Suchergebnisse

AbstractThis paper investigates the relationship between inflation and inflation volatility. Using annual data from 1688 to 2009, the results show that UK inflation and its volatility have been positively correlated when inflation exceeds a certain value, but negatively correlated when inflation is below this threshold. The evidence also suggests that the break in the relationship occurs between annual inflation rates of 0.6% and 5.5%, which includes both the 2% inflation target of many central banks, and the 3.5% break point predicted by the New Keynesian model of Coibionet al. (2012).

This paper estimates the productivity of private and government employment for a panel of 23 OECD economies over the 1961–1992 period, and investigates their relation to the government/private wage ratio. The paper finds that (i) the elasticities of output with respect to private and government employment are statistically significantly different from each other; (ii) the marginal products of private and government employment are not statistically significantly different, which suggests that government employment is neither over‐ nor under‐provided, and that shifting employment from one sector to the other is not likely to produce substantial output gains; and (iii) in most of the countries examined, government workers are overpaid in the sense that the government/private wage ratio exceeds the corresponding ratio of marginal products.(J.E.L. E24, E62).

Changes in the tax rate alter real growth permanently in an endogenous growth model, but only temporarily in a neoclassical model, where the only permanent effect is a decrease in the steady‐state level of output per capita. Using data from the 1960'1992 period for a panel of 11 Organization of Economic Cooperation and Development economies, this paper's empirical results support the following conclusions. First, consistent with the tax smoothing hypothesis, tax rates have exhibited significant persistent changes while output growth rates have not. Second, a higher tax rate permanently reduces the level of output but has no permanent effects on the output growth rate. These findings are inconsistent with endogenous growth mechanisms and suggest that the relationship between output and the tax rate is best described by the neoclassical growth model. (JEL E62, 041)

The optimal government size for the representative European country is estimated by investigating the role of public services in the production process. The empirical results support the following conclusions: (i) government services are significantly productive; (ii) there is no evidence that government services (on average) are not optimally provided; (iii) the optimal government size is 16 per cent (±3 per cent) for the average ICP European country; (iv) the marginal productivity of government services may be negatively related to government size.