other shocks.

This paper investigates changes in the production structure of the New Zealand economy using input output data. The analysis is undertaken at the 25-industry level using inter industry transactions for 1971-72, 1977-78, 1981-82, 1986-87, 1990-91 and 1994-95. Changes in the composition of gross output and value added are examined. Backward and forward linkages, indices of industry interconnectedness, a value added production multiplier, a cumulated primary input coefficient for compensation of employees and a measure of import content of final demand output are calculated, taking into account both direct and indirect transactions. The results suggest that some industries have been subject to large structural change and that a shift in New Zealand's pattern of industrial activity has occurred. These changes will have affected the transmission and propagation of shocks in the economy.

This paper constructs a composite index of leading indicators of New Zealand employment. The choice of variables and their weights in the composite index are determined by their concordance with employment. The composite index is included in an indicator model to forecast quarterly employment growth. The indicator model explains about 67 percent of the quarterly variation in employment, in sample, and correctly predicted the direction of next period employment almost 80 percent of the time, out of sample.

This paper investigates the production structure of the New Zealand business sector using the recently released 1996 input output tables. The analysis is undertaken at the most disaggregated level for which data are available, 126 industries. Indices of backward and forward linkages, measures of industry interconnectedness and a value added production multiplier are calculated. The ranking of industries by degree of connectedness depends on whether direct transactions or both direct and indirect transactions are considered. In 1996, wholesale and retail trade, air transport, services to transport and storage, central government administration, meat processing, and dairy product manufacturing had the strongest backward and forward links with other industries.

This paper examines the trends in saving in New Zealand. It considers different sources of information about saving and highlights issues with the measurement of saving. Illustrations are provided of the impact of adjusting saving for both the effects of inflation and the inclusion of some items of expenditure, which are typically counted as consumption. The difficulty of drawing clear implications for policy on the basis of our existing knowledge and data on saving and wealth levels in New Zealand is highlighted. An appendix to the paper includes a comprehensive set of data on New Zealand saving and related variables.

Household saving can be measured as either the difference between the flows of current income and expenditure, or through households' balance sheets as changes in the stocks of accumulated net wealth. This paper examines household saving in New Zealand and other OECD countries, with particular focus on the stock of net wealth. The ratio of real assets to disposable income in New Zealand is close to OECD levels. However, household financial net wealth as a proportion of disposable income has been falling in New Zealand since the late 1980s, whereas it has been rising in other OECD countries. As a result, housing assets in New Zealand have become an increasing share of households' wealth portfolios. The implied savings rate from households' balance sheets is significantly higher than the flow measure. Moreover, it follows the business cycle more closely, consistent with consumption smoothing behaviour by households.

Concern has been raised by an apparent lack of saving in New Zealand. It is often argued that policies which foster savings are important, as higher savings will contribute to higher economic growth. This paper investigates the link between saving, investment and growth. In particular, it focuses on issues potentially important in an open economy such as New Zealand. Theory predicts that increased total saving will lead to higher investment and output. In an open economy, total saving comprises saving by domestic agents (government, firms and households) plus foreign saving. Diversified portfolios, large inflows of foreign investment into New Zealand and investment rates comparable to those in other OECD countries suggest that New Zealand, so far, has been able to access foreign saving to meet investment demands. Domestic saving does not appear to have constrained investment and hence growth.

A monetary authority with the primary objective of price stability has to distinguish between temporary price shocks and persistent shocks to the rate of inflation. A measure of underlying inflation, therefore, has an important role to play as a guideline for monetary policy. In this paper, a measure of underlying inflation in the United States is obtained using a structural vector autoregressive (SVAR) methodology. The assumption that movements in measured inflation are the result of (a) one-time shocks to prices arising from supply-side developments and (b) persistent shocks to the inflation rate arising from demand-side developments provides a set of long-run restrictions to identify the structural innovations to the consumer price inflation rate. The model is estimated with monthly data and includes consumer prices (CPI), capacity utilization (CAPUT), producer prices of finished consumer goods (PPI), and import prices (IMP). The evidence reported in this paper suggests that measured inflation in the United States was below its underlying trend rate in 1994 and 1995, a period when inflationary pressures remained subdued, despite above-potential growth and labour market tightness. The evidence also supports the view that temporary factors have helped to contain inflationary tendencies in recent years. Past shocks should exert some further downward pressure on the inflation rate. Moreover, we find that the tightening in 1994-95 coincided with an upward trend in the underlying inflation rate, while measured inflation was still trending downward. The finding supports the view that the Federal Reserve reacts to movements in the underlying trend inflation rate., Une banque centrale ayant pour objectif premier de préserver la stabilité des prix doit pouvoir distinguer les chocs temporaires qui frappent les prix et les chocs persistants qui touchent le taux d'inflation. Il importe donc qu'elle dispose d'une mesure de l'inflation sous-jacente susceptible de la guider dans la conduite de la politique monétaire. L'auteure de l'étude mesure l'inflation sous-jacente aux États-Unis au moyen d'un vecteur autorégressif structurel (SVAR). Elle prend pour hypothèse que les variations de l'inflation mesurée résultent a) de chocs d'offre ponctuels que subissent les prix et b) de chocs de demande persistants qui touchent le taux d'inflation. Elle obtient ainsi un ensemble de restrictions à long terme permettant d'isoler les chocs structurels auxquels est soumis le taux d'accroissement des prix à la consommation. Le modèle, qui est estimé à l'aide de données mensuelles, englobe l'indice des prix à la consommation (IPC), le taux d'utilisation des capacités (CAPUT), les prix à la production des biens de consommation finis (PPI) et les prix à l'importation (IMP). Les résultats présentés par l'auteure donnent à penser que l'inflation mesurée aux États-Unis est restée au-dessous du taux de l'inflation tendancielle en 1994 et 1995, années au cours desquelles les tensions inflationnistes sont demeurées faibles, en dépit d'une croissance économique supérieure à celle de la production potentielle et de tensions sur le marché du travail. Il semble également que des facteurs temporaires aient contribué à contenir les tendances inflationnistes ces dernières années. Les chocs passés devraient exercer de nouvelles pressions à la baisse sur le taux d'inflation. De plus, l'auteure constate que le resserrement monétaire opéré en 1994 et en 1995 coïncidait avec une tendance à la hausse du taux d'inflation sous-jacent, à un moment où l'inflation mesurée s'orientait toujours à la baisse. Ce résultat vient appuyer la thèse que la Réserve fédérale réagit aux mouvements du taux de l'inflation tendancielle.

Cyclical contractions are often referred to as inventory cycles, in part because movements in inventories can amplify cyclical fluctuations in output. An unanticipated slowing in demand generally leads to an unintended buildup of inventories: only with a lag do firms adjust production and their actual holding of inventories relative to the desired level. A possible explanation for this accumulation is that the costs of adjusting inventory holdings outweigh the disequilibrium costs, i.e., the cost of temporarily deviating from the equilibrium level of inventories. In this paper, the relative importance of the disequilibrium costs to adjustment costs of inventories is evaluated. An estimate of the rate of inventory adjustment towards its long-run equilibrium level is provided in the United States by means of a linear-quadratic model with integrated processes. A limited-information approach allows the time-series properties of the data to be exploited and consistent estimates of the structural parameters of the Euler equation obtained. Evidence is provided that the actual level of U.S. inventories was generally above the target level during the past six recession periods and that inventories fell below their desired level following an economic downturn. Furthermore, the actual level of inventories appears to have been at desired levels between the 1960 and the 1969-70 recessions and since the last recession in 1990-1991—two periods of sustained economic growth. These findings support the view that inventory imbalances can amplify the business cycle. The empirical estimates also imply that adjustment costs are substantially more important than disequilibrium costs. The estimate of the speed of adjustment suggests that firms adjust their holdings of inventories slowly as it takes about a year for 95 per cent of the adjustment of the actual level to the target level to be completed., On invoque souvent le cycle des stocks pour expliquer le ralentissement conjoncturel de l'activité économique, en partie parce que l'évolution des stocks peut amplifier les fluctuations cycliques de la production. Un fléchissement inattendu de la demande provoque généralement un gonflement involontaire des stocks, les entreprises n'ajustant leur production et le niveau effectif de leurs stocks par rapport au niveau qu'elles souhaitent détenir qu'après un certain temps. Il se pourrait que ce gonflement soit dû au fait que les coûts d'ajustement des stocks sont plus élevés que les « coûts de déséquilibre » (coûts entraînés par un écart temporaire des stocks relativement à leur niveau d'équilibre). L'auteure évalue l'importance relative des coûts de déséquilibre et des coûts d'ajustement des stocks. Elle estime la vitesse à laquelle les stocks s'ajustent vers leur niveau d'équilibre à long terme aux États-Unis à l'aide d'un modèle quadratique linéaire à processus intégrés. La méthode d'estimation à information limitée qu'elle utilise permet d'exploiter les propriétés temporelles des données et d'obtenir des estimations convergentes des paramètres structurels de l'équation d'Euler. Selon les résultats présentés dans l'étude, le niveau effectif des stocks aux États-Unis a été en règle générale supérieur au niveau visé durant les six dernières périodes de récession et il est tombé au-dessous de ce niveau une fois la récession terminée. En outre, les stocks semblent s'être établis au niveau souhaité entre les récessions de 1960 et de 1969-1970 et depuis la dernière récession survenue en 1990­1991 - deux périodes de croissance économique soutenue. Ces résultats appuient l'hypothèse voulant que les déséquilibres des stocks amplifient les fluctuations économiques. Les estimations empiriques indiquent également que les coûts d'ajustement sont nettement supérieurs aux coûts de déséquilibre. S'il faut en croire la vitesse d'ajustement calculée par l'auteure, les entreprises modifient lentement le niveau de leurs stocks. En effet, il leur faut environ un an pour réaliser 95 % de l'ajustement total au niveau souhaité.