The Need for Pension Reform

pension reform; norway

Eurosclerosis or Financial Collapse: Why Did Swedish Incomes Fall Behind?

Sweden represents an archetypal welfare state economy, with extensive government safety nets. Some scholars have attributed a decline in its per capita income ranking since 1970 to “eurosclerosis” or sluggish growth caused by distortionary policies. This paper argues rather, that the permanent loss in output following Sweden’s banking crisis in the early 1990s explains the decline in its per capita GDP ratings. The paper finds no macroeconomic evidence that welfare state policies have deterred growth. The results warn that empirical growth analyses should distinguish between trend output growth and permanent output loss associated, for example, with financial crises.Financial Crisis; Welfare State; Sweden; Output Loss

How Competitive is Irish Manufacturing?

Ireland experienced significant competitiveness gains in the 1990s on the basis of the standard manufacturing unit labour cost-based measure of the real effective exchange rate. A few sectors mostly dominated by multinational companies have accounted for the bulk of value added in production. Their productivity gains have greatly contributed to Ireland’s exceptional growth performance in the 1990s, which has earned it the nickname of “Celtic Tiger.” However, these sectors represent a disproportionately smaller share of manufacturing employment, and competitiveness in employment-intensive sectors has been much weaker. This paper thus explores Irish competitiveness from the viewpoint of risks to employment.

Essays on growth, human capital, and income distribution

Thesis (Ph.D.)--University of Washington, 1996The first two chapters present a pair of endogenous growth models with both physical and human capital and a public education input. These papers contribute to the literature on endogenous growth by analyzing a nonrepresentative agent model. That is, agents are permitted to differ in their initial endowment of both types of capital. Using this framework I study the dynamics of the income and wealth distribution and optimal fiscal policy. Existing models of growth and income distribution that are modeled using only human capital typically find a counterfactual income convergence. This pair of models illustrates how convergence is sensitive to the extent of factor markets and to the existence of nonhuman wealth.In regard to fiscal policy, I find that the optimal income tax rate is constant over time and the same for all agents regardless of initial endowments. However, if the tax rates on capital and effective labor income can differ, individuals would be made better off with a low (high) tax on the factor in which they have a relatively large (small) endowment.The third chapter expands the set of policy instruments to include a consumption tax and government debt. It also parameterizes the extent to which the productivity of public educational expenditures depends on the individual's effective learning. The second contribution of this paper is to determine the dynamic path of private debt between individuals in the economy when the degree of congestion in learning varies by region.Finally, empirical studies have shown that credit constraints are prevalent in many developing economies. The existence of imperfect credit markets implies that some agents who would otherwise invest in human capital will remain uneducated due to the inability to borrow or self-finance out of wealth. My fourth chapter investigates the consequence of moving from autarky to free trade in an economy with credit constraints. In particular, I look at how trade impacts wealth, income, and investment in human capital