Fiscal Policy in a Monetary Union: Gains from Changing Institutions

In a Monetary Union where individual monetary instruments are lost, fiscal policy becomes more important as a national policy. The question addressed in this article is whether fiscal policy should be decided at the country level or by a central decision maker, being in any case the fiscal instruments specific to each country. To answer this question, the focus is on the quantitative effect, since there are costs of implementing a supranational decision maker. While discussing the methodologies used in literature, we hereby propose a different one for quantifying gains from cooperation. We conclude that gains from fiscal coordination are significative, but gains that result from policy changes as a reaction to shocks are, by nature, very small. We also show that, symmetric shocks lead to coordination gains of the same magnitude than asymmetric ones.Coordination, Fiscal Policy, Gains, Nash.

Measuring trade policy intervention : a cross-country index of relative price dispersion

In the debate about the relationship between trade policy and growth, various measures for trade intervention have been used. The author presents a new measure based on a country's relative price structure and the structure of relative world prices. This measure, he argues, conforms more closely than existing measures to the concept of trade intervention. The relationship between openness and trade liberalization is more complicated than is often believed. Whether a country intervenes does not tell the whole story about its trade policy, and misses an essential aspect of intervention: which goods are favored by subsidies and which are protected by tariffs. The debate has been confused by the failure to distinguish between trade intervention and outward orientation. Trade intervention implies policies that distort the flow or pattern of trade; outward orientation implies incentives to export that are greater than incentives for import substitution. The two may be related but a heavily interventionist policy could be outwardly oriented. The index of relative price dispersion that the author develops has the advantage that it is objective, measures intervention in both exports and imports, is comparable across countries, and is independent of fluctuations in exchange rates caused by macroeconomic mismanagement.Environmental Economics&Policies,Economic Theory&Research,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Markets and Market Access,Access to Markets

Novel Indicators of the Trade and Welfare Effects of Agricultural Distortions in OECD Countries.

Agricultural markets in OECD countries have long been highly distorted by government policies. Traditional weighted average aggregates of the price distortions they involve, such as producer and consumer support estimates (PSEs and CSEs), can be poor indicators of the trade restrictiveness and economic welfare losses associated with them, especially if a countryÂ’s support estimates vary a lot across the product range. Supplementing those measures with estimates of trade and welfare effects of price supports requires the use of a sectoral or economy wide model and price elasticity data. This paper shows that, in the absence of such a model, and a willingness to make simple assumptions about elasticities, it is possible to generate more satisfactory indicators than PSEs and CSEs using no more than the price and quantity data used to generate them. These new indexes provide an attractive supplement to the current policy monitoring regime developed by the OECD Secretariat.Distorted incentives, agricultural price and trade policies, trade restrictiveness index

Novel indicators of the trade and welfare effects of agricultural distortions in OECD countries

Agricultural markets in OECD countries have long been highly distorted by government policies. Traditional weighted average aggregates of the price distortions involved, such as producer and consumer support estimates can be poor indicators of the trade restrictiveness and economic welfare losses associated with them, especially if a country's support estimates vary a lot across the product range. Certainly estimates of trade and welfare effects of price supports can be obtained from sector or economy-wide models using price elasticity estimates, but the results can be contentiousif there is no consensus on what model specification and elasticity parameters to use. This paper shows that, if there is a willingness to accept simple assumptions about elasticities, it is possible to generate indicators of the welfare and trade restrictiveness of agricultural policies using no more than the price and quantity data needed to generate producer and consumer support estimates. These new indexes thus provide an attractive supplement to the current policy monitoring regime developed by the OECD Secretariat.Economic Theory&Research,Markets and Market Access,Emerging Markets,Crops&Crop Management Systems,Free Trade

The Endogenous Market Structures Approach. A Non-technical Survey with Applications to the Crisis and Future Scenarios for the New Economy

The EMSs approach to macroeconomics introduces strategic interactions and endogenous entry decisions in the analysis of aggregate phenomena as business cycle, international trade and growth. This survey provides a non-technical discussion of the applications of the EMSs approach to positive and normative issues, and relates these with recent debates on the current recession, future scenarios for glabalization, policymaking and the New Economy.

Global distortions to agricultural markets : new indicators of trade and welfare impacts, 1955 to 2007

Despite recent reforms, world agricultural markets remain highly distorted by government policies. Traditional indicators of those price distortions can be poor guides to the policies'economic effects. Recent theoretical literature provides indicators of trade and welfare-reducing effects of price and trade policies which this paper builds on to develop more-satisfactory indexes. The authors exploit a new Agricultural Distortion database to generate estimates of them for developing and high-income countries over the past half century. These better approximations of the trade and welfare effects of sector policies are generated without a formal model of global markets or even price elasticity estimates.Currencies and Exchange Rates,Economic Theory&Research,Agribusiness,Markets and Market Access,Trade Policy

Global Distortions to Agricultural Markets: New Indicators of Trade and Welfare Impacts, 1955 to 2007

Despite reforms over the past quarter-century, world agricultural markets remain highly distorted by government policies. Traditional indicators of those price distortions such as the nominal rate of assistance and consumer tax equivalent provide measures of the degree of intervention, but they can be misleading as indicators of the true effects of those policies. By drawing on recent theoretical literature that provides indicators of the trade- and welfare-reducing effects of price and trade policies, this paper develops more-satisfactory indexes for capturing distortions to agricultural incentives. It then exploits the Agricultural Distortion database recently compiled by the World Bank to generate estimates of them for both developing and high-income countries over the past half century, based on a sample of 75 countries that together account for all but one-tenth of the world’s population, GDP and agricultural production. While they are still only partial equilibrium measures, they provide a much better approximation of the true trade and welfare effects of sectoral policies without needing a formal model of global markets or even price elasticity estimates.Distorted incentives, agricultural and trade policies, trade restrictiveness index,

Agricultural distortions in Sub-Saharan Africa : trade and welfare indicators, 1961 to 2004

For decades, agricultural price and trade policies in Sub-Saharan Africa have hampered farmers’ contributions to economic growth and poverty reduction. Although there has been much policy reform over the past two decades, the injections of agricultural development funding, together with ongoing regional and global trade negotiations, have brought distortionary policies under the spotlight once again. A key question asked of those policies is: How much are they still reducing national economic welfare and trade? Economy-wide models are able to address that question, but they are not available for many poor countries. Even where they are, typically they apply to just one particular previous year and so are unable to provide trends in effects over time. This paper provides a partial-equilibrium alternative to economy-wide modeling, by drawing on a modification of so-called trade restrictiveness indexes to provide theoretically precise indicators of the trade and welfare effects of agricultural policy distortions to producer and consumer prices over the past half-century. The authors generate time series of country level indexes, as well as Africa-wide aggregates. They also provide annual commodity market indexes for the region, and a sense of the relative importance of the key policy instruments used.Economic Theory&Research,Markets and Market Access,Emerging Markets,Trade Policy,Free Trade

Macroeconomic policy coordination during the various phases of economic and monetary integration in Europe

Economic Policy;International Economics;EEC;EMS