Structural Determinants of the Natural Rate of Unemployment in Canada

This paper presents empirical estimates of the policy and structural determinants of the natural rate of unemployment in Canada. The paper begins with a discussion of structural features of the economy which impinge on the adjustment of real wages to their equilibrium level. Estimates are presented showing how the generosity of the unemployment insurance system is related to past levels of unemployment. The empirical results indicate that government policies have been largely responsible for changes in the natrual rate, and hence can contribute to a reduction in the natural rate in the medium term.Natural rate of unemployment; Canada

North-South R&D Spillovers

We examine the extent to which developing countries that do little, if any research and development themselves benefit from R&D that is performed in the industrial countries. By trading with an industrial country that has large 'stocks of knowledge' from its cumulative R&D activities, a developing country can boost its productivity by importing a larger variety of intermediate products and capital equipment embodying foreign knowledge, and by acquiring useful information that would otherwise be costly to obtain. Our empirical results, which are based on observations over the 1971-90 period for 77 developing countries, suggest that R&D spillovers from the industrial countries in the North to the developing countries in the South are substantial.

Structural Determinants of the Natural Rate of Unemployment in Canada

This paper presents empirical estimates of the policy and structural determinants of the natural rate of unemployment in Canada. The paper begins with a discussion of structural features of the economy which impinge on the adjustment of real wages to their equilibrium level. Estimates are presented showing how the generosity of the unemployment insurance system is related to past levels of unemployment. The empirical results indicate that government policies have been largely responsible for changes in the natrual rate, and hence can contribute to a reduction in the natural rate in the medium term

International R&D Spillovers and Institutions

The empirical analysis in "International R&D Spillovers" (Coe and Helpman, 1995) is first revisited by applying modern panel cointegration estimation techniques to an expanded data set that we have constructed for the purpose of this study. The new estimates confirm the key results reported in Coe and Helpman about the impact of domestic and foreign R&D capital stocks on TFP. In addition, we show that domestic and foreign R&D capital stocks have measurable impacts on TFP even after controlling for the impact of human capital. Furthermore, we extend the analysis to include institutional variables, such as legal origin and patent protection, in order to allow for parameter heterogeneity based on a country’s institutional characteristics. The results suggest that institutional differences are important determinants of total factor productivity and that they impact the degree of R&D spillovers.

A Systems Approach to Estimating the Natural Rate of Unemployment and Potential Output for the United States

The methodology used in this paper has three distinguishing features: the natural rate of unemployment and potential output are jointly estimated; estimation integrates wage and price data with "real" and structural data; and third, the methodology encompasses many of the methods found in the literature. The results indicate that potential output growth has recovered somewhat during the early 1990s, but remains below the rapid rates of increase in the late 1960s. The natural rate, after rising during the late 1960s and the 1970s, is found to have declined in the 1980s. The paper concludes with an assessment of medium-term prospects for potential output and the natural rate

International R&D Spillovers

Investment in research and development (R&D) affects a country's total factor productivity. Recently new theories of economic growth have emphasized this link and have also identified a number of channels through which a country's R&D affects total factor productivity of its trade partners. Following these theoretical developments we estimate the effects of a country's R&D capital stock and the R&D capital stocks of its trade partners on the country's total factor productivity. We find large effects of both domestic and foreign R&D capital stocks on total factor productivity. The foreign R&D capital stocks have particularly large effects on the smaller countries in our sample (that consists of 22 countries). Moreover, we find that about one quarter of the worldwide benefits of investment in R&D in the seven largest economies are appropriated by their trade partners.

Liberating Supply: Fiscal Policy and Technological Innovation in a Multicountry Model

This paper examines how endogenizing technological progress in a multicountry macroeconometric model affects the analysis of fiscal policies. It uses an expanded version of the IMF's multicountry model, MULTIMOD, in which total factor productivity (TFP) is endogenized as a function of domestic research and development (R&D) expenditures, R&D expenditures of trading partners, and trade. Compared with the standard version of the model with exogenous TFP, fiscal policies have much larger and long-lived effects on the domestic economy and on other countries