OECD Economic Surveys: Euro area (Volume 2003 12 - October)

Table of contents......Page 5
Basic statistics......Page 8
Assessment and recommendations......Page 10
I. Macroeconomic performance and structural reform......Page 22
Recent developments and short-term prospects......Page 23
Figure 1. GDP and short-term indicators......Page 24
Figure 2. The policy stance......Page 25
Figure 3. Economic slack and inflation pressure......Page 27
Table 1. Risks and uncertainties surrounding the projections......Page 29
Medium-term performance......Page 30
Table 2. Average trend growth in GDP per capita......Page 31
Figure 5. Explaining the income gap......Page 32
Figure 6. Decomposing trend labour resource utilisation......Page 33
Taking stock of market integration......Page 34
Figure 8. Trade patterns in the euro area......Page 35
Removing barriers to integration......Page 36
Table 4. Formalities for establishing a business......Page 37
Box 1. Progress in financial market integration......Page 38
Table 5. Restrictiveness in distribution......Page 40
Improving the regulatory framework......Page 42
Box 2. Proposals for improving the EU’s regulatory framework......Page 44
Tackling taxation issues......Page 43
Enhancing innovative capacity......Page 46
Figure 9. R&D intensity......Page 47
Box 3. Assessing the Barcelona R&D targets......Page 48
Figure 11. Venture capital investment by stages......Page 49
Figure 12. Science, technology and innovation benchmark indicators......Page 50
Towards a better working labour market......Page 52
Figure 13. Structural rates of unemployment......Page 53
Common policies and peer pressure......Page 54
Figure 16. Temporary contracts in the euro area......Page 55
Table 7. Key EU labour market targets and indicators......Page 56
Will the targets be met?......Page 57
Priority areas for reform......Page 58
Figure 17. Estimates of gross and net replacement rates......Page 59
Figure 18. Tax rates on labour......Page 60
Figure 19. Incidence of long-term unemployment......Page 62
Box 4. Can immigration help?......Page 64
Figure 20. Ratio of minimum wage to full-time median earnings......Page 66
Figure 21. Strictness of employment protection legislation......Page 67
Box 5. Directives on work organisation......Page 68
Achieving the Lisbon targets by 2010: a reasonable goal?......Page 69
Table 8. Change in productivity induced by a change in product market regulation......Page 70
Figure 22. Medium-term effects of structural reforms boosting productivity......Page 71
Figure 23. Medium-term effects of structural reforms enhancing employment......Page 73
Table 9. Summary results of the medium term effects of structural reforms......Page 74
Table 10. European Union accession countries: key indicators......Page 75
Fiscal targets were again largely undershot......Page 76
Figure 24. Moving targets......Page 77
Table 11. Euro area fiscal indicators......Page 78
Figure 25. Fiscal balances......Page 79
What went wrong......Page 81
Figure 26. Fiscal policy indicators......Page 82
Table 13. The fiscal stance across countries......Page 83
Box 6. Is the political business cycle still alive in EMU?......Page 85
Table 14. Fiscal policy stances at different stages of the election cycle......Page 86
What should be done......Page 84
Box 7. Financial markets and fiscal discipline......Page 87
Box 8. The Commission’s proposals to improve the implementation of the Stability and Growth Pact......Page 89
Inflation is coming down......Page 92
Figure 27. Inflation performance since the advent of the euro......Page 93
Interest end exchange rate developments......Page 94
Figure 28. Interest rate developments......Page 95
Figure 29. Exchange rate developments......Page 97
Money and credit growth......Page 96
Table 15. Monetary aggregates and their counterparts......Page 98
Figure 30. Asset prices and debt......Page 99
Low policy rates are appropriate......Page 100
The policy framework revisited......Page 101
The role of monetary analysis......Page 102
Figure 32. House prices and money growth......Page 104
Taking out insurance against deflation risk......Page 105
Inflation dispersion: an issue for monetary policy?......Page 106
Figure 33. Inflation dispersion......Page 107
Table 16. Structural features of housing markets and inflation differentials......Page 108
Competition enhances potential growth......Page 110
Box 9. Price dispersion......Page 111
Figure 34. Relative price levels and GDP per capita......Page 112
Table 17. Review of literature on price dispersion in Europe......Page 113
Antitrust cases......Page 115
Box 10. The block exemption for the automobile industry......Page 117
Merger review......Page 118
Box 11. The judgements of the Court......Page 120
The enforcement of competition law......Page 121
Table 18. Average value of imposed sanctions relative to the turnover in affected industries......Page 122
State aid by member countries is under Community surveillance......Page 124
Regulatory policy......Page 126
Box 12. Agriculture: a sector with its own competition framework......Page 127
Table 19. Total support estimate (TSE) in agriculture......Page 129
The network industries......Page 130
Figure 36. Market share of the largest generator in the electricity market......Page 131
Railways and postal services......Page 133
Telecommunications......Page 135
Figure 37. Telephone charges in OECD countries......Page 136
Figure 38. Telecommunications market shares......Page 138
“Necessary” public services?......Page 137
Regulators......Page 139
The external trade regime influences concentration and competitive pressures......Page 140
Table 21. Import penetration......Page 141
Introducing competition in public procurement......Page 143
Figure 39. Published public procurement......Page 144
Changes are taking place in the financial markets......Page 145
Table 22. Entry into banking......Page 146
Scope for further action......Page 147
Box 13. Synopsis of recommendations......Page 148
Notes......Page 152
Glossary of acronyms......Page 162
Bibliography......Page 164
Table A1. Labour market transitions......Page 180
Table A2. Benefit systems in the euro area......Page 181
Table A3. Childcare and elderly care: data and targets set in 2002 National Action Programmes......Page 182
Table A4. Overview of the Action Plan for Skills and Mobility......Page 184
Table A5. Developing lifelong learning strategies......Page 185
Table A6. Wage indexation and minimum wages in the euro area......Page 186
Table A7. The five vintages of Stability and Convergence Programmes compared......Page 187
Annex II. The mutual recognition principle in practice......Page 189
Annex III. The financial market environment......Page 191
Box A1. Synopsis of 2002 EDRC recommendations......Page 192
Table A8. Legislative programme for 2003......Page 194
Figure A1. Volume of euro-denominated bonds issued......Page 198
Annex IV. Tax incentives and house price volatility: Theory and Evidence......Page 200
Figure A2. The impact of a demand shock on house prices......Page 201
Table A9. The tax wedge for housing: simulation results......Page 202
Figure A3. The impact of taxation on housing cost......Page 203
Figure A4. Correlation between the tax wedge and variability of house prices......Page 204
Annex V. Indicators of market power......Page 205
Table A10. Estimated industry wage premia......Page 206
Table A11. Hirschman-Herfindahl indices of industry concentration......Page 207
Table A12. Import penetration......Page 208