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Edit Comment Close Premium member Presentation Transcript The New Government’s Economic Policy: The New Government’s Economic Policy Per JanssonPlan of talk: Plan of talk Some personal data A few facts about the Government Offices, the Ministry of Finance, and economic policy in general Facts about the Swedish economy The new economic policy Undertaken and planned policy measures Expected effects (forecasts from Budget Bill and evaluation done by Lars Calmfors)Personal data: Personal data PhD 1994; Associate Professor 2000 (Uppsala University) Mainly: general macro (empirical) and monetary policy 10 yrs at the Riksbank, 2 yrs at the NIER Also: FIEF, the Economic Council of Sweden, SJSlide4: The Government Offices The Government Ministry of Agriculture, Food and Fisheries Ministry of Justice Prime Minister’s Office Ministry for Foreign Affairs Ministry of Defence Ministry of Health and Social Affairs Ministry of Finance Ministry of Education Research and Culture Ministry of Sustainable Development Ministry of Industry, Employ-ment and Communications Office for Administrative AffairsSlide5: most common occupations: economists, lawyers and social scientists 470 plus employees 95% are non-political staff average age is about 40 50 per cent are women 65% have executive responsibilities 10% have managerial responsibilities 25% have administrative responsibilities The Ministry of FinanceSlide6: IA KLA Minister for Finance Anders Borg Minister Mats Odell Chief Political Adviser Political Advisers Press Press Political Advisers 7 Divisions Budget Department Economic Affairs Tax and Customs Public Administration Financial Markets International Department 3 Divisions 4 Divisions 3 Divisions 5 Divisions 5 Divisions Legal Secretariat Information Department Departement for Coordination and Support 3 Divisions State Secretary Hans Lindblad State Secretary Per Jansson State Secretary Ingemar Hansson State Secretary State Secretary for economic policy responsible for…: State Secretary for economic policy responsible for… Departments: International Department, Economics Affairs, Division for Structural Policies at Budget Department In addition: issues related to statistics and government real estates Government agencies: NIER, Statistics Sweden, the Economic Council of Sweden, the Swedish National Financial Management Authority (ESV), the National Property Board (SFV), the National Fortification Administration Slide8: Conducting economic policy means… monitors and analyses the Swedish economy makes short and long-term forecasts conducts studies at household and individual level takes part in international economic work The Ministry of Finance …undertaking measures to influence the national economy. Divided into: - stabilisation policy - distribution policy - structural policySlide9: The goals of economic policy… full employment a stable economy stable prices high growth fair distribution … are set by the Government and the Riksdag, and can broadly be summarised as follows: sound public financesSlide10: Government commences preparatory budget work Government submits Spring Budget Bill including proposals for expenditure ceilings to the Riksdag Economic policy is implemented through the budget process Riksdag approves the budget January • February • March • April • May • June • July • August • September • October • November • December Government agencies supply background budget data The Riksdag approves expenditure ceilings and preliminary frames for the expenditure areas Government submits the Budget Bill to the RiksdagThe Swedish economy: since the mid 1990s good macro performance in many respects: The Swedish economy: since the mid 1990s good macro performance in many respects Growth higher than previously and higher than in many other countries Inflation low and stable Public finances with surplus Reasonable real and nominal wage increasesGDP level and growth rate: GDP level and growth rateCPI inflation: CPI inflationPublic savings (percent of GDP): Public savings (percent of GDP) Note: The dashed line is the forecast in the Budget Bill for 2007.Nominal and real wage growth: Nominal and real wage growthBut there are also problems…: But there are also problems… Weak labour market development with high absence Equilibrium (un)employment too low (high) It does not pay enough to work Business climate for in particular small companies not as good as it should be Too few want to employ and run a business Demographic challenges ahead Slide17: GDP growth and unemploymentThe Swedish population by labour force status, 2005 : The Swedish population by labour force status, 2005 Individuals supported by social transfers Thousands of full-time equivalents: Individuals supported by social transfers Thousands of full-time equivalentsThe difference between going to work and being sick-listed is too small: The difference between going to work and being sick-listed is too smallFew new companies established: Few new companies establishedSwedish population growth up to 2050 (change compared to 2006): Swedish population growth up to 2050 (change compared to 2006)Dependency ratios: Dependency ratiosPopulation growth in the age 20-64 years (change compared to 2006): Population growth in the age 20-64 years (change compared to 2006)The labour market at different points in time: The labour market at different points in time 1990 1993 2005 Unemployment 1,5 8,3 5,4 Labor force participation 84,5 77,7 78,0 Employment 83,3 71,2 73,8 Benefit recipients 15,7 22,2 20,4 Possible sources of unemployment persistence: Possible sources of unemployment persistence Decreasing search activity Calls for: measures that increase search activity and decrease locking-in effects Generous benefits Calls for: measures that make it worthwhile to work The compressed wage structure Calls for: measures that increase the availability of low-skilled jobs at an agreeable wage Stigmatization Calls for: measures that decrease the cost associated with employing jobseekers who have been out of work for a long time Employment protection legislation What is needed?: What is needed? A combination of measures that affect simultaneously: The matching process Labour supply Labour demandAutumn Budget Bill 2007 affects Matching: Autumn Budget Bill 2007 affects Matching through: Changes in the institutional set-up of labour market policies Individual action plans and coaching Changes in unemployment benefits Lower volumes of labour market programmesAutumn Budget Bill 2007 affects Labour supply: Autumn Budget Bill 2007 affects Labour supply through: Earned income tax credit that increase after-tax revenue Changes in unemployment benefits Changes in sick-leave benefits Lower volumes of labour market programmes Slide30: P Y AS ADAutumn Budget Bill 2007 affects Labour demand: Autumn Budget Bill 2007 affects Labour demand through: “New start jobs” targeted at benefit recipients, refuges, and older people Decreased employers’ contributions for youth & older Increased possibilities to time-limited hires and also: Tax reductions on household-related services (in 2007) Tax reductions in various service sectors (in 2008)Slide32: P Y AS ADSlide33: P Y AS ADThe Swedish labour market according to the Budget Bill: The Swedish labour market according to the Budget BillEffects on income distribution (2007, percentage change): Effects on income distribution (2007, percentage change)Effect on income distribution: Gini coefficient: Effect on income distribution: Gini coefficientCalculation of effects by Lars Calmfors: Calculation of effects by Lars Calmfors Approach: use estimates (elasticities) of previous empirical studies (several) to quantify the long-run effects of the different policy measures Studies considered: Bassanini & Duval (2006, OECD WP 486) Forslund, Gottfries & Westermark (2006, CESifo WP 1649) Forslund & Kolm (2000, IFAU WP 7) Nickell (2003, CESifo DICE Report 2)Bassanini & Duval (2006): lower unemployment benefits and tax wedge: Bassanini & Duval (2006): lower unemployment benefits and tax wedgeForslund et al (2006): lower net replacement rate and reduction of ALMPs: Forslund et al (2006): lower net replacement rate and reduction of ALMPsForslund & Kolm (2000) and Nickell (2003): Forslund & Kolm (2000) and Nickell (2003) FK about 1 percentage point larger unemployment effect Nickell: Change in U = -0.42 – 1.24 x (net no. of ”employment-friendly” reforms) R2 = 0.51, N = 20 => for Sweden this gives 3 x 1.24 = 3.7 percentage points lower unemployment You do not have the permission to view this presentation. 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PerJansson2006 Panfilo Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINTLite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 109 Category: Education License: All Rights Reserved Like it (0) Dislike it (0) Added: March 05, 2008 This Presentation is Public Favorites: 0 Presentation Description No description available. Comments Posting comment... By: sunnysingh1 (18 month(s) ago) I need this . Please send me . Saving..... Post Reply Close Saving..... Edit Comment Close By: zk_ali (19 month(s) ago) Hello!!! Nice Presentation.. Please mail me this presentation on zulkernain.kanjariwala@gmail.com... it will be great help for me. Thanks in Advance... Saving..... Post Reply Close Saving..... Edit Comment Close Premium member Presentation Transcript The New Government’s Economic Policy: The New Government’s Economic Policy Per JanssonPlan of talk: Plan of talk Some personal data A few facts about the Government Offices, the Ministry of Finance, and economic policy in general Facts about the Swedish economy The new economic policy Undertaken and planned policy measures Expected effects (forecasts from Budget Bill and evaluation done by Lars Calmfors)Personal data: Personal data PhD 1994; Associate Professor 2000 (Uppsala University) Mainly: general macro (empirical) and monetary policy 10 yrs at the Riksbank, 2 yrs at the NIER Also: FIEF, the Economic Council of Sweden, SJSlide4: The Government Offices The Government Ministry of Agriculture, Food and Fisheries Ministry of Justice Prime Minister’s Office Ministry for Foreign Affairs Ministry of Defence Ministry of Health and Social Affairs Ministry of Finance Ministry of Education Research and Culture Ministry of Sustainable Development Ministry of Industry, Employ-ment and Communications Office for Administrative AffairsSlide5: most common occupations: economists, lawyers and social scientists 470 plus employees 95% are non-political staff average age is about 40 50 per cent are women 65% have executive responsibilities 10% have managerial responsibilities 25% have administrative responsibilities The Ministry of FinanceSlide6: IA KLA Minister for Finance Anders Borg Minister Mats Odell Chief Political Adviser Political Advisers Press Press Political Advisers 7 Divisions Budget Department Economic Affairs Tax and Customs Public Administration Financial Markets International Department 3 Divisions 4 Divisions 3 Divisions 5 Divisions 5 Divisions Legal Secretariat Information Department Departement for Coordination and Support 3 Divisions State Secretary Hans Lindblad State Secretary Per Jansson State Secretary Ingemar Hansson State Secretary State Secretary for economic policy responsible for…: State Secretary for economic policy responsible for… Departments: International Department, Economics Affairs, Division for Structural Policies at Budget Department In addition: issues related to statistics and government real estates Government agencies: NIER, Statistics Sweden, the Economic Council of Sweden, the Swedish National Financial Management Authority (ESV), the National Property Board (SFV), the National Fortification Administration Slide8: Conducting economic policy means… monitors and analyses the Swedish economy makes short and long-term forecasts conducts studies at household and individual level takes part in international economic work The Ministry of Finance …undertaking measures to influence the national economy. Divided into: - stabilisation policy - distribution policy - structural policySlide9: The goals of economic policy… full employment a stable economy stable prices high growth fair distribution … are set by the Government and the Riksdag, and can broadly be summarised as follows: sound public financesSlide10: Government commences preparatory budget work Government submits Spring Budget Bill including proposals for expenditure ceilings to the Riksdag Economic policy is implemented through the budget process Riksdag approves the budget January • February • March • April • May • June • July • August • September • October • November • December Government agencies supply background budget data The Riksdag approves expenditure ceilings and preliminary frames for the expenditure areas Government submits the Budget Bill to the RiksdagThe Swedish economy: since the mid 1990s good macro performance in many respects: The Swedish economy: since the mid 1990s good macro performance in many respects Growth higher than previously and higher than in many other countries Inflation low and stable Public finances with surplus Reasonable real and nominal wage increasesGDP level and growth rate: GDP level and growth rateCPI inflation: CPI inflationPublic savings (percent of GDP): Public savings (percent of GDP) Note: The dashed line is the forecast in the Budget Bill for 2007.Nominal and real wage growth: Nominal and real wage growthBut there are also problems…: But there are also problems… Weak labour market development with high absence Equilibrium (un)employment too low (high) It does not pay enough to work Business climate for in particular small companies not as good as it should be Too few want to employ and run a business Demographic challenges ahead Slide17: GDP growth and unemploymentThe Swedish population by labour force status, 2005 : The Swedish population by labour force status, 2005 Individuals supported by social transfers Thousands of full-time equivalents: Individuals supported by social transfers Thousands of full-time equivalentsThe difference between going to work and being sick-listed is too small: The difference between going to work and being sick-listed is too smallFew new companies established: Few new companies establishedSwedish population growth up to 2050 (change compared to 2006): Swedish population growth up to 2050 (change compared to 2006)Dependency ratios: Dependency ratiosPopulation growth in the age 20-64 years (change compared to 2006): Population growth in the age 20-64 years (change compared to 2006)The labour market at different points in time: The labour market at different points in time 1990 1993 2005 Unemployment 1,5 8,3 5,4 Labor force participation 84,5 77,7 78,0 Employment 83,3 71,2 73,8 Benefit recipients 15,7 22,2 20,4 Possible sources of unemployment persistence: Possible sources of unemployment persistence Decreasing search activity Calls for: measures that increase search activity and decrease locking-in effects Generous benefits Calls for: measures that make it worthwhile to work The compressed wage structure Calls for: measures that increase the availability of low-skilled jobs at an agreeable wage Stigmatization Calls for: measures that decrease the cost associated with employing jobseekers who have been out of work for a long time Employment protection legislation What is needed?: What is needed? A combination of measures that affect simultaneously: The matching process Labour supply Labour demandAutumn Budget Bill 2007 affects Matching: Autumn Budget Bill 2007 affects Matching through: Changes in the institutional set-up of labour market policies Individual action plans and coaching Changes in unemployment benefits Lower volumes of labour market programmesAutumn Budget Bill 2007 affects Labour supply: Autumn Budget Bill 2007 affects Labour supply through: Earned income tax credit that increase after-tax revenue Changes in unemployment benefits Changes in sick-leave benefits Lower volumes of labour market programmes Slide30: P Y AS ADAutumn Budget Bill 2007 affects Labour demand: Autumn Budget Bill 2007 affects Labour demand through: “New start jobs” targeted at benefit recipients, refuges, and older people Decreased employers’ contributions for youth & older Increased possibilities to time-limited hires and also: Tax reductions on household-related services (in 2007) Tax reductions in various service sectors (in 2008)Slide32: P Y AS ADSlide33: P Y AS ADThe Swedish labour market according to the Budget Bill: The Swedish labour market according to the Budget BillEffects on income distribution (2007, percentage change): Effects on income distribution (2007, percentage change)Effect on income distribution: Gini coefficient: Effect on income distribution: Gini coefficientCalculation of effects by Lars Calmfors: Calculation of effects by Lars Calmfors Approach: use estimates (elasticities) of previous empirical studies (several) to quantify the long-run effects of the different policy measures Studies considered: Bassanini & Duval (2006, OECD WP 486) Forslund, Gottfries & Westermark (2006, CESifo WP 1649) Forslund & Kolm (2000, IFAU WP 7) Nickell (2003, CESifo DICE Report 2)Bassanini & Duval (2006): lower unemployment benefits and tax wedge: Bassanini & Duval (2006): lower unemployment benefits and tax wedgeForslund et al (2006): lower net replacement rate and reduction of ALMPs: Forslund et al (2006): lower net replacement rate and reduction of ALMPsForslund & Kolm (2000) and Nickell (2003): Forslund & Kolm (2000) and Nickell (2003) FK about 1 percentage point larger unemployment effect Nickell: Change in U = -0.42 – 1.24 x (net no. of ”employment-friendly” reforms) R2 = 0.51, N = 20 => for Sweden this gives 3 x 1.24 = 3.7 percentage points lower unemployment