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The macro-economic effects of labour market reforms in the European Union - Some selected simulations with the NIME model. 10/05/2004

In this paper, we use the nime model to assess the medium-term macro-economic effects for the European Union (eu) of a one percentage point cut in the social security contribution rate, and a one percentage point increase in the labour participation rate. In the case of a cut in the social security contribution rate, we consider two variants. First, we consider the variant in which the tax cut is ex ante financed by an across the board cut in public outlays. Next, we consider the variant in which the tax cut is ex ante financed by an increase in the indirect tax rates. In the long run, such measures increase unambiguously employment and potential output, thereby raising the standard of living of the eu citizens and reinforcing the sustainability of the social protection system. However, all kinds of rigidities prevent an immediate adjustment towards the new equilibrium, so that economic activity may be less buoyant in the medium-term. This paper describes these medium-term effects.

Working Papers - Working Paper 12-04 (en),

An assessment of the risks to the medium-term outlook of the Belgian international economic environment 12/09/2003

Each year, the Federal Planning Bureau (fpb) prepares a medium-term outlook for the Belgian economy with its macro-econometric hermes model. One of the key inputs of this exercise is a baseline scenario for the Belgian international economic environment, which includes an outlook for the output, imports, prices and financial variables of the major trading partners of Belgium. Traditionally, this international environment is based on the medium-term outlook presented by the European Commission in its Autumn Forecasts or the most recent available medium-term outlook of the Organisation for Economic Co-operation and Development (oecd).

Working Papers - Working Paper 12-03 (en),

The international transmission of shocks - Some selected simulations with the NIME model 01/09/2003

The macro-econometric nime model is one of the analytical tools used by the Belgian Federal Planning Bureau to improve its understanding of developments in the Belgian international economic environment. This paper shows some concrete applications with this model by analysing the spill-over effects of shocks from the United States (us) to the euro area and the rest of the world. The shocks we investigate are a temporary increase in public expenditures in the us, a us-led world-wide permanent increase in total factor productivity, an increase in the risk premium in the us stock market, and a temporary 1 percentage point increase in the us short-term interest rate. Here, we will discuss how these shocks affect economic activity in the us and how they are transmitted to the euro area. Such an analysis can be useful because it catalogues answers to questions which are often posed by economists who want to assess their medium term projection of the euro area economy.

Working Papers - Working Paper 09-03 (en),

Monetary policy in the euro area - Simulations with the NIME model 01/11/2002

In this paper, we investigate with a macroeconometric world model how mone-tary policy rules affect economic activity in the euro area. In the economic literature, there is a general consensus that a credible monetary policy rule is to be preferred to discretionary interventions by central banks because monetary surprises can increase expected inflation and worsen economic performance (Kydland and Prescott (1977)). Several monetary policy rules have been proposed, for example, money targeting (Friedman (1956)), inflation targeting (Bernanke et al. (1999)), nominal income targeting (Hall and Mankiw (1994), Frankel and Chinn (1995)), and an interest rate rule that targets inflation and output relative to a reference value (Taylor (1993)). Although the theoretical merits of these rules have been thoroughly discussed in the literature, the empirical investigation of the implications of these rules has only recently commenced (Bryant et al. (1993)).

Working Papers - Working Paper 11-02 (en),

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