Front Matter Page
© 2005 International Monetary Fund
July 2005
IMF Country Report No. 05/225
Kingdom of the Netherlands—Netherlands: Selected Issues
This Selected Issues paper for the Kingdom of the Netherlands—Netherlands was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on June 6, 2005. The views expressed in this document are those of the staff team and do not necessarily reflect the views of the government of the Kingdom of the Netherlands—Netherlands or the Executive Board of the IMF.
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Front Matter Page
INTERNATIONAL MONETARY FUND
KINGDOM OF THE NETHERLANDS—NETHERLANDS
Selected Issues
Prepared by David Hofman and Francisco Nadal De Simone (both EUR) and Mark Walsh (ICM)
Approved by the European Department
June 6, 2005
Contents
I. The External Competitiveness of the Dutch Economy: A Short Note on Evidence from both Aggregate and Disaggregate Data
A. Overview
B. Recent Developments in Competitiveness
C. Aggregate Trade Data
Figures
I.1 Real Exchange Rate
I.2 Dutch Export Share in World Market
Tables
I.1 Unit Labor Costs in the Netherlands and its Competitors
I.2 Dutch Unit Labor Costs, Manufacturing, 2001–06
I.3 CMS Analysis of Exports Changes
II. Long-Run Household Consumption Equilibrium in the Netherlands
A. Overview and Introduction
B. The Standard Consumption Model
C. Data and Data Issues
D. The Long-Run Elasticities of the Model
E. Concluding Remarks
References
Figures
II.1 Consumption, Income, and Net Worth
II.2 Unemployment Rate
II.3 Interest Rates and Stock Market Returns
II.4 Stock Market Price Index
II.5 Real House Prices
II.6 Real Household Net Worth/Income
II.7 Consumption and Estimated Long-Run Consumption
Tables
II.1 Elliot, Rothenberg, and Stock Test for Unit Roots
II.2 Johansen-Juselius Maximum Likelihood Test for Cointegration
Appendix
II.1 Detailed Econometric Results
III. House Prices in the Netherlands
A. Introduction
B. Brief Review of the Literature
C. The Conceptual Framework
D. The Data
E. Econometric Issues and Hypothesis Tests
F. Empirical Results
G. Concluding Remarks
References
Figures
III.1 Ratio of House Prices over Disposable Income 1970:Q1–2004:Q2
III.2 Price-Rent Ratio, 1970:Q1–2004:Q2
III.3 Real House Prices, 1970:Q1–2004:Q2
III.4 Household Disposable Income and Mortgage Rates, 1970:Q1–2004:Q2
III.5 Actual House Prices Versus Their Long-Run Equilibrium, 1970:Q1–2004:Q2
Tables
III.1 Unit Root Tests
III.2 Lag Order Selection Criteria
III.3 Johansen Cointegration Test
III.4 Estimation Results
IV. Budgetary Policymaking in the Netherlands
A. Introduction
B. Fiscal Policy Before 1994
C. Medium-Term Expenditure Framework
D. Role of the CPB
E. Performance Budgeting
F. Summary and Conclusions
References
Figures
IV.1 Expenditure Development, 1999–2003
IV.2 Trends in Public Finances, 1970–2004
V. The Financial Sector in the Netherlands: A Health Check and Progress Report on the FSSA Recommendations
A. Recent Developments
B. FSSA Recommendations
Tables
V.1 Financial System Structure
V.2 Encouraged Financial Soundness Indicators
V.3 Financial Sector Indicators
V.4 Performance of Dutch Pension Funds