Inventory investment and sectoral characteristics in some OECD countries

This paper discusses the effects of sectoral structure on the long run macroeconomic inventory behaviour of national economies. Data on 15 OECD countries are included in the analysis, which is based on correlation and cluster analysis methodologies. The study is part of a long-term research project exploring factors influencing the inventory behaviour of national economies. First, we introduce some basic characteristics of macroeconomic inventory formation in the 15 OECD countries. We argue that our previous results on the existence of specific characteristic features of macroeconomic inventory investment are justified, hence it makes sense to study the factors influencing these features. We then examine the contribution of various sectors to the production of in the countries involved and the relationship between sectoral structure and inventory intensity (annual inventory change/Gross Value Added). We find that the high share of agriculture and manufacturing increases inventory intensity, that the increasing share of services has a negative effect and that the role of construction and trade is not obvious. The relatively low stability of the statistical results warns us to be cautious with our judgements. Further, case-by-case analysis would be required to obtain more solid results.

Inventory investment and GDP characteristics in OECD countries

There are very few research studies on macroeconomic inventory behaviour of various countries. It is clear that macro inventories are the results of a large number of individual microdecisions. However, we believe that it is worth analysing how inventories develop in the individual countries and why we can see different tendencies. This paper is the newest piece in a series of studies on the above subject. We use the OECD database to analyse inventory trends between 1987 and 2004 in nine of the most developed economies of the world. Annual inventory investment data are used and their connections with other components of GDP expenditure (governmental and private consumption, investment in fixed assets and foreign trade balance as well as the annual growth rate of GDP) are examined by multi-variable statistical analysis. Conclusions include the steadily decreasing tendency of inventory fluctuations, the varying periods of higher and lower rates of inventory investments and the differences of main influencing factors by country.

The impact of the recession on health care expenditure — How does the Czech Republic, Hungary, Poland and Slovakia compare to other OECD countries?

In the past few years, several papers have been published in the international literature on the impact of the economic crisis on health and health care. However, there is limited knowledge on this topic regarding the Central and Eastern European (CEE) countries. The main aims of this study are to examine the effect of the financial crisis on health care spending in four CEE countries (the Czech Republic, Hungary, Poland and Slovakia) in comparison with the OECD countries. In this paper we also revised the literature for economic crisis related impact on health and health care system in these countries. OECD data released in 2012 were used to examine the differences in growth rates before and after the financial crisis. We examined the ratio of the average yearly growth rates of health expenditure expressed in USD (PPP) between 2008–2010 and 2000–2008. The classification of the OECD countries regarding “development” and “relative growth” resulted in four clusters. A large diversity of “relative growth” was observed across the countries in austerity conditions, however the changes significantly correlate with the average drop of GDP from 2008 to 2010. To conclude, it is difficult to capture visible evidence regarding the impact of the recession on the health and health care systems in the CEE countries due to the absence of the necessary data. For the same reason, governments in this region might have a limited capability to minimize the possible negative effects of the recession on health and health care systems.

The impact of the recession on health care expenditure — How does the Czech Republic, Hungary, Poland and Slovakia compare to other OECD countries?

In the past few years, several papers have been published in the international literature on the impact of the economic crisis on health and health care. However, there is limited knowledge on this topic regarding the Central and Eastern European (CEE) countries. The main aims of this study are to examine the effect of the financial crisis on health care spending in four CEE countries (the Czech Republic, Hungary, Poland and Slovakia) in comparison with the OECD countries. In this paper we also revised the literature for economic crisis related impact on health and health care system in these countries. OECD data released in 2012 were used to examine the differences in growth rates before and after the financial crisis. We examined the ratio of the average yearly growth rates of health expenditure expressed in USD (PPP) between 2008–2010 and 2000–2008. The classification of the OECD countries regarding “development” and “relative growth” resulted in four clusters. A large diversity of “relative growth” was observed across the countries in austerity conditions, however the changes significantly correlate with the average drop of GDP from 2008 to 2010. To conclude, it is difficult to capture visible evidence regarding the impact of the recession on the health and health care systems in the CEE countries due to the absence of the necessary data. For the same reason, governments in this region might have a limited capability to minimize the possible negative effects of the recession on health and health care systems.

Fiscal and Monetary Institutions in Central, Eastern and South-Eastern European Countries

This paper studies the role of fiscal and monetary institutions in macroeconomic stability and budgetary control in central, eastern and south-eastern European countries (CESEE) in comparison with other OECD countries. CESEE countries tend to grow faster and have more volatile output than non-CESEE OECD countries, which has implications for macroeconomic management: better fiscal and monetary institutions are needed to avoid pro-cyclical policies. The paper develops a Budgetary Discipline Index to assess whether good fiscal institutions underpin good fiscal outcomes. Even though most CESEE countries have low scores, the debt/GDP ratios declined before the crisis. This was largely the consequence of a very favourable relationship between the economic growth rate and the interest rate, but such a favourable relationship is not expected in the future. Econometric estimations confirm that better monetary institutions reduce macroeconomic volatility and that countries with better budgetary procedures have better fiscal outcomes. All these factors call for improved monetary institutions, stronger fiscal rules and better budgetary procedures in CESEE countries.

Should non-euro area countries join the single supervisory mechanism?

Highlights - Irrespective of the euro crisis, a European banking union makes sense, including for non-euro area countries, because of the extent of European Union financial integration. The Single Supervisory Mechanism (SSM) is the first element of the banking union. - From the point of view of non-euro countries, the draft SSM regulation as amended by the EU Council includes strong safeguards relating to decision-making, accountability, attention to financial stability in small countries and the applicability of national macro-prudential measures. Non-euro countries will also have the right to leave the SSM and thereby exempt themselves from a supervisory decision. - The SSM by itself cannot bring the full benefits of the banking union, but would foster financial integration, improve the supervision of cross-border banks, ensure greater consistency of supervisory practices, increase the quality of supervision, avoid competitive distortions and provide ample supervisory information. - While the decision to join the SSM is made difficult by the uncertainty about other elements of the banking union, including the possible burden sharing, we conclude that non-euro EU members should stand ready to join the SSM and be prepared for the negotiations of the other elements of the banking union.

Fiscal Divergence and Business Cycle Synchronization: Irresponsibility is Idiosyncratic

Using a panel of 21 OECD countries and 40 years of annual data, we find that countries with similar government budget positions tend to have business cycles that fluctuate more closely. That is, fiscal convergence (in the form of persistently similar ratios of government surplus/deficit to GDP) is systematically associated with more synchronized business cycles. We also find evidence that reduced fiscal deficits increase business cycle synchronization. The Maastricht "convergence criteria," used to determine eligibility for EMU, encouraged fiscal convergence and deficit reduction. They may thus have indirectly moved Europe closer to an optimum currency area, by reducing countries’ abilities to create idiosyncratic fiscal shocks. Our empirical results are economically and statistically significant, and robust.

A fiskális divergencia és a konjunktúraciklusok együttmozgása - a felelőtlen fiskális politika az aszimmetrikus sokkok forrása (Fiscal divergence and business cycle synchronization: irresponsibility is idiosyncratic)

A világ 115 országának - köztük 21 OECD-tagország - 40 évnyi adatait vizsgálva, arra a következtetésre jutottunk, hogy a hasonló állami költségvetési pozíciójú országok konjunktúraciklusai között szorosabb együttmozgás mutatható ki. Azaz, a fiskális konvergenciát (amelyet a költségvetési egyenleg GDP-hez viszonyt arányának konvergenciájaként definiáltunk) összehangoltabb konjunktúraciklusokkal lehet összefüggésbe hozni. Kutatásaink során arra is találtunk bizonyítékot, hogy a kisebb mértékű költségvetési deficitek növelik a konjunktúraciklusok együttmozgását. A maastrichti konvergenciakritériumok - amelyek az európai monetáris unió követelményeinek való megfelelést hivatottak meghatározni - a fiskális konvergenciát és a költségvetési deficit csökkentését ösztönözték, s ezzel közvetett módon hozzásegítették Európát egy optimális valutaövezet létrehozásához azáltal, hogy csökkent az egyes országok lehetősége a felelőtlen fiskális politika által gerjesztett sokkhatások létrehozására. Az általunk feltárt empirikus eredmények gazdasági és statisztikai szempontból is szignifikánsak és robusztusak. _____ Using panels of 115 countries of world – including 21 OECD countries – and 40 years of annual data, the authors find that countries with similar government budget positions tend to have business cycles that fluctuate more closely. Thus fiscal convergence (in the form of persistently similar ratios of government surplus/deficit to GDP) is systemati-cally associated with more strongly synchronized business cycles. Evidence is also found that reduced fiscal deficits increase business-cycle synchronization. The Maastricht "con-vergence criteria", used to determine eligibility for EMU, encouraged fiscal convergence and deficit reduction. So they may, indirectly, have moved Europe closer to an optimum currency area, by reducing countries abilities to create idiosyncratic fiscal shocks. The empirical results of the study are economically and statistically significant, and robust.

Transition and Foreign Aid Policies in the Visegrád Countries: A Path Dependant Approach

The paper argues that the current emerging international development policies of the Visegrád (V4) countries are heavily influenced by the certain aspects of the communist past and the transition process. Due to these influences, the V4 countries have difficulties in adapting the foreign aid practices of Western donors and this leads to the emergence of a unique Central and Eastern European development cooperation model. As an analytical background, the paper builds on the path dependency theory of transition. A certain degree of path dependence is clearly visible in V4 foreign aid policies, and the paper analyzes some aspects of this phenomenon: how these new emerging foreign aid donors select their partner countries, how much they spend on aid, how they formulate their aid delivery policies and institutions and what role the non state actors play. The main conclusions of the paper are that the legacies of the communist past have a clear influence and the V4 countries still have a long way to go in adapting their aid policies to international requirements.

A költségvetési korlát megkeményítése a posztszocialista országokban = Hardening of the budget constraint in the post-socialist countries

A költségvetési korlát megkeményítése nem egyforma mértékben ment végbe minden posztszocialista gazdaságban. Egyes országokban messzire jutottak ebben a tekintetben, másokban viszont alig változott az indulóállapot. A tanulmány áttekinti a költségvetési korlát puhaságának különböző megnyilvánulásait: az állami támogatásokat, a puha adózást, a nem teljesítő bankkölcsönöket, a vállalatközi tartozások felgyülemlését és a kifizetetlen béreket. A jelenséget sokféle tényező okozza, amelyek többnyire együttesen jelentkeznek. Az állami tulajdon fenntartása kedvez a puha költségvetési szindróma megrögződésének, a privatizálás elősegíti a keményítést, de nem elégséges feltétele a kemény korlát érvényesítésének. Ehhez megfelelő politikai, jogi és gazdasági környezetet kell céltudatosan kialakítani. A posztszocialista átmenet kezdetén sokan azt hitték, hogy a hatékony piacgazdaság létrehozásához elegendő lesz megvalósítani a liberalizáció, privatizáció és stabilizáció "szentháromságát". Mára már kiderült, hogy a költségvetési korlát megkeményítése az említett három feladattal egyenrangúan fontos. Ahol ez nem valósul meg (például Oroszország), ott a privatizáció nem hozza meg a várt eredményt. ___________________ The budget constraint has not hardened to equal degrees in the various post-socialist countries. In some of them, a great deal has been done in this respect, while in others there has been hardly any change from the initial state. This study surveys the typical manifestations of softness of the budget constraint, such as state subsidies, soft taxation, non-performing loans, the accumulation of trade arrears between firms, and the build-up of wage arrears. Softness of the budget constraint is caused by several factors that tend to act in combination. Thus retention of state ownership helps to preserve the soft budget-constraint syndrome, while privatization encourages the budget constraint to harden, although it does not form a sufficient condition for it to happen. Purposeful development of the requisite political, legal and economic conditions is also required. It was widely maintained at the outset of the post-socialist transition that the 'Holy Trinity' of liberalization, privatization and stabilization would suffice to produce an efficient market economy. Since then, it has become clear that hardening the budget constraint needs to be given equal priority with these. Otherwise, the effects of privatization will fall short of expectations, as they have in Russia, for example.