If productivity increases more slowly for services than for manufactured goods then services suffer from Baumol’s cost disease and tend to become relatively more costly over time. Since the welfare state in all countries is an important supplier of tax financed services, this translates into a...

Increasing longevity causes an upward trend in the dependency ratio in many countries. This raises concerns about the financial sustainability of social security schemes, and reform proposals and initiatives abound. It is shown that a fundamental policy choice inevitably arises since a given...

The role of real and nominal propagation mechanisms in generating persistent real effects of nominal shocks is analysed analytically in a fully specified intertemporal general equilibrium model. While neither a real propagation mechanism (capital acccumulation) with one-period nominal contracts...

It is vividly debated how the ongoing process of European integration will affect the need and scope for welfare state activities. To some this process signals that welfare state activities have to be rolled back, while others stress that international integration may increase the need for...

The Scandinavian welfare states are mature in the sense of having a high level of standards for public provisions of welfare services as well as a high replacement level for income transfers, especially for low-income groups. In this welfare model, individuals have basic rights to welfare...