The Long View

Abstract

The OECD Economic Policy Paper Series is published on the responsibility of the Secretary General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. Series: OECD Economic Policy Papers ISNN:2226583X On 3 May 2018, the OECD Council invited Lithuania to become a Member. At the time of preparation, the deposit of Lithuania's instrument of accession to the OECD Convention was pending and therefore Lithuania does not appear in the list of OECD Members and is not included in the OECD zone aggregates. On 25 May 2018, the OECD Council invited Colombia to become a Member. At the time of preparation, the deposit of Colombia's instrument of accession to the OECD Convention was pending and therefore Colombia does not appear in the list of OECD Members and is not included in the OECD zone aggregates. This document and any 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

Policies for Switzerland’s ageing society

“…In any event, future income growth depends heavily on raising output per worker, which is highly uncertain (Box 1). Labour shortages are widely expected to lift the relative return on capital and raise labour productivity (Guillemette and Turner, 2018;Lee, 2016). A scarcity of middle-aged workers may intensify automation and, in some industries, raise productivity (Acemoglu and Restrepo, 2018).…”

“…Nonetheless, these spending items could expand by 3% of GDP by 2060. Other public spending could grow even more if spending per capita is maintained in real terms, as assumed (Guillemette and Turner, 2018). Cantons and municipalities, which are primarily responsible for health and long-term care delivery, will bear ageing-related fiscal pressure most (Brändle, Colombier and Philipona, 2016).…”

“…Just as the spell of historically low interest rates was unanticipated, the pick-up in interest rates foreseen in the OECD long-term scenarios and other projections may fail to eventuate − or it may be sharper (Guillemette and Turner, 2018). Either scenario would have knock-on effects to the capital stock via the user cost of capital and in turn, productivity and wage growth.…”

“…Note: The baseline scenario is from the OECD Pension Model and assumes a full-career worker starting a career at 20 in 2016; it applies mandatory settings for pillars 1 and 2; inflation is 2% per year; real wages increase 1.25% per year; rate of return is assumed equal to nominal wage growth. 'Time varying inflation and interest rates' are the projections for inflation (converging to 2%) and rate of return (long-term real interest rate plus 1 percentage point, converging to 3.5%) from Guillemette and Turner (2018). 'Extended period of contributions' have contributions starting at age 20 and up to 68.…”

The digital great leap forward mapping China's 21st century attempt to create a new growth model

“…Potential reasons for this slowdown are economic policy shortcomings, investment stagnation, political uncertainties, the protracted effects of the 2008 global crisis, measurement problems and demographic causes, as well as the ongoing structural transformations. However, when taking a closer look at Figure 1, it seems to be clear that the current (and expected future) unfavourable development of global growth performance can also be explained by the rather moderate growth of the BRIICS countries 1 (Guillemette -Turner 2018). Nevertheless, the contribution of this group of countries -China and India in particularto world GDP is steadily increasing: according to the OECD's forecast, China's share will be around 27% in the mid-2030s ( Figure 2) finalized before the ongoing COVID-19 crisis.…”