Empirical Evidence For OECD Countries Research Articles

Institutions and entrepreneurship: Empirical evidence for OECD countries

Institutions and entrepreneurship: Empirical evidence for OECD countries

COVID-19 infections and fatalities developments: empirical evidence for OECD countries and newly industrialized economies

This paper presents empirical results on coronavirus infection and fatality rates from cross-country regressions for OECD economies and a sample of middle- and high-income countries. We include environmental, economic, medical, and policy variables in our analysis to explain the number of corona cases and deaths per million. We find a significant positive impact of local air pollution on infection rates in the whole sample and on fatality rates for OECD countries. Obesity rates have a positive effect on cases and deaths across the different estimation equations. The strategy of aiming to achieve herd immunity has a significant positive effect on infections as well as on death rates. The first affected countries have significantly higher mortality rates, revealing the lack of experience and medical capacity to deal with the pandemic in an initial phase. Postponing – and fighting - the pandemic could save lives in many countries and generate considerable economic benefits. Other medical and policy variables discussed in the public sphere do not show a significant impact in the regression analysis. Our results suggest that improving air quality and fighting obesity helps reduce the negative effects of a coronavirus pandemic significantly. Policy options for fighting a second epidemic wave should take into account the results from this study in order to optimize global epidemic policy.

Fiscal performance of minority governments: New empirical evidence for OECD countries

I use new data on central and general governments for 23 OECD countries over the period 1960–2015 (unbalanced panel) to examine fiscal performance under minority governments. The results do not suggest that minority governments had higher fiscal deficits and public expenditure than majority governments—corroborating many previous studies. An innovation of my study is to examine fiscal policies of minority governments that enjoy organized support of opposition parties. The results do not show that minority governments that enjoy organized support of opposition parties increased public expenditure to a larger extent than majority governments. If anything, fiscal deficits were somewhat higher under single-party minority governments with organized support of opposition parties than under majority governments especially. Minority and majority governments had quite similar fiscal performance in OECD countries.

Fiscal Performance of Minority Governments: New Empirical Evidence for OECD Countries

I use new data on central and general governments for 23 OECD countries over the period 1960-2015 (unbalanced panel) to examine fiscal performance under minority governments. The results do not suggest that minority governments had higher fiscal deficits and public expenditure than majority governments – corroborating many previous studies. An innovation of my study is to examine fiscal policies of minority governments that enjoy organized support of opposition parties. The results do not show that minority governments that enjoy organized support of opposition parties increased public expenditure to a larger extent than majority governments. If anything, fiscal deficits were somewhat higher under single-party minority governments with organized support of opposition parties than under majority governments especially. Minority and majority governments had quite similar fiscal performance in OECD countries.

Education: Optimal Choice and Efficient Policy

The research on earnings determination is based on the Mincer-Becker assumption that individuals decide on schooling by maximizing income. This paper offers an alternative and less restrictive approach based on utility maximization. Using this approach, we analyze the efficiency of education policy in Ramsey’s tradition. Distortive wage taxation is shown to provide an efficiency reason for subsidizing education in effective terms. Second-best policy is confronted with empirical evidence for OECD countries.

The credibility of monetary policy announcements: Empirical evidence for OECD countries since the 1960s

Monetary policy rules have been considered as fundamental protection against inflation. However, empirical evidence for a correlation between monetary commitment to rules and price stability is relatively weak. We discuss likely causes for this weak link and argue that monetary commitment is not necessarily credible by itself without adequate policy assignment and an institutional framework enforcing the commitment. We further propose a proxy variable for monetary credibility in an empirical assessment of our theoretical arguments based on panel data covering 22 OECD countries and five decades. Results confirm the crucial role of a credibly backed monetary commitment for price stability.

The Credibility of Monetary Policy Announcements: Empirical Evidence for OECD Countries Since the 1960s

Monetary policy rules have been considered as fundamental protection against inflation. However, empirical evidence for a correlation between rules and inflation is relatively weak. In this paper, we first discuss likely causes for this weak link and present the argument that monetary commitment is not credible in itself. It can grant price stability best if it is backed by an adequate assignment of economic policy. An empirical assessment based on panel data covering five decades and 22 OECD countries confirms the crucial role of a credibly backed monetary commitment to price stability.

The Credibility of Monetary Policy Announcements – Empirical Evidence for OECD Countries Since the 1960s

Monetary policy rules have been considered as fundamental protection against inflation. However, empirical evidence for a correlation between rules and inflation is relatively weak. In this paper, we first discuss likely causes for this weak link and present the argument that monetary commitment is not credible in itself. It can grant price stability best if it is backed by an adequate assignment of economic policy. An empirical assessment based on panel data covering five decades and 22 OECD countries confirms the crucial role of a credibly backed monetary commitment to price stability.

The changing nature of the OECD shadow economy

Traditionally, the presence of the shadow economy (SE) has been associated, mainly and positively, with taxation. Recently, some authors have suggested that the SE may be also linked to the institutional setting (efficiency of the bureaucracy, regulations, corruption, etc.) so that just two stable equilibria are possible. In the “good” one, there is a small hidden sector, large fiscal revenues and honest/appreciated institutions. The other, “bad”, equilibrium is the opposite. Unlike the traditional approach, therefore, the recent literature argues that the tax burden and SE can be negatively correlated. Examining the links between these variables in relatively uncorrupt systems, this paper reconciles the two views. Theoretically, it claims that many different good equilibria can emerge whereby SE and its determinants are linked in complex and different ways. For instance, taxation and SE can go hand-in-hand, even taking into account the institutional framework. Empirical evidence for OECD countries supports both the model and the changing nature of the SE.

The Changing Nature of the OECD Shadow Economy

As recently suggested, the shadow economy and its determinants (taxation, regulations, corruption, etc.) are linked such that just two stable equilibria are possible. In the good one there is a small hidden sector, large fiscal revenues and honest/appreciated institutions. The other (bad) equilibrium is quite the opposite. Our paper examines the links between these variables in relatively uncorrupt systems. Unlike mainstream literature, we suggest that a continuum of SE equilibrium rates can emerge and that taxation and underground activities can be positively correlated. Empirical evidence for OECD countries broadly supports the model

Monetary Commitment, Institutional Constraints and Inflation: Empirical Evidence for OECD Countries Since the 1970s

Central bank independence (CBI) is a very important precondition for price stability. However, the empirical evidence for a correlation between both is relatively weak. In this paper, this weakness is countered with a) an extended measure of monetary commitment, which includes well-known criteria for CBI and external criteria such as convertibility and exchange rate regimes and b) the argument that monetary commitment can grant price stability best if it is backed by an adequate assignment of economic policy. An empirical assessment with data from four decades confirms the crucial role of monetary commitment for price stability.

Venture Capital Investment and Labor Market Performance: New Empirical Evidence for OECD Countries

Anglo-Saxon countries have been successful in the 1990s concerning labor market performance compared to the former role models Germany and Japan. This reversal in relative economic performance might be related to idiosyncracies in financial markets with bank-based financial markets as in Germany and Japan being possibly inferior to stock-market based financial markets in turbulent times and when approaching the economic frontier. A cleavage is related to venture capital markets which are flourishing on Anglo-Saxon but not on German type financial markets. Venture capital is crucial for financing structural change, new firms and innovations and therefore possibly also nowadays for employment growth.