Do funded pensions contribute to higher aggregate savings? A cross-country analysis

Do Funded Pensions Contribute to Higher Aggregate Savings? A Cross-Country Analysis.—In this paper we test the hypothesis that increases in funded pension wealth contribute to higher aggregate savings by employing a panel data set of ten countries over the 1982–1993 period. We develop a proxy for changes in funded pension wealth for this sample of countries based on pension fund asset data. Using this measure and controlling for other determinants of savings, we estimate the relationship between aggregate saving rates and changes in funded pension wealth. Our results suggest that the build-up of pension assets exerts a positive and statistically significant effect on aggregate saving rates, and that this impact differs for OECD and non-OECD countries. JEL no. E21, G23, O57     

A note on poverty and gender in Spain

This article focuses on the gender distribution of poverty in Spain. Our basic objective is determining if poverty is equally shared between men and women. The source of the data is the Encuesta Básica de Presupuestos Familiares 1990–1991. Having analyzed three poverty rates—the head count ratio, the income gap ratio and the normalized income gap ratio, with three poverty lines (25%, 40%, and 50% of the mean) and two income variables (OECD equivalent household income and per capita household income)—it cannot be said that the women are “over-represented” amongst the poor in Spain in 1991.     

Financial development and top income shares in OECD countries

We examine the causal impact of financial development (FD) on top income shares for a panel of 14 OECD countries—five Anglo‐Saxon countries, eight continental European countries, and Japan—over a 110‐year period. In our main General Method of Moments estimates, we find that a 1‐percentage‐point change in FD increases the top 1% income share by 0.2%. In distribution terms, a 1‐SD incr=ease in FD increases the top 1% income share by around 0.4 of an SD. The effects are robust to various measures of top income shares and FD and alternative estimation techniques, including nonparametric estimation. FD is typically viewed in positive terms in that it makes it easier to access credit and facilitates economic growth. Our results are important because they contribute to understanding of the potential negative effects of FD.     

Country size and comparative advantage: An empirical study

Country Size and Comparative Advantage: An Empirical Study.—The author formulates a simple model that captures two hypotheses: (i) that countries absolutely abundant in skilled labor will be net exporters in R&;D-intensive industries and (ii) that countries with a large domestic market will be net exporters in scale-intensive industries. The hypotheses are empirically examined by pooling the data into one regression of industry-specific net export shares on country and industry characteristics. The results offer relatively strong support for hypothesis (i) and some support for hypothesis (ii). The conclusions are the same as when studying the trade of each OECD country individually. JEL no. F12, F14     

Saving,investment and international capital mobility in East Asia

This paper estimates the degree of international capital mobility in East Asia using the saving–investment correlation originated in Feldstein and Horioka [Feldstein, M., Horioka, C., 1980. Domestic saving and international capital flows. Economic Journal 90, 314–329]. We apply the empirical method used in Kim [Kim, S.H., 2001. The saving–investment correlation puzzle is still a puzzle. Journal of International Money and Finance 20, 1017–1034] to control for cyclical effects in estimating a time-series saving–investment correlation of 10 Asian countries from 1980 to 2002. Our conclusion is that the saving–investment correlation in East Asia steadily decreases over time but is still higher than that of the OECD countries over all studied periods. These results are consistent with the fact that capital mobility in East Asia is lower than that in the OECD countries. In addition, regional saving and investment data demonstrate that investment in East Asia is largely financed by regional savings.     

Unemployment and Labor Market Institutions: An Empirical Analysis

The development of the unemployment rate differs substantially between OECD countries. In this paper we investigate to what extent these differences are related to labor market institutions. In our analysis we use data of eighteen OECD countries over the period 1960–1994 and show that the way in which institutions interact is important. J. Japan. Int. Econ., December 2001, 15(4), pp. 403–418. Department of Economics, CentER, Tilburg University and Institute for Labour Studies (OSA), The Netherlands. © 2001 Elsevier Science (USA).Journal of Economic Literature Classification Numbers: E24, J68.     

Strategic implications of the Soviet‐North Korean alliance

Abstract

Globalization is commonly defined as a strict economic path by most previous works, but it is really a fuzzy concept with unrestrained dimensions. While the ideological location of an incumbent political party is a powerful predictor of its policy position, the role of a political party in the globalization-growth nexus has never been fully empirically investigated. By applying Pedroni's panel cointegration technique instead of a time-series or traditional panel data approach, this paper aims to empirically re-examine the co-movement and the causal relationship among economic growth, the overall globalization index, and its three main dimensions—economic, social, as well as political integrations—by using panel data for 23 Organization for Economic Cooperation and Development (OECD) countries for 1970 to 2006. Certainly, the political party variable is taken into account as the advanced test is promoted, and we finally discover that all variables move together in the long run. Based on the results of the panel causality test, though the evidence of short-run causality is very weak, it does show long-run unidirectional causality running from the overall index of globalization, economic globalization, and social globalization to growth. Finally, the critical role of the political party is deeply discussed in relation with our results.     

Changing nature of North–South linkages: Stylized facts and explanations

This paper examines the changing nature of growth spillovers between developed economies, the North, and developing countries, the South, driven by the process of globalization—the phenomenon of rising international trade and financial flows. We use a comprehensive database of macroeconomic and sectoral variables for 106 countries over the period 1960–2005. We consider the South to be composed of two groups of countries, the Emerging South and the Developing South, based on the extent of their integration into the global economy. Using a panel regression framework, we find that the impact of the Northern economic activity on the Emerging South has declined during the globalization period (1986–2005). In contrast, the growth linkages between the North and Developing South have been rather stable over time. Our findings also suggest that the North and Emerging South economies have started to exhibit more intensive intra-group growth spillovers.     

Government capital formation: Explaining the decline

Government Capital Formation: Explaining the Decline. —This paper examines whether various hypotheses put forward to explain the downward trends in government capital spending are supported by the data. Using panel data for 22 OECD countries for 1980–1992, various hypotheses are tested in a model. The authors find support for three hypotheses: (1) capital spending is reduced during periods of fiscal stringency, since this category of government spending is politically an easier target for cuts than other spending categories; (2) myopic governments will cut investment spending more than governments which have a longer policy horizon; (3) private investment influences government investment spending, because both types of investment are complementary.     

Are Financial Development and Trade Openness Complements or Substitutes?

This article studies the long‐ and short‐run relationships between financial development and trade openness. Using the pooled mean group estimator of Pesaran, Shin, and Smith (1999) for unbalanced panel data for 87 countries over the 1960–2005 period, our empirical results indicate that long‐run complementarity between financial development and trade openness coexists with short‐run substitutionarity between the two policy variables. But when splitting the data into OECD and non‐OECD country groups, this finding can be observed only in non‐OECD countries. For OECD countries, financial development has negligible effects on trade. In addition, we find nonlinearity in the relationship in that long‐run responses of trade decrease with financial development. The article further finds coexistence of negative trade effects of financial fragility and positive trade impacts of financial depth.     

The great realignment: How factor-biased innovation reshaped comparative advantage in the U.S. and Japan, 1970–1992

Recent changes in comparative advantage in the largest OECD economies contradict static Heckscher–Ohlin–Vanek theory. Japan's rising share of machinery exports and the improved comparative advantage of the USA in heavy industry were accompanied by growing scarcities of factors used intensively in these sectors. We show that under factor-price equalization, directed technical change leads to increasing specialization in goods intensive in each country's abundant factor. Testing this hypothesis with 1970–1992 export data from 14 OECD countries, we find that international comparative advantage was reshaped by biased innovation in the largest economies that increased the effective stocks of their abundant factors.     

Real Exchange Rates,the Trade Balance and Net Foreign Assets: Long-Run Relationships and Measures of Misalignment

In this paper we estimate equilibrium exchange rates for 23 OECD countries and four less mature economies in a panel data setting. Our empirical analysis demonstrates significant links between the trade balance and net foreign assets, and between real exchange rates and the trade balance, rather than between real exchange rates and net foreign asset, as predicted by the model of Lane and Milessi-Ferretti (2002). Our study indicates that, in terms of the association between real exchange rates and trade balance, there is heterogeneity between the emerging market economies and the OECD countries. Finally, we construct various measures of exchange rate misalignment for all the exchange rates included in our panels.     

Some Unpleasant Consequences of EMU

The recent economic woes of some Eurozone countries have raised doubts about whether they can remain in the Eurozone. Prior to these problems emerging, the price levels in these countries rose faster than the average Eurozone price level and their rates of economic growth were higher. It is conjectured in this paper that the two sets of events are connected. Using a formal theory of inflation in the Eurozone based on a stylised version of the New Keynesian model, it is shown that, due to a “one-size-fits-all” monetary policy, inflation rates in individual Eurozone countries are unlikely to converge, and their price levels are likely to diverge, causing large differences in levels of competitiveness over time. The reason for this is different real effects in these economies such as productivity differences or different fiscal policies. In other words the Eurozone is not an optimal currency area. Despite the outstanding record of the ECB in achieving its inflation goals, it is powerless to affect the underlying problem.     

Discretionary Government Consumption, Private Domestic Demand, and Crisis Episodes

This paper analyzes the dynamic impact of discretionary government consumption purchases on private demand. Using a panel of 132 countries from 1960 to 2008, we find that while discretionary changes in government consumption lead to crowding-in effects in the short run, crowding-out effects take over in the medium run. In addition, we also find that both short-term crowding-in and medium-term crowding out effects are amplified once we control for periods of crisis.     

Export variety and export performance: Empirical evidence for the OECD countries

Export Variety and Export Performance: Empirical Evidence for the OECD Countries. — Does product variety matter for export performance? This has been suggested by the new trade theory. In the present paper, we investigate empirically whether increasing export variety has contributed to the export growth of the OECD countries. We calculate direct measures of export variety and estimate pooled export demand equations for 15 OECD countries. The econometric results suggest that producing highly differentiated export goods gives a competitive advantage which allows to sell more products.     

Determinants of software exports from India

Notable accomplishments in export have made India’s software sector conspicuous. This paper attempts to discuss the determinants of software exports from India. The study notes that—besides dynamic elements of economic development across the world—the policy measures and actions of the Indian government have played proactive and facilitating roles in the growth of the software sector. The study uses the autoregressive distributed lag (ARDL) approach to estimate the impact of various explanatory variables on software exports from India. Since causality is found running in both directions for many variables, the study attempts to examine the determinants of software exports from India through the regression equation in first difference. The results suggest that changes in openness index, human capital, and the GDP of high-income OECD countries have exercised positive impact on change in software exports from India. The study finds a stable long run relationship among variables.     

Public debt and economic growth – economic systems matter

Most studies on the relationship between public debt and economic growth implicitly assume homogeneous debt effects across their samples. We –in accordance with recent literature– challenge this view and state that there likely is a great deal of cross-country heterogeneity in that relationship. However, other than scholars assuming that all countries are different, we expect that clusters of countries differ. We identify three country clusters with distinct economic systems: Liberal (Anglo Saxon), Continental (Core EU members) and Nordic (Scandinavian). We argue that different degrees of fiscal uncertainty at comparable levels of public debt between those economic systems constitute a major source of heterogeneity in the debt-growth relationship. Our empirical evidence supports this assumption. Continental countries face more growth reducing public debt effects than especially Liberal countries. There, public debt apparently exerts neutral or even positive growth effects, while for Nordic countries a non-linear relationship is discovered, with negative debt effects kicking in at public debt values of around 60% of GDP.     

Saving Trends in Southeast Asia: A Cross-Country Analysis

This paper investigates the long-run pattern of private saving in Indonesia, Malaysia, Singapore and Thailand. These countries have not only maintained saving levels that are currently among the highest in the world, but have also experienced a sustained increase in their rate of private saving over the past twenty years. Using a cointegration approach, this paper empirically examines the economic determinants underlying the saving trends in this group and the extent to which these countries share a common experience with respect to the factors accounting for their strong saving performance. The findings suggest that demographic shifts and, to a somewhat lesser extent, rising per capita incomes have been important factors underlying regional saving trends, with broadly similar long-run impacts across countries. Limited evidence to support a significant and common relation between compulsory and total saving in Singapore and Malaysia is also found.     

Exchange-Rate Coordination for Surmounting the East Asian Currency Crises

This paper investigates the long-run pattern of private saving in Indonesia, Malaysia, Singapore and Thailand. These countries have not only maintained saving levels that are currently among the highest in the world, but have also experienced a sustained increase in their rate of private saving over the past twenty years. Using a cointegration approach, this paper empirically examines the economic determinants underlying the saving trends in this group and the extent to which these countries share a common experience with respect to the factors accounting for their strong saving performance. The findings suggest that demographic shifts and, to a somewhat lesser extent, rising per capita incomes have been important factors underlying regional saving trends, with broadly similar long-run impacts across countries. Limited evidence to support a significant and common relation between compulsory and total saving in Singapore and Malaysia is also found.     

Regulatory Policy: OECD Experience and Evidence

In the past 20 years a key topic of public-sector reform inOECD countries has been the emergence of regulatory policy.During this period, the nature of regulation has undergone profoundand rapid change. This paper reviews the development of regulatorypolicy in OECD countries over the last quarter-century. It identifiesa range of tools and institutions that have been used by OECDcountries to develop high-quality regulation. The analysis attemptsto show that while there is considerable commonality on broadobjectives of regulatory policy, considerably diversity remainsin the implementation of regulatory policy across OECD countries. Footnotes ¹ E-mail address: nikolai.malyshev{at}oecd.org