Showing posts with label health expenditure. Show all posts
Showing posts with label health expenditure. Show all posts

Monday, May 14, 2012

15/5/2012: Austerity, Stimulus & Euro Area Crisis

An excellent article for Bloomberg by Peter Boone and Simon Johnson, titled As European Austerity Ends, So Could the Euro.


Note the referencing of 90% debt/GDP ratio for the euro area. In 2012, per IMF more detailed WEO database, General Government Gross Debt in EA17 will rise to 89.95% of GDP from 88.08% in 2011. For EA12 (old euro area member states), the GGD will rise from 88.75% of GDP in 2011 to 90.61% of GDP in 2012, while removing Luxembourg out of EA12 (the country is a massive outlier for virtually all GDP-related parameters due to its huge 'brass plate' sector), implies EA11 debt to GDP ratio of 90.915% of GDP in 2012, up from 89.06% in 2011.


In addition to Table 5 in the GFSR (linked by Boone and Johnson), I suggest you take a look at the Statistical Table 9.a on page 69 of the report, especially columns 2-5. These detail parameters of sustainability of unfunded future health and pensions obligations.  Ireland, with its 'demographic dividends' is fourth worst-off country in the EA17 in terms of future pensions liabilities increases, although we are much better than average in terms of health liabilities.


Table 10.a page 71 of the said report (reproduced below) shows that Ireland is facing the worst 
Required Adjustment and age-related spending, 2011–30 and 2011-2020 horizon in the advanced economies, save for Japan and the US.




Monday, April 2, 2012

2/4/2012: Impact of the middle class on economic, social and political institutions

A fascinatingly interesting study of the effects the middle class has on economic, social and political institutions.

The World Bank Policy Research Working Paper 6015: "Do Middle Classes Bring Institutional Reforms?" by Norman Loayza Jamele Rigolini Gonzalo Llorente (link here - emphasis mine) "examines the link between poverty, the middle class and institutional outcomes using a new cross-country panel dataset on the distribution of income and expenditure." The data "spans 672 yearly observations across 128 countries" allowing the authors "...to gauge whether a larger middle class has a causal effect on policy and institutional outcomes in three areas:

  • social policy in health and education 
  • market- oriented economic structure and 
  • quality of governance." 
The study finds that "when the middle class becomes larger (measured as the proportion of people earning more than US$10 a day),

  • social policy on health and education becomes more progressive [expansion of share of these expenditures to GDP], and 
  • the quality of governance (democratic participation and official corruption) also improves. 
  • This trend does not occur at the expense of economic freedom, as a larger middle class also leads to more market-oriented economic policy on trade and finance." 
From data (econometrics) perspective: "These beneficial effects of a larger middle class appear to be more robust than the impact of lower poverty, lower inequality or higher gross domestic product per capita."

The causality of the latter effect is itself an interesting point: "That may be linked to the evolution of the middle class: they are more enlightened, more likely to take political actions and have a stronger voice. They also share preferences and values for policy and institutional reforms, as well as higher stakes in property rights and wealth accumulation."

The authors note that their results show that "the indicators of poverty and inequality are also relevant determinants for social policies, economic structure, and governance quality, but not always in the expected way or with the consistency shown by the middle class measure. For instance, a decrease in income inequality seems to produce a decline in official corruption (as possibly expected) but also a reduction in democratic participation (which may be harder to explain). Similarly, a decrease in the poverty headcount appears to induce a liberalization of international trade but also, surprisingly, a constriction of credit markets."

Fascinating stuff, in my view.