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Since August 2007, the world economy has fallen into recession and has been confronted with a severe financial crisis. In the context of what is now a world-wide recession, what hope can we place in announced fiscal stimulus plans? Will the fiscal stimulus plans decided and implemented in both the euro area and the United States since end 2008 be adequate responses, most notably in the face of the current systemic financial crisis? This document provides an evaluation of the effectiveness of fiscal policy and of current stimulus plans. It indicates that, while the fiscal stimulus measures will undoubtedly prove to be useful in limiting the scale and duration of the downturn, they won’t be sufficient by themselves to prevent a lengthy recession followed by a tepid recovery. In order to maximise the effectiveness of the stimulus plans, these should be accompanied by accommodative monetary policy. Furthermore, in view of accelerating and underpinning a recovery in world-wide economic activity, fiscal and monetary policies will also have to be supplemented by measures aimed at re-establishing properly functioning banking and financial sectors.
Several legal missions from the Federal Planning Bureau require the construction of long-term macroeconomic scenarios for the Belgian economy. In order to increase the consistency of these scenarios and to build them within a rigorous theoretical framework, it appeared important to develop a new long-term model that considers economic growth as depending upon the supply of production factors.
The theoretical structure of the model draws on similar work done by the Dutch CPB. In the working paper we detail the construction, the properties and the estimation of the parameters based upon quarterly data from the Belgian national accounts. The model should contribute for instance to the production of long-term macro-economic scenarios to evaluate the budgetary cost of ageing.
The "Strategic table with sustainable development indicators" (SDI) contains 88 indicators on 51 issues. All these indicators are classified within the DPSR framework (driving force, pressure, state, response). A trend assessment in relation to goals, established in the sustainable development strategies at different policy levels (world, EU, Belgium), could be made for 54 of the SDI. 17 of these SDI, where quantified targets with time limits were alloted, were assessed in relation to these targets. The SDI table is available in French and Dutch.
The Working Paper analyses the performances of the Walloon innovation system in 2008. This analysis concentrates on the six dimensions of the innovation system: knowledge development, human resources, R&D exploitation, innovation absorption capacity, entrepreneurial skills and financing capacity. These foundations are evaluated by comparing the performances of the Walloon innovation system with the performances of innovation systems of other countries and regions in Europe. They were chosen for their socio-economic proximity to the Walloon region. The examination of the Walloon innovation system reveals a problem that is essentially connected with the capacity to turn research and innovation efforts into economic results that are sufficient for the Region.
Increased international economic integration and skill-biased technological change are often regarded as the main drivers of the rising inequality in wages and employment witnessed in industrialized countries in recent decades as they are believed to emphasize differences between individuals in level of education. However, proponents of a task-based view of technological change and offshoring stress the evolving content of tasks as the major determinant of shifts in labour demand and argue that this does not necessarily imply a clear-cut match between the level of education and job opportunities. Belgian data from the Structure and Distribution of Earnings Survey for the period 1999-2004 suggest that the level of wages is significantly correlated with the level of education but wage growth is not. Occupation seems to explain a statistically significant part of the wage level as well as wage growth of workers. The analysis supports the view that the level of education provides less information than the occupation of workers in explaining changes in wages and employment. Overall, it appears that a policy that simply aims to increase the level of education of the active population is not warranted. In addition to the risk of over-education, such a policy is not likely to alleviate the mismatch which to some extent exists between the competencies required by employers and the competencies offered by workers and the unemployed.
In the context of a European-funded sixth framework project called AIM, a dynamic microsimulation model MIDAS is being developed for Belgium, Germany and Italy. This is a joint effort by three institutions, the German DIW, the Italian ISAE and the Belgian FPB. This model MIDAS simulates future developments of the adequacy of pensions, following wherever possible the projections and assumptions of the Ageing Working Group. This paper describes the model MIDAS in detail. It next presents and discusses some simulation results for Belgium, Germany and Italy. Finally, the simulation results of two alternative policy scenarios are presented and discussed.
The fear of massive job losses has prompted a fast-growing literature on offshoring and its impact on employment in advanced economies. This paper examines the situation for Belgium. The offshoring intensity is computed as a volume measure of the share of imported intermediate inputs in output based on a series of constant price supply-and-use tables for the period 1995-2003. Both materials and business services offshoring to high-wage and low-wage countries are addressed. The split-up according to the origin of the imported intermediates is done combining detailed trade data with data from the use table. The main findings are that materials offshoring stands at a higher level than business services offshoring, but that the latter grows much faster especially for the Central and Eastern European countries. Estimations of static and dynamic industry-level labour demand equations augmented by offshoring intensities do not reveal a significant impact of either materials or business services offshoring on total employment for Belgium between 1995 and 2003. However, this does not preclude a differential impact by skill-level.
In order to prepare for the negotiations on the EU Energy and Climate Package, the Federal Planning Bureau was asked by the Belgian federal and regional authorities to conduct a study on the impact of the January 2008 European Commission’s proposal. In the course of this study, various scenarios were run. Next to a baseline, two main alternative scenarios were scrutinised: the 20/20 and 30/20 target scenarios, standing for an EU reduction of respectively 20% and 30% of GHG emissions in the year 2020 compared to the level of 1990 and a 20% mandatory EU share of RES in Gross Final Energy Demand in 2020. The report then includes an analysis of the impact of both scenarios on the Belgian energy system and economy as well as on GHG emissions.
This paper illustrates the deficiency of the production approach as a tool to measure a country’s responsibility for international environmental impacts. A use approach is presented as a more suitable tool. The difference between the two approaches is determined by a better grasp of international trade, which can lead to environmental leakage when a country specialises in the production of environmentally friendly products and has the environmentally unfriendly products which it consumes produced abroad. We show that in the period 1995-2002 Belgium was on average a provider of air emission intensive products for the rest of the world. Environmental leakage was mostly negative. However, the evolution of the Belgian environmental terms of trade shows that by 2002 its imports had become considerably more air emission intensive with respect to its exports than in 1995. There are indications that this evolution is due to a considerable increase of extra-EU imports of air emission intensive products. This in turn could point to environmentally inspired offshoring. However, the currently available data do not allow us to test this hypothesis.
The objective of the report is to provide an overview of the main drivers of economic growth and the productivity evolution in Belgium, in comparison with the EU and the US, between 1970 and 2005, based on a consistent data set. The growth accounting methodology is applied to explain value added and labour productivity growth for the total economy, manufacturing and market services. This decomposition exercise diverges from what has been applied in Belgium up to now, as it uses capital services flows rather than the capital stock and labour services flows rather than the number of hours worked to measure the contribution of these factors of production to economic and productivity growth. Contributions of the main industries to value added, employment and productivity growth are also estimated.
The Belgian Federal Planning Bureau presents a new world macroeconometric projection for 2008-2015 in "The NIME Outlook for the World Economy" of August 2008. The document also contains an analytical Focus featuring the US housing market crisis.
The scenario that is presented in this new world outlook was built on the basis of information available through mid-August 2008. The international economic environment underlying the Federal Planning Bureau's new Economic Forecasts for Belgium of 12 September 2008 is based on more recent international assumptions, of which those relative to euro area GDP growth in 2008.
In 2008, we expect euro area real GDP to progress by a modest 1.5% and by only 1% in 2009. GDP growth should reach an annual average rate of 1.6% over the 2008-2015 period and be gradually curtailed by a declining working-age population and by private sector capacity constraints which should lead monetary authorities to raise interest rates. GDP growth in the United States is expected to reach 1.8% in 2008 and to average only 2% per annum over 2008-2015, slowing markedly in 2011 as a number of significant tax cut provisions expire. In Japan, GDP growth is expected to reach 1% in 2008 and fall to only 0.4% in 2009. GDP is projected to rise at a low yearly average rate of 0.9% over 2008-2015. Japan's economic growth is projected to rapidly lose momentum as the ageing of the country's population leads to a decline in the labour supply.
Using dynamic panel data on 20 Belgian market sectors over 1987-2005, the paper analyses the link between Multifactor Productivity (MFP) growth and three frequently cited determinants: business R&D, labour skills and ICT use. The theoretical framework of the analysis is given by the Aghion-Howitt model which explains the rate of MFP growth by the distance to the world technology frontier.
The PLANET model is a long term transport model for Belgium. Its aim is threefold:
(i) to construct a business-as-usual scenario for medium to long term passenger and freight transport in Belgium,
(ii) to simulate the effects of transport policy measures, and
(iii) to provide a social cost-benefit analysis of these measures.
The working paper describes the main features of the PLANET model (version 1.0). The development of the model was made possible thanks to financing by the FPS Mobility and Transport.
The Working Paper looks at the strategy that has been implemented in Belgium since the beginning of the decade to finance the future increase in public spending due to population ageing. This strategy is laid down in the Stability Programmes and in the Ageing Act and is supported by a broad social and political consensus. It implies building up budget surpluses, which has not been done so far. The paper analyses the long-term effects of such a situation, for example as regards the trade-off between the various policies that could be implemented to face the budgetary challenges posed by ageing populations.
This Working Paper introduces the notion of qualitative employment multipliers. These show the employment use by sex, age class, professional status, educational attainment level and labour regime for each final demand product. The paper describes the methodology and presents three applications based on input-output data and detailed employment data for Belgium for the years 2000 and 2002.
The study identifies the goods and services that most extensively use low skilled labour and determines the direct and indirect use of high skilled labour in the production of ICT goods and services. The third application is to generate qualitative employment multipliers per final demand component, distinguishing exports, investment and household or government and NPISH consumption.
This working paper gives an overview of the Modtrim team’s recent research in the field of Belgian exports and export markets. In the first chapter a new leading indicator is introduced as a supplementary tool to determine a growth profile for Belgium’s potential export markets in the first quarters of the forecasting period. In the second chapter, an attempt is made to improve forecasts of Belgium’s exports by breaking down the model equation into a goods and a services component. Finally, the third chapter reveals that (a lack of) competitiveness is probably not the only reason for the losses of export market share in Belgium and in some of its main trading partners in the past 25 years.
The Federal Planning Bureau presents a world macroeconomic projection for the 2007-2013 period in its August 2007 issue of “The NIME Outlook for the World Economy”.
This paper provides a rough estimate for Belgium of the proportion of service jobs at risk of being offshored in the wake of ICT-developments, and compares the results for Belgium with results for the EU15 and the US. Occupational employment data from the Labour Force Survey are used to produce this estimate by identifying service jobs that could possibly be offshored due to ICT-enabled tradability. The results show that the share of such jobs is lower for Belgium than for the EU15 or the US, but that there is an upward trend in this share over the period 1993 to 2005. Industry-level data and a shift-and-share analysis are used to explain the results.
The Belgian Federal Planning Bureau presents its new 2007-2013 macroeconomic outlook for the world in the January 2007 edition of “The NIME Outlook for the World Economy”.
After four years of good and faithful service, it was about time to update our Internet website. If you click on www.plan.be you will notice that it is done. This new version stands out by:
a new graphic design for greater visual comfort;
a thematic navigation bar: in the new site, each theme studied by the Federal Planning Bureau is presented in the form of a mini-site. This way, all information available on that specific theme (publications, databases, press releases) can be grouped together, and, more importantly, it is more easily accessible.
a RSS feed: when you register for the RSS feed, you are informed of all current events at the Federal Planning Bureau. The RSS feed lets you know when new content (new publication, press release, vacancies, etc.) is added on the website.
All these innovations will provide our visitors with more and more easily accessible information. Therefore, we kindly invite you to discover this new tool and, if you feel like it, to send us your comments.
