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AbstractThis paper computes a new measure of capacity utilization‐adjusted Total Factor Productivity (TFP) using sector‐level data from a sample of 18 Advanced Economies and 24 industries between 1970 and 2014. We then empirically examine the impact of structural reforms (labor and product market) on TFP by means of the local projection method. Structural reforms follow a narrative‐base construction which have several advantages in our context. Results show that structural reforms positively impact TFP, particularly the liberalization of employment protection legislation for regular workers. The effect of reforms affects both changes in resource misallocation across sectors (the between effect) and within sectors (the within effect). The TFP‐effect of both types of reforms varies depending on the phase of the business cycle prevailing at the time the reform is implemented. Finally, our findings are robust to a wide range sensitivity checks.

This paper provides a novel dataset of time-varying measures of social spending cyclicality for an unbalanced panel of 45 developing economies from 1982 to 2012. More specifically, we focus on four categories of government social expenditure: health, social protection, pensions and education. We find that social spending has generally been acyclical over time in developing countries, with the exception of spending on pensions. However, sample averages high marked heterogeneity across countries with the majority showing procyclical behaviour in different social spending categories. In addition, by means of weighted least squares panel regressions with country and time effects, we find that the degree of social spending [pro]cyclicality is generally negatively associated with financial deepening, the level of economic development, trade openness, government size as well as political constraints on the executive. ; info:eu-repo/semantics/publishedVersion

This paper compiles a novel dataset of time-varying measures of government consumption cyclicality for a panel of 46 African economies between 1960 and 2014. Government consumption has, generally, been highly procyclical over time in this group of countries. However, sample averages hide serious heterogeneity across countries with the majority of them showing procyclical behavior despite some positive signs of graduation from the "procyclicality trap" in a few cases. By means of weighted least squares regressions, we find that more developed African economies tend to have a smaller degree of government consumption procyclicality. Countries with higher social fragmentation and those are more reliant on foreign aid inflows tend to have a more procyclical government consumption policy. Better governance promotes counter- cyclical fiscal policy whileincreased democracy dampens it. Finally, some fiscal rules are important in curbing the procyclical behavior of government consumption. ; info:eu-repo/semantics/publishedVersion

This paper empirically revisits the validity of Wagner's proposition in a panel of 149 developing countries between 1980-2015 by focusing on different components of government expenditure. We rely on an ARDL approach which allow us to uncover short and long-run cyclicality coefficients. Our results do not overwhelmingly support the existence of higher than unity long-run elasticities of government spending components vis-a-vis economic growth, suggesting that the Wagner's regularity is more the exception than the norm. Moreover, the case for voracity is fading away as developing countries catch-up the development ladder and graduate from procyclicality. In fact, most short-run elasticities are countercyclical. Finally, some macroeconomic and institutional and political characteristics affect the degree of government spending cyclicality. ; info:eu-repo/semantics/publishedVersion

AbstractThis paper revisits, by means of both time series and panel data analyses, the empirical regularity popularized by Okun's (Proc Bus Econ Sect, 98‐103, 1962) seminal paper focusing on a sample of 20 advanced economies between 1978 and 2015. Not only do we provide arguably better estimates of the Okun's Law coefficient (OLC) (using the gap version) by employing a new filtering technique, but more importantly, we also contest the hypothesis that the OLC has been static over time. By estimating country‐specific time‐varying Okun coefficient models, we confirm that the unemployment‐output responsiveness has been changing over time. The dispersion between countries' OLCs has been determined by some (structural) characteristics. The starting level of unemployment and the phase of the business cycle increase the estimated OLCs, while informality and certain labour and product market policies lower them. Our evidence sustains the fact that aggregate demand policies aiming at increasing output growth can equally contribute to the recovery in labour markets.