OCFEB research programme


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Title OCFEB research programme
Period 12 / 1991 - unknown
Status Completed
Research number OND1280924


OCFEB is the Dutch acronym of Research Centre for Economic Policy. Its aimis to conduct both theoretic and applied research, oriented towards policymaking. This implies that research results are meant to reach both the academicworld as well as the practice of economic policy making. It also means thatOCFEB values both publications of high academic standards as well aspublications that are more directly oriented towards day-to-day practice ofeconomic policy. The latter may take the form of research reports or articlesin non-refereed journals, mainly in the Dutch language.The orientationtowards economic policy making is also reflected in OCFEB's research programme.The programme covers six themes, which are described in shortbelow.Subprogramme 1: Markets and competitionIn the past decade, economicpolicy in most OECD-countries aimed at restrengthening the private sector. Inthe Netherlands much effort was done to reduce the size of the public sector,to privatize public enterprises, to remove distorting regulations, and tosecure fair competition. Since its foundation in 1991, OCFEB always stronglyemphasized the relevance of these topics. They are not only reflected in thecurrent subprogramme "Markets and competition", but also play a role in theother five subprogrammes. This subprogramme evaluates policy measures tointroduce or to improve competition, and tries to use the lessons learnt forfuture policy design.Sector studies are an important part of thesubprogramme, regarding both the public and the private domain. Both therealized effects of measures to improve competition as well as furtherpossibilities for competition policy are studied. Comparative as well as(general equilibrium) modeling methods are used. Moreover, several otheraspects of market functioning are studied, such as the effects of differentforms of deregulation and privatization. Finally, effort is made to apply theresults of research findings to sectors where market elements until now havebeen scant or even absent.Subprogramme 2: Environmental economicsIn thissubprogramme environmental issues are approached from the economic point ofview. In particular, four topics are studied.First, the question is addressedwhether the introduction of environmentally oriented taxes might yield a"double dividend". The introduction of a "green tax" in itself counterbalancesnegative external effects. The idea of a double dividend is that such a policymight have an additional positive effect on welfare, because the receipts ofthe green tax create room for lowering other, distortionary taxes. Especiallylowering wage taxes might result in an additional welfare gain. This topic isstudied by means of general equilibrium analysis.Second, this subprogrammestudies the relationship between economic growth and environmental damage. Inparticular, research is done on the so-called Environmental Kuznets Curvehypothesis. This hypothesis states that an inverted U-shaped relationshipexists between economic performance and environmental quality, suggesting thatafter some threshold a growing economy would cause smaller pollution.Third,the possible relationship between environmental policy and technology choice isexamined. Environmental policy influences the opportunities and constraintsunder which firms operate. The focus of this research theme is on the dynamiceffects of environmental policy, i.a. on the environmental efficiency ofcapital goods, on the sector structure, and on employment. Part of thisresearch is carried out in connection with the NWO-programme "Environmentalpolicy, economic reform, and endogeneous technology" (see also under 5:Research input etc.).Finally, the choice of environmental policy instrumentsis studied, especially tradeable permits, environmental taxation, and publicprivate partnership. The emphasis here is on instruments that counterbalancemarket failures without introducing new distortions.Subprogramme 3: Knowledgeand innovationThis subprogramme concentrates on the relationship betweenknowledge, and research and development on the one hand, and innovation andeconomic growth on the other. As a result of market failures (e.g. nonexcludability of knowledge, uncertainty, and externalities), firms tend toinvest less in R&D than is socially optimal. Therefore, attention is given tothe question how government may stimulate investment in R&D, how R&D influencesmarket and sector structure, how endogeneous technology translates itself intogrowth, and how industrial and education policy might contribute to economicdevelopment.Subprogramme 4: European integrationThe enlargement of theEuropean Union (EU) and the realization of the Economic and Monetary Union(EMU) present a multitude of challenges and problems for the member countries.Some of these are addressed in this subprogramme.First, attention is paid tothe question of co-ordination versus co-operation between EU member states andthe EU in the field of taxation. Studies are done on both the corporate and thepersonal income tax, as well as the VAT.A second research theme focusses onthe role of fiscal policy in a monetary union. Much effort is done to modelwage formation, tax incidence, and the effects of fiscal policy in the settingof the Maastricht Treaty and the Stability Pact.The exchange rate stabilityof the euro and its consequences for international policy co-ordination form athird research theme.Recently, also the effects of enlargement of the EU havebeen adopted as a research topic.Subprogramme 5: AgeingLike mostOECD-countries, The Netherlands will face a severe ageing problem in the firsthalf of the 21st century. Ageing will have a strong impact on the size and thecomposition of the labour force and therefore on economic development.Moreover, the growing number of aged will exercise an upward pressure ongovernment expenditure (e.g. unfunded pensions, health care). This subprogrammetries to model the consequences of ageing, using a dynamic general equilibriummodel with overlapping generations. The model is capable of describingtransition paths for a large number of scenarios and policy measures. The modeldescribes imperfect markets, i.a. the labour market. It is called IMAGE, whichis short for "Imperfect Markets and Ageing in General Equilibrium". Part ofthis subprogramme is financed by NWO (project 510-01-0030;"Belastinghervorming, marktwerking en groei in een vergrijzende samenleving",see also under 5: Research input etc.).Subprogramme 6: RedistributionalinstitutionsIncome and wage distributions differ widely across developedcountries, and so do institutions for redistribution. Redistributionalinstitutions that are suboptimal in a first best world, may be efficient in asecond best world. This so-called "efficient redistribution hypothesis"(Becker) leads to a number of questions, two of which are addressed in thissubprogrogramme.First, the contribution of various institutions ofredistribution is analysed. Among these institutions are subsidies toeducation, income tax, social insurance, and minimum wages.Second, it isanalysed to what extent the outcomes of these institutions are efficient in asecond best world (constrained Pareto efficient).This subprogramme not onlyyields an empirical decomposition of cross-country differences in incomedispersion to causes and institutions, but also a theoretical analysis of theefficiency trade-offs in the use of various institutions. Moreover, thepolitical institutions and constitutional arrangements that support thesedifferences in institutions are examined. Finally, the potential consequencesof European integration for the future viability of these institutions are analysed.

Abstract (NL)

Het OnderzoekCentrum Financieel Economisch Beleid (OCFEB) is op 13 juni1991 opgericht en per 1 september 1991 officieel van start gegaan. Hetressorteert onder de Stichting Instituut Financieel Economisch Beleid (IFEB).Dat is een samenwerkingsverband tussen de Erasmus Universiteit Rotterdam en deministeries van Economische Zaken, Sociale Zaken en Werkgelegenheid enFinanciën. Onder het IFEB valt ook de BeroepsOpleiding Financieel-EconomischBeleidsmedewerker (BOFEB).Het onderzoekprogramma van het OCFEB bestaat uiteen viertal rubrieken, namelijk:* Europese integratie* Milieu eneconomie* Overheidspolitiek* DiversenBinnen de rubriek Europeseintegratie wordt vanuit diverse invalshoeken naar het eenwordingsproces binnenEuropa gekeken. Die eenwording heeft belangrijke consequenties, zowel voor degemeenschap als geheel als voor de afzonderlijke lidstaten.In de rubriekMilieu en economie richt de aandacht zich op de vraagstukken betreffende demogelijkheden en implicaties van milieupolitieke instrumenten voor heteconomisch beleid.In het kader van de rubriek Overheidspolitiek wordenverschillende onder-zoekvragen bezien, waaronder de vraag welkewelvaartsverliezen er optreden bij de herverdeling van inkomens en de vraag hoede bedrijfsvoering van de overheid kan worden verbeterd.Onder de rubriekDiversen zijn onderwerpen samengebracht die niet in één van de drie voorgaandezijn onder te brengen. Aan de orde komen onder meer (overheids)investeringen,sectorale investeringsrelaties en handelsstromen en onvolledige mededinging ende marktwerking in Nederland.Kenmerkend voor het onderzoek binnen het OCFEBis, dat dit onderzoek gericht is op beleidsrelevante vraagstukken. Deresultaten van het onderzoek zullen op zodanige wijze worden gepresenteerd, datzij kunnen worden geconcretiseerd in beleidsaanbevelingen.

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