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Gonand F. (2015), The Carbon Tax, Ageing and Pension Deficits, Environmental Modeling and Assessment
Ageing increases the income of a carbon tax ceteris paribus since energy consumption rises with age, as macro and micro data show. Ageing also increases some public expenditures, notably those of pay-as-you-go (PAYG) pension systems. Accordingly, there may be a case for recycling a carbon tax in an ageing context so as to finance ageing-related public expenditures. This article studies the interacting effects on intergenerational equity and growth of such a recycling. It relies on a general equilibrium model with overlapping generations parameterised with empirical data. Several results emerge. Implementing a carbon tax fully recycled through higher lump-sum pensions weighs relatively more on the intertemporal welfare of young and future generations. A carbon tax fully recycled through lower social contributions financing the PAYG bolsters the wellbeing of young and future generations but weighs on the welfare of baby-boomers and older cohorts. The redistributive effects of recycling a carbon tax can depend significantly on the way used to balance the PAYG regime.
Gonand F., Jouvet P-A. (2015), The "Second Dividend" and the Demographic Structure, Journal of Environmental Economics and Management, 72, p. 71â97
The demographic structure of a country influences economic activity. The "second dividend" modifies growth. Accordingly, in general equilibrium, the second dividend and the demographic structure are interrelated. This paper aims at assessing empirically the "second dividend" in a dynamic, empirical and intertemporal setting that allows for measuring its impact on growth, its intergenerational redistributive effects, and its interaction with the demographic structure. The paper uses a general equilibrium model with overlapping generations, an energy module and a public finance module that distinguishes between non-ageing-related public spending and a pension regime. Policy scenarios compare the consequences of different scenarios of recycling a carbon tax through lower proportional income taxes rather than higher public lump-sum expenditures. They are computed for two countries with different demographics (France and Germany). Results suggest that the magnitude of the "second dividend" is significantly related with the demographic structure. The more concentrated the demographic structure on cohorts with higher income and saving rate, the stronger the effect on capital supply of the second dividend. The second dividend weighs on the welfare of relatively aged working cohorts. It fosters the wellbeing of young working cohorts and of future generations. The more concentrated the demographic structure on aged working cohorts, the higher the intergenerational redistributive effects of the second dividend.
Gonand F. (2010), Population Issues in Social Choice Theory, Welfare Economics and Ethics. By C. BLACKORBY, W. BOSSERT, and D. DONALDSON, Economica, 77, 306, p. 405-406
Legros F., Gonand F. (2009), Pension Reforms in France : Impact on Growth and Inter-generational Redistributive Effects, The Geneva Papers on Risk and Insurance. Issues and Practice, 34, 4, p. 639-659
This paper assesses the impact on growth and the inter-generational redistributive effects of some possible pension reforms in France using a dynamic general equilibrium model with overlapping generations. Results suggest that a reform increasing the effective average retirement age by 1.25 years per decade and diminishing the average replacement rate by around 6 percentage points up to 2020 could stabilise social contributions for the youngest, but would gradually foster the poverty rate among pensioners. On the other hand, a reform incorporating a rise in the age of retirement by 1.25 years per decade, unchanged replacement rates and a discretionary increase of all pensions of 2.5 per cent in 2008 would limit the poverty rate among pensioners, but it would weigh down on the growth rate and the welfare of future generations.
Gonand F., Price R., Sutherland D. (2009), Improving public spending efficiency in primary and secondary education, OECD Journal : Economic Studies, 4, 1, p. 30
Influenced by the perceived link between higher levels of educational attainment and growth, the education sector has seen significant reform efforts in recent years in a number of countries. Public spending in this sector has increased on average by one-fifth in real terms over the past decade and growth in terms of spending per student has also been marked in many countries (Figure 1, upper panel); governments in the OECD area now spend on average around 3% of GDP on primary and secondary education. However, a close correspondence between the level of resources and educational outcomes is difficult to demonstrate empirically: cross-sectional evidence reveals only a weak correlation between national spending per student or teaching resources and mean pupil performance in standardised tests (Figure 1, lower panels). Extra resources devoted to education do not automatically lead to commensurate improvements in outcomes.
Gonand F. (2006), Réforme des retraites, marchés financiers et investissement socialement responsable : les affinités électives, Revue d'Economie financière, 85, p. 285-294
Elective affinity seems to link reform of retirement, development of long-term investments and SRI next decades. They so suggest the possibility of an endogenous evolution of financial capitalism which would become more favourable to a long term perspective, without departing from the principle of investors' rationality
Gonand F. (2004), Fonds de pension américains : une évaluation du risque macroéconomique, Revue d'Economie financière, 75, p. 291-311
The American pension funds system reinforces the sensibility of the American economy to financial markets fluctuations. Market risk is supported by companies as concerns defined benefits funds (DB) and by households as regards defined contributions plans (DC). DC funds are often over-invested in shares of their own company. DB funds are currently underfunded. Our calculations suggest that a 50bp fall in long term interest rates may worsen the net wealth of private DB funds by around 90 billion $. The Pension Funding Equity Act may substantially lessen the macroeconomic risk stemming from these financial problems. By raising the regulatory actualization rate applied to future pension payments by DB funds, it could help resolving underfunding in the end of 2004 under reasonable assumptions as regards financial markets. Moreover, the burden on trend labor productivity gains associated with the refunding of DB funds in the 5 forthcoming years could also be substantially slashed.
Gonand F. (2007), Pourquoi la rupture s'impose : déficits, retraites, chômage, productivité..., Paris, 219 p.
Gonand F. (2014), Fostering Renewables and Recycling a Carbon Tax: Joint Aggregate and Intergenerational Redistributive Effects, Les Cahiers de la Chaire Economie du Climat, Paris, Université Paris Dauphine, 40
A rising share of renewables in the energy mix push es up the average price of energy - and so does a carbon tax. However the former bolsters the accumulation of capital whereas the latter, if fully recycled, does not. Thus, in general equilibrium, the effects on growth and intertemporal welfare of these two environmental po licies differ. The present article assesses and compares these effects. It relies on a computable general equilibrium model with overlapping generations, an energy module and a pub lic finance module. The main result is that an increasing share of renewables in the energy mix and a fully recycled carbon tax have opposite (though limited) impacts on activity and i ndividuals' intertemporal welfare in the long run. The recycling of a carbon tax fosters consumption and labour supply, and thus growth and welfare, whereas an increasing share of renewables does not. Results also suggest that a higher share of renewables and a recycled carbon tax trigger intergenerational redistributive effects, with the former being relat ively detrimental for young generations and the latter being pro-youth. The policy implication is that a social planner seeking to modify the structure of the energy mix while achieving some ne utrality as concerns the GDP and triggering some proyouth intergenerational equity, could usefully contemplate the joint implementation of higher quantitative targets for the future development of renewables and a carbon tax fully recycled through lower proportional taxes.
Gonand F. (2014), Dynamic Impacts on Growth and Intergenerational Effects of Energy Transition in a Time of Fiscal Consolidation, Les Cahiers de la Chaire Economie du Climat, Paris, Université Paris Dauphine, 52
Social planners in most western countries will be facing two long-lasting challenges in the next years: energy transition and fiscal consolidation. One problem is that governments might consider that implementing an energy transition could get i n the way of achieving a fiscal consolidation. If so, interrupting the energy transition in a time of fiscal consolidation would involve significant aggregate impacts on activity and inter generational redistributive effects. This article tries to assess them empirically. It relies on an overlapping-generations framework in a general equilibrium setting, with a detailed energy module. The model is parameterized on data provided by OECD/IEA for France. Different results emerge. Renouncing to the energy transition would slightly foster the level of GDP during the next 10 to 15 years - depending on the dynamics of the prices of fossil fuels on world markets - but weigh on it more significantly afterwards (up to -1% in 2050). If the pric es of fossil fuels keep increasing in the future, implementing an energy transition could have br oadly the same favourable effects on the GDP level in the long run as those of a fiscal consolidation diminishing significantly public spending instead of raising taxes. In the long-run, the GDP would be maximized by implementing an energy transition and simultaneously lessening the public deficit by lowering some public expenditure, a policy that would entail an overall gain of around 1,6% of GDP in 2050. Stopping the energy transition would also bring about intergenerational issues. It would be detrimental to the intertemporal wellbeing of almost all cohorts alive in 2010. A fiscal policy with lower public expenditures and frozen tax rates may be still more favourable to young and future generations than implementing an energy transition. However, renouncing to an energy transition would annihilate most of these pro-youth effects.
De Perthuis C., Gonand F., Trotignon R. (2014), La réforme de l'EU ETS dans le Paquet Energie Climat 2030 : Premières leçons à partir du modèle ZEPHYR, Policy Brief, Paris, Université Paris Dauphine, Chaire Economie du Climat, 6
Gonand F. (2007), Effet sur la croissance d'un système éducatif primaire et secondaire plus efficace, OECD Papers, Paris, OCDE, 35
This paper assesses the impact on economic growth of increased efficiency of public spending in primary and lower-secondary education. Higher efficiency in publ ic spending in schools can bolster growth through two main channels. On the one hand, it can allow a transfer of labour from the public sector to the business sector at unchanged educational output. On the other, it can enhance educational output and productivity of the future labour force at unchanged public employment and expenditures. The paper argues that, in most cases, efficiency gains might have larger effects on GDP in the long run if they are used to increase educational outputs rather than to reduce inputs. A 10% increase on educational output might raise GDP by, on average, 3% to 6% in the long run in most OECD countries, whereas using efficiency gains to transfer resources to the business sector might have an impact of less than 1% on GDP. However, some trade-off can appear in the short run because input-decreasing efficiency gains materialise more rapidly on growth than improvements in output-increasing efficiency.
Joumard I., Price R., Gonand F. (2007), Public Spending Efficiency: Institutional Indicators in Primary and Secondary Education, OECD Economics Department Working Papers, Paris, OECD, 50
This paper presents composite indicators of the institutional and policy characteristics of educational systems, collated from the questionnaire responses of 26 Member countries. These indicators provide an overview of the institutional framework in the primary and secondary education sector and are constructed so as to be used for the analysis of international differences in spending efficiency. The key features of the institutional setting in the non-tertiary education sector are grouped under three headings: i) the ability to prioritise and allocate resources efficiently (through decentralisation and mechanisms matching resources to specific needs); ii) the efficiency in managing spending at the local level (through outcome-focused policies and managerial autonomy), and iii) the efficiency in service provision (through benchmarking and user choice). For each country, an intermediate indicator is computed for each of these six institutional properties. Composite indicators then combine the six intermediate indicators of spending efficiency into a single, aggregate measure. Results are presented and some of their implications are discussed. Overall, the characteristics of the institutional framework in the non-tertiary public education sector seem to be very favourable, compared to OECD average, in the United Kingdom, Australia, Norway, Denmark and the Netherlands, whereas results are less favourable for the Czech Republic, Greece, Luxembourg, Japan, Turkey, Hungary, Belgium (French speaking community), Switzerland and Austria.
Gonand F. (2006), Effets redistributifs des réformes des retraites selon le revenu: une prise en compte des carrières incomplètes et des éligibles au minimum vieillesse, Cahiers de recherche du Laboratoire d'econometrie de l'école polytechnique, Paris, Ecole polytechnique, 44
Cet article s'intéresse aux effets de redistribution intra-générationnelle de différentes réformes des retraites par répartition, avec une attention particulière aux bas revenus (smicards, carrières incomplètes, éligibles au minimum vieillesse). Dans un modèle analytique avec simulations numériques sur données réelles, 4 réformes-types sont envisagées: hausse des cotisations sociales avec âge de la retraite inchangé, baisse du taux de remplacement avec âge de la retraite inchangé, augmentation de l'âge de la retraite avec hausse complémentaire limitée des cotisations sociales, augmentation de l'âge de la retraite avec baisse complémentaire limitée du taux de remplacement. Dans les deux derniers scénarios, l'augmentation de l'âge de la retraite permet de stabiliser le rapport (durée de retraite / durée d'activité) dans un contexte de hausse de l'espérance de vie. Les principaux résultats de cet exercice sont: a) une réforme augmentant l'âge de la retraite et stabilisant le rapport (durée de retraite / durée d'activité) n'a aucun effet distorsif, alors qu'une hausse des cotisations sociales avec âge de la retraite inchangé a des effets distorsifs significatifs, en particulier pour l'offre de travail des éligibles au minimum vieillesse; b) pour tous les individus, les réformes avec augmentation de l'âge de la retraite, sous la condition mentionnée supra, pèsent moins sur le bien-être intertemporel des ménages que les réformes qui ne modifient pas l'âge de la retraite; c) en particulier, une hausse de l'âge de la retraite pèse sensiblement moins sur le bien-être des individus à carrière incomplète qu'une hausse des cotisations sociales avec âge de la retraite inchangé; d) aucune des deux réformes envisagées qui modifient l'âge de la retraite (avec hausse complémentaire des cotisations sociales ou baisse complémentaire du taux de remplacement) n'est pareto-améliorante par rapport à l'autre s'il est tenu compte de l'existence d'agents à carrières incomplètes.
Gonand F. (2006), Une politique budgétaire keynésienne neutralisant les stabilisateurs automatiques en haut de cycle : le cas de la France en 2000-2001, Cahiers de recherche du Laboratoire d'econometrie de l'école polytechnique, Paris, Ecole polytechnique, 17
Cette étude présente une méthode empirique simple permettant d'évaluer l'impact des finances publiques sur la croissance à court terme, et plus précisément : a)l'impulsion discrétionnaire des finances publiques avant bouclage macroéconomique ; b) l'impact sur la croissance de l'impulsion discrétionnaire après bouclage et c) l'impact sur la croissance de l'ensemble des finances publiques (stabilisateurs automatiques inclus) après bouclage. L'application de cette méthode à la politique budgétaire française durant la législature 1997-2002 suggère deux résultats : a) l'effet multiplicateur agrégé des finances publiques françaises est probablement inférieur à 1, ce qui tend à valider une des propositions théoriques du modèle d'équivalence néo-ricardienne ; b) la politique budgétaire française massivement pro-cyclique lors de la phase haute de cycle en 2000-2001 a complètement neutralisé l'effet modérateur des stabilisateurs automatiques. Elle a ainsi rendu impossibles tant un retour à l'équilibre des comptes publics en période faste que toute possibilité de relance ultérieure une fois le ralentissement cyclique avéré à la fin de l'année 2001.
Cournède B., Gonand F. (2006), Rétablir la soutenabilité des finances publiques dans la zone euro : augmenter les impôts ou maîtriser les dépenses?, OECD Economics Department Working Papers, Paris, OCDE, 39
With population ageing, fiscal consolidation has become of paramount importance for euro area countries. Consolidation can be pursued in various ways, with different effects on potential growth, which itself will be dragged down by ageing. A dynamic general equilibrium model with overlapping generations and a public finance block (including a pay-as-you-go pension regime, a health care system, non ageingrelated public spending and a stock of debt to be repaid) is used to compare the macroeconomic impact of four scenarios: a) increasing taxes to finance unchanged pensions and repay public debt, b) lowering future pension replacement rates and repaying public debt through a lower ratio of non ageing-related outlays to GDP, c) raising the retirement age by 1.25 years per decade and increasing taxes only to pay off debt, and d) increasing the retirement age by 1.25 years per decade and paying off debt through a lower ratio of non ageing-related expenditure to GDP. This last scenario is the one where growth is strongest: with gradual increases in the retirement age and spending restraint, average GDP growth in the 2010s would be 0.34 percentage point stronger than in a scenario where fiscal consolidation is achieved exclusively through tax hikes. The appropriate conclusion from the model is not that public spending is bad per se, but that cuts to lower-priority spending items can deliver surprisingly large income gains compared with the alternative of raising taxes.
Gonand F. (2005), Assessing the Robustness of Demographic Projections in OECD Countries, OECD Economics Department Working Papers, Paris, OCDE, 50
This paper aims at assessing the robustness of demographic projections to different assumptions on mortality, fertility and migration. It builds on a small-scale simulation model for 23 OECD countries, which reproduces closely national projections under similar demographic assumptions. Up to 2020, projections are relatively robust to alternative hypothesis. However, uncertainty about future longevity gains and fertility rates account for a large range of results for dependency ratios by 2050. Eventually, a long lasting surge in fertility may not be enough to fully offset the impact on dependency ratio of increases in longevity in line with past trends (i.e., around two years every decade).
Gonand F. (2005), Effect on potential growth of non-sustainable public debt dynamics: an application to France, Cahiers de recherche du Laboratoire d'econometrie de l'école polytechnique, Paris, Ecole polytechnique, 16
Cet article évalue l'impact sur la croissance potentielle à l'horizon 2020 de différentes trajectoires de dette publique française, sous l'hypothèse d'une accélération des dépenses de retraite entièrement financée par endettement. Un modèle analytique avec fonction de production et impôts proportionnels est calibré sur données de comptabilité nationale. Il suggère que l'accumulation de dette publique se traduit par un effet d'éviction significatif sur le capital productif. Des simulations suggèrent qu'à politique inchangée le ratio (dette publique/PIB) corrigé de cet effet d'éviction se redresserait significativement pour atteindre 97% en 2020. Il ne se stabiliserait aux alentours de 60% qu'en cas de surplus primaires importants (hors dépenses de retraite nouvelles), de l'ordre de 1.25% PIB en moyenne. Néanmoins l'impact défavorable sur la croissance potentielle resterait contenu, de l'ordre de -0.1% par an en moyenne.
Antolín P., de la Maisonneuve C., Gonand F., Oliveira Martins J., Yoo K-Y. (2005), The Impact of Ageing on Demand, Factor Markets and Growth, OECD Economics Department Working Papers, Paris, OECD, 101
This paper examines the channels through which ageing will shape the main economic factors that in turn affect potential growth; identifies current policy settings that may in fact amplify the adverse impact of demographic trends; and sets out policy reforms that will work to temper the effects of ageing on growth. The paper begins with a brief discussion of demographic issues. The analysis first focuses on the impact of these trends on the future level and structure of consumption, which may affect aggregate saving and the structure of the economy, respectively. Then, it explores the main channels through which ageing affects the supply side of the economy following a production function approach: capital markets, labour markets and productivity. The empirical analysis focuses on a subset of large OECD countries with differing ageing patterns and generosity of pension systems. Using a simple general equilibrium overlapping generations model and considering alternative reform scenarios, some illustrative simulations are presented decomposing the effects of ageing on potential GDP per capita growth and economic convergence within OECD countries.