In this paper we develop a simple analytical framework to analyze “good” and “bad equilibria” in public-debt and growth dynamics. The “bad equilibrium” is characterised by the simultaneous occurrence, and adverse feedbacks between, high and growing fiscal deficits and debt, high risk...

This paper analyses the reaction of fiscal policy to the cycle in OECD countries. The results suggest that while overall government balances were counter-cyclical in the past and more so in economic downturns than in upswings, discretionary fiscal policy was neutral on average. However,...

This study analyses the impact of economic catching-up on annual inflation rates in the European Union with a special focus on the new member countries of Central and Eastern Europe. Using an array of estimation methods, we show that the Balassa-Samuelson effect is not an important driver of...

One commonly held view about the difference between continental European countries and other OECD countries, especially the United States, is that the heavy regulation of Europe reduces its growth. Using newly assembled data on regulation in several sectors of many OECD countries, we provide...

Ireland’s banking crisis, one of the most severe in the OECD area, and the associated economic recession have taken a heavy toll on public finances. Large public deficits have accumulated since 2008 and net public debt, which had been eliminated, has soared once again. The rapid deterioration...

This paper discusses how to improve Canada’s business innovation in order to boost labour productivity and output growth. Many general framework conditions are highly favourable to business risk-taking and innovation, including macro stability, openness, strong human capital, low corporate tax...

Structural transformation towards a more knowledge-based economy will strengthen Spain’s medium-term growth prospects. To deal with long standing impediments to higher growth the government has a substantial structural reform programme touching on education, the labour market and the business...

Income and earning inequality has been on the rise in most of the OECD and in many emerging economies since the 1980s. This paper estimates a model of earnings inequality across OECD countries that incorporates determinants of relative demand and supply of more and less-skilled labour. Drawing...

China is well-placed to avoid the so-called “middle-income trap” and to continue to converge towards the more advanced economies, even though growth is likely to slow from near double-digit rates in the first decade of this millennium to around 7% at the 2020 horizon. However, in order to...

Since the beginning of the decade, France has seen a marked decline in its export performance, leading to growing concerns on the part of the authorities and of civil society about the economy’s capacity to adapt to the intensified globalisation of trade and investment in goods and services....