Services procurement under the WTO’s agreement on government procurement: whither market access?

This paper studies the government procurement of services from foreign suppliers by conducting a statistical analysis of data submitted by Japan and Switzerland to the WTO's Committee on Government Procurement. Using several metrics, the paper examines whether the WTO’s Agreement on Government Procurement (GPA) has led to greater market access for foreign suppliers in services procurement. Our results indicate that despite the GPA, the proportions of services contracts awarded to foreigners have declined over time for both countries and that in the absence of this decline, the value of services contracts awarded to foreign firms would have been more than 15 times higher in the case of Japan and nearly 68 times more in the case of Switzerland. We also find that for the same services categories, the Japanese government is not purchasing as much from abroad as its private sector is importing from the rest of the world, a finding that further points to the home-bias in that government's public purchase decisions.Services, public procurement, GPA, Japan, Switzerland

COMMON STOCHASTIC TRENDS IN INTERNATIONAL STOCK MARKETS: TESTING IN AN INTEGRATED FRAMEWORK

In this paper we analyze the implications for the identification of common stochastic trends among stock price indices of using data transformed on a ”real dollar” basis. By applying a “general” VAR model where all the relevant variables (stock indices, consumer price indices and the exchange rate) are included, we show that the expected results from the cointegration analysis differ substantially. In particular it is shown that if four common stochastic trends drive the system then cointegration between the indices transformed in nominal dollars should be the relevant test while the use of their “real dollars equivalent” is superfluous. In cases where three common stochastic trends exist then a reasonable specification of the model would imply that the Purchasing Power Parity condition accounts for one of them while the second one relates to a cointegrating relation between the stock indices in nominal domestic currency terms. We apply the testing methodology developed by Johansen (1992a, 1995a, 1997) and extended by Paruolo (1996) and Rahbek et al. (1999) to examine the presence of I(2) and I(1) components in a multivariate context using monthly data for the US, UK, Germany and Japan for the period 1980 – 2000. Four possible economic scenarios were considered in a bivariate setting and two of them were found to be statistically supported. By imposing linear restrictions on each cointegrating vector as suggested by Johansen and Juselius (1994), the order and rank conditions for statistical identification are satisfied while the test for economic identification was not significant for each bilateral case, namely US-UK, US-Germany, US-Japan. The main findings suggest that the policy to transform the data into a “real” dollar basis, which is often encountered in the literature, lacks empirical support. Furthermore, the stability results indicate that cointegration was established in the early 1990s which implies that some form of policy coordination between the G-7 countries was implemented in the aftermath of the October 1987 crisis.International stock markets, I(2) cointegration analysis, commom trends, identification, purchasing

Empirical Study Of Purchasing Power Parity: The Balassa-Samuelson Effect In Indonesia

This study empirically investigate the Balassa-Samuelson theory through the analysis of the long-term relationship of the differences effect in productivity on the exchange rate deviation from Purchasing Power Parity (PPP) using the Panel Dynamic Ordinary Least Squares (POLS) method. The data used is panel data with cross-sectional data from 4 of Indonesia's largest trading partners, namely the United States, Japan, Korea, Singapore and the time series data from the year 1967 to 2015. The result is that there is a long-term relationship between differences in productivity to the exchange rate deviation from PPP in Indonesia. Keywords: Balassa-Samuelson effect, PDOLS, real exchange rate, real GDP per capita, ratio of trade balance to GD

Air conditioning and electricity expenditure: The role of climate in temperate countries

This paper investigates how households adopt and use air conditioning to adapt to climate change and increasingly high temperatures, which pose a threat to the health of vulnerable populations. The analysis examines conditions in eight temperate, industrialized countries (Australia, Canada, France, Japan, the Netherlands, Spain, Sweden, and Switzerland). The identification strategy exploits cross-country and cross-household variations by matching geocoded households with climate data. Our findings suggest that households respond to excess heat by purchasing and using air conditioners, leading to increased electricity consumption. Households on average spend 35%–42% more on electricity when they adopt air conditioning. Through an illustrative analysis, we show that climate change and the growing demand for air conditioning are likely to exacerbate energy poverty. The number of energy poor who spend a high share of income on electricity increases, and households in the lowest income quantile are the most negatively affected

The unintended consequences of the debt ... will increased government expenditure hurt the economy?

In 2008, governments in many countries embarked on large fiscal expenditure programmes, with the intention to support the economy and prevent a more serious recession. In this study, the overall impact of a substantial increase in fiscal expenditure is considered by providing a novel analysis of the most relevant recent experience in similar circumstances, namely that of Japan in the 1990s. Then a weak economy with risk-averse banks seemed to require some of the largest peacetime fiscal stimulation programmes on record, albeit with disappointing results. The explanations provided by the literature and their unsatisfactory empirical record are reviewed. An alternative explanation, derived from early Keynesian models on the ineffectiveness of fiscal policy is presented in the form of a modified Fisher-equation, which incorporates the recent findings in the credit view literature. The model postulates complete quantity crowding out. It is subjected to empirical tests, which were supportive. Thus evidence is found that fiscal policy, if not supported by suitable monetary policy, is likely to crowd out private sector demand, even in an environment of falling or near-zero interest rates. As a policy conclusion it is pointed out that by changing the funding strategy, complete crowding out can be avoided and a positive net effect produced. The proposed framework creates common ground between proponents of Keynesian views (as held, among others, by Blinder and Solow), monetarist views (as held in particular by Milton Friedman) and those of leading contemporary macroeconomists (such as Mankiw)

Long swings in Japan’s current account and in the yen

The yen has experienced several big swings over recent decades. This paper argues that the fluctuations of the Japanese exchange rate resulted mainly from corresponding movements in the current account, which affected the demand for yen relative to other currencies. The paper builds a vector error correction model for the exchange rate and the current account, based on the idea that the exchange rate and its economic fundamental do not move too far apart over time. In addition, the model allows for a Markov-switching stochastic trend in the current account. Regime changes occur at uncertain dates, possibly in response to exchange rate changes. Bayesian estimation proceeds using an innovative Gibbs-sampling procedure. The empirical results suggest that recurrent structural breaks in the yen’s fundamentals account for the large fluctuations of the Japanese exchange rat

U.S. Health Care Spending: Comparison with Other OECD Countries

[Excerpt] The United States spends more money on health care than any other country in the Organization for Economic Cooperation and Development (OECD). The OECD consists of 30 democracies, most of which are considered the most economically advanced countries in the world. According to OECD data, the United States spent $6,102 per capita on health care in 2004 — more than double the OECD average and 19.9% more than Luxembourg, the second-highest spending country. In 2004, 15.3% of the U.S. economy was devoted to health care, compared with 8.9% in the average OECD country and 11.6% in second-placed Switzerland. Why does the United States spend this amount on health care? Economists break health care spending into two parts: price and quantity (which includes the number of visits to health care providers and the intensity of those visits). In terms of quantity, OECD data indicate that the United States has far fewer doctor visits per person compared with the OECD average; for hospitalizations, the United States ranks well below the OECD and is roughly comparable in terms of length of hospital stays. The intensity of service delivery is a different story: the United States uses more of the newest medical technologies and performs several invasive procedures (such as coronary bypasses and angioplasties) more frequently than the average OECD country. In terms of price, the OECD has stated that there is no doubt that U.S. prices for medical care commodities and services are significantly higher than in other countries and serve as a key determinant of higher overall spending. What does the United States get for the money it spends? Said slightly differently, does the United States get corresponding value from the money it spends on health care? The available data often do not provide clear answers. For example, among OECD countries in 2004, the United States had shorter-than-average life expectancy and higher-than-average mortality rates. Does this mean that the U.S. system is inefficient in light of how much is spent on health care? Or does this reflect the greater prevalence of certain diseases in the United States (the United States has the highest incidence of cancer and AIDS in the OECD) and less healthy lifestyles (the United States has the highest obesity rates in the OECD)? These are some of the issues that confound international comparisons. However, research comparing the quality of care has not found the United States to be superior overall. Nor does the U.S. population have substantially better access to health care resources, even putting aside the issue of the uninsured. Although the United States does not have long wait times for non-emergency surgeries, unlike some OECD countries, Americans found it more difficult to make same-day doctor’s appointments when sick and had the most difficulty getting care on nights and weekends. They were also most likely to delay or forgo treatment because of cost. The OECD data and other research provide some insight as to why health care spending is higher in the United States than in other countries, although many difficult research issues remain. This report presents some of the available data and research and concludes with a summary of study findings

Testing for Long-Run PPP in a System Context: Evidence for the US, Germany and Japan

The present paper tests for the validity of long-run purchasing power parity (PPP) for the three key currencies of the recent floating exchange rate period, the US dollar, the German mark and the Japanese yen. The novelty of the paper is that the validity of the PPP conditions relating the economies of the US, Germany and Japan is tested in a system framework, which allows for possible interactions in the determination of the exchange rates and the prices of the three economies. Some form of causality among the variables of the system is also assessed empirically with the aid of weak exogeneity tests. The results illustrate the importance of the multilateral testing. Positive evidence for PPP is found: long-run PPP is supported for the US and Germany but also for the US and Japan, in contrast to evidence of earlier empirical studies. In addition, causality is found running from the US prices to the exchange rates and German and Japanese prices.Money demand; PPP, cointegration, causality