A revised approach to trend employment projections in long-term scenarios

Abstract

JT03414224 Complete document available on OLIS in its original format This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. ECO/WKP(2017)16 Unclassified English-Or. English ECO/WKP(2017)16 2 OECD Working Papers should not be reported as representing the official views of the OECD or of its member countries. The opinions expressed and arguments employed are those of the author(s). Working Papers describe preliminary results or research in progress by the author(s) and are published to stimulate discussion on a broad range of issues on which the OECD works.

Saving, investment, capital stock and current account projections in long-term scenarios

“…The large estimated effect appears robust across the different specifications in Tables 1 and 2 and may be due to the wider sample coverage of the present study. It is also supported by recent simulations of a calibrated model for the United States, which shows that increasing life expectancy can explain about 175 basis points of the decline in the equilibrium real interest rate in the United States (Carvalho, Ferrero and Nechio, 2017 [24] ). While this effect is not directly comparable to the one estimated here, it is large and, as the authors explain, comes through because of the additional incentive to save that a longer life creates for a given retirement age.…”

“…For implementation in the long-term model, [16] is modified to include the difference between the log actual capital-to-output ratio and the log equilibrium value resulting from any change in product market regulation, employment protection legislation or the user cost of capital following [24]:…”

“…The coefficient estimates are those of Table 3, column 3. However, this expression requires the level of _ * , whereas [24] only determines its evolution from an initial value. As explained previously, in practice the initial value (i.e.…”

“…To summarise, the equations determining the business sector capital stock and investment projections in the long-term model are [24] to [28] with, importantly, the assumption that the initial equilibrium business sector capital stock to output ratio is equal to the ratio in the last historical period. This set-up helps to achieve the following objectives:…”

The Long View

“…The last instance is OECD (2014 [47] ), which was also used in the context of the broader OECD@100 project (Braconier, Nicoletti and Westmore, 2014 [45] ).…”