Sources of the German Productivity Demise – Tracing the Effects of Industry-Level ICT Investment

While the US experienced two successive labor productivity surges in 1995 and 2000, Germany’s productivity declined dramatically during the same period. We examine the sources of Germany’s productivity demise using the ifo industry growth accounting database that provides detailed industry-level investment information. While much attention has focused on the reduction in German labor hours, our data show that Information, Communication and Technology (ICT) investment in Germany was deeply lacking in the mid 1990’s as compared to the US. The transition to the new economy mitigated the German productivity slowdown, but did not reverse it. After 2000, we find that a recovery in Non-ICT investment was offset by a widespread collapse in German total factor productivity. Over half of German industries (accounting for almost 50 percent of German output) experienced negative TFP growth. This second major difference between the US and German industry performance explains Germany’s secular departure from the technological frontier.growth accounting, industry productivity analysis, information and communication technology

Being on Sick Leave – Possible Explanations for Differences of Sick-leave Days AcrossCountries Privatization

Sick-leave days differ widely among industrialised countries. For the US it is 5, for Sweden 20 and for Poland 26 days per year and per employee. The possible causes for these differences have apparently not been systematically analysed. Two groups of contributing factors are considered: (1) natural causes, like the general health situation, employment of women and older persons, and (2) behavioural reactions (a) to macroeconomic conditions,like unemployment or the possibility to work outside the official labour market, and (b) to the design of institutions, like the generosity of granting sick leave. On the basis of 20 countries it is econometrically shown that the main explanatory factors are: generosity of granting sick leave, opportunity costs due to income differentials with neighbouring states, and employment of older people. The unemployment rate – contrary to the result of some single-country studies – and the employment of women do not contribute to theexplanation of sick-leave differences between countries.

Institutional Determinants of Economic Performance in OECD Countries – An Institutions Climate Index

Wirtschaftswachstum, Wirtschaftspolitik, Entwicklung, OECD-Staaten, Economic growth, Economic policy, Economic development, OECD countries

The Ifo Industry Growth Accounting Database

In this paper we present a new database that allows deep industry-level growth accounting from 1991–2003. The database allows for the first complete analysis of the German industry performance drivers based on the contributions of 12 asset types in 52 different industries. The industry sources of productivity and output growth are crucial to the understanding of the transformation of the German economy from manufacturing to information technology and service industries. The database enables researchers to develop an adequate picture of the sources of growth using standard growth accounting techniques. We formally document the new data series and its origins, with special focus on the capital stock and capital service data.growth accounting, industry productivity analysis

Three Empirical Essays on the Determinants of Economic Growth

Economic Growth; Bayesian Model Averaging; Growth Accounting

Unraveling the Fortunates of the Fortunate: An Iterative Bayesian Model Averaging (IBMA) Approach

We investigate country heterogeneity in cross-country growth regressions. In contrast to the previous literature that focuses on low-income countries, this study also highlights growth determinants in high-income (OECD) countries. We introduce Iterative Bayesian Model Averaging (IBMA) to address not only potential parameter heterogeneity, but also the model uncertainty inherent in growth regressions. IBMA is essential to our estimation because the simultaneous consideration of model uncertainty and parameter heterogeneity in standard growth regressions increases the number of candidate regressors beyond the processing capacity of ordinary BMA algorithms. Our analysis generates three results that strongly support different dimensions of parameter heterogeneity. First, while a large number of regressors can be identified as growth determinants in Non-OECD countries, the same regressors are irrelevant for OECD countries. Second, Non-OECD countries and the global sample feature only a handful of common growth determinants. Third, and most devastatingly, the long list of variables included in popular cross-country datasets does not contain regressors that begin to satisfactorily characterize the basic growth determinants in OECD countries.growth regressions, growth determinants of OECD countries, parameter heterogeneity, model uncertainty, Iterative Bayesian Model Avering

Reduction of Employment Protection in OECD Countries: Its Driving Forces

Arbeitnehmerschutz, Arbeitslosenversicherung, Arbeitsmarktpolitik, Arbeitsmarktflexibilisierung, OECD-Staaten, Flexicurity, Employment protection legislation, Unemployment insurance, Labour market policy, Labour market flexibility , OECD countries

New Evidence on the Private Saving Offset and Ricardian Equivalence

The ability of discretionary fiscal policy to affect economic activity following shocks depends on how private agents react. This paper re-investigates the extent of possible offsetting private saving behaviour to fiscal policy changes. The results suggest that the private saving offset is around 40% on average across countries in both the short and the long term, which is somewhat lower than found in prior research. However, the estimates vary considerably across countries. Disaggregate analyses of the budget components shows that changes in current revenues are almost fully offset, whereas offsets to current spending are on average around one third to one half depending on the sample. There is no offset for public investment, making it the most potent policy tool. Saving offsets are stronger the higher the level of government debt consistent with the expectation that snowballing debt may ultimately lead to higher taxation. They are also stronger the better developed financial markets are, pointing to the importance of liquidity constraints for the effectiveness of policy. Nouveaux éléments concernant l'effet compensatoire de l'épargne privée et l'équivalence ricardienne L’influence des mesures budgétaires discrétionnaires sur l’activité économique après un choc dépend de la réaction des agents économiques privés. Ce document réexamine, à partir de données allant jusqu’à 2008, l’ampleur d’un éventuel comportement compensatoire d’épargne du secteur privé face à l’évolution de la politique budgétaire. Les résultats montrent que l’effet compensatoire de l’épargne privée est de 40 % en moyenne dans les différents pays, soit un peu moins que la proportion découlant des recherches antérieures. Les estimations sont toutefois extrêmement variables d’un pays à l’autre. Une analyse désagrégée des composantes du budget fait apparaître que les variations des recettes courantes sont presque entièrement compensées, alors que pour les dépenses courantes, la compensation n’est qu’en moyenne d’un tiers à la moitié, en fonction de l’échantillon. Il n’y a pas d’effet compensatoire de l’investissement public, qui est donc l’instrument d’action le plus puissant. L’effet compensatoire de l’épargne est d’autant plus marqué que le niveau de la dette publique est plus élevé, ce qui est conforme à l’attente d’un assainissement ultérieur qui alourdira l’impôt. L’effet compensatoire est en outre d’autant plus prononcé que les marchés de capitaux sont plus développés, ce qui témoigne de l’importance des contraintes de liquidité pour l’efficacité des politiques.private saving, asset prices, ricardian equivalence, fiscal policy, politique budgétaire, équivalence ricardienne, prix des actifs, épargne privée