International Monetary Fund

Displaying 1-40 of 679 results

  • White Papers // Dec 2011

    Employment Protection and Business Cycles in Emerging Economies

    The authors build a small open economy, real business cycle model with labor market frictions to evaluate the role of employment protection in shaping business cycles in emerging economies. The model features matching frictions and an endogenous selection effect by which inefficient jobs are destroyed in recessions. In a quantitative...

    Provided By International Monetary Fund

  • White Papers // Jun 2011

    The Cost Of Volatile Investment In An Emerging Economy

    The author measures the welfare gains from eliminating fluctuations in investment in an emerging economy such as Argentina. The estimated welfare effects are an order of magnitude higher than those for the US and arise with moderate degrees of diminishing returns to investment. This paper calculates the welfare costs associated...

    Provided By International Monetary Fund

  • White Papers // Jun 2011

    The Role Of Monetary Policy In Turkey During The Global Financial Crisis

    Turkey is an interesting case study because it was one of the hardest hit emerging economies by the global financial crisis, with a year-over-year contraction of 15 percent during the first quarter of 2009. At the same time, anticipating the fallout from the crisis, the Central Bank of the Republic...

    Provided By International Monetary Fund

  • White Papers // May 2011

    Precautionary Savings And Global Imbalances In World General Equilibrium

    In this paper, the authors assess the implications of precautionary savings for global imbalances by considering a world economy model composed by the US, the Euro Area, Japan, China, oil-exporting countries, and the rest of the world. These areas are assumed to differ only with respect to GDP volatility which...

    Provided By International Monetary Fund

  • White Papers // May 2011

    Sectoral Composition Of Foreign Direct Investment And External Vulnerability In Eastern Europe

    In the run up to the global crisis, countries in Central Eastern and Southeastern Europe attracted large capital inflows and some of them built up large external imbalances. This paper investigates whether these imbalances are linked to the sectoral composition of FDI. It shows that FDI in the tradable sectors...

    Provided By International Monetary Fund

  • White Papers // May 2011

    Did Export Diversification Soften The Impact Of The Global Financial Crisis?

    This paper considers the role of export diversification in determining trade outcomes during the global financial crisis. The impact of export diversification (or concentration) is measured by assessing three different dimensions of specialization. First, concentration by geographic destination is considered; that is, whether the bulk of exports from a country...

    Provided By International Monetary Fund

  • White Papers // May 2011

    Impact Of The Global Crisis On Banking Sector Soundness In Asian Low-Income Countries

    The paper takes stock of the impact of the global financial crisis that began in late 2007 on banking sectors of Asian low-income countries, by exploring bank-level data provided by Bankscope. The paper examines three key channels of possible crisis spillovers: exposures to valuation changes of mark-to-market financial assets, a...

    Provided By International Monetary Fund

  • White Papers // Apr 2011

    Toward Inflation Targeting In Sri Lanka

    This paper develops a practical model-based Forecasting and Policy Analysis System (FPAS) to support a transition to an inflation forecast targeting regime in Sri Lanka. The FPAS model provides a relatively good forecast for inflation and a framework to evaluate policy trade-offs. The model simulations suggest that an open-economy inflation...

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  • White Papers // Apr 2011

    Evidence On Productivity, Comparative Advantage, And Networks In The Export Performance Of Firms

    This paper tests the effect of comparative advantage, size, and networking on the firm probability of exporting. The closest theoretical framework is the one of Bernard, Redding, and Schott (2007), with firm heterogeneity across countries and industries. The authors use a recently assembled multi-country multi-industry firm level dataset, and construct...

    Provided By International Monetary Fund

  • White Papers // Apr 2011

    ICT, Financial Inclusion, And Growth: Evidence From African Countries

    This paper studies the impact of Information and Communication Technologies (ICT), especially mobile phone rollout, on economic growth in a sample of African countries from 1988 to 2007. Further, the authors investigate whether financial inclusion is one of the channels through which mobile phone development influences economic growth. In estimating...

    Provided By International Monetary Fund

  • White Papers // Apr 2011

    Reconsidering The Role Of Food Prices In Inflation

    Food prices are generally excluded from measures of inflation most closely watched by policymakers due either to their transitory nature or their higher volatility. However, in lower income countries, food price inflation is not only more volatile but also on average higher than nonfood inflation. Food inflation is also in...

    Provided By International Monetary Fund

  • White Papers // Mar 2011

    Modeling Inflation In Chad

    This paper examines the determinants of inflation in Chad using quarterly data from 1983:Q1 to 2009:Q3. The analysis is based on a single-equation model, completed by a structural vector auto regression model to capture inflation persistence. The results show that the main determinants of inflation in Chad are rainfall, foreign...

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  • White Papers // Mar 2011

    Fiscal Expectations Under The Stability And Growth Pact: Evidence From Survey Data

    The paper uses survey data to analyze whether financial market expectations on government budget deficits changed in France, Germany, Italy, and the United Kingdom during the period of the Stability and Growth Pact (SGP). The authors' findings indicate that accuracy of financial expert deficit forecasts increased in France. Convergence between...

    Provided By International Monetary Fund

  • White Papers // Feb 2011

    New Indicators For Tracking Growth In Real Time

    The authors develop monthly indicators for tracking growth in 32 advanced and emerging-market economies. They test the historical performance of the indicators and find that they do a good job at describing the business cycle. In a recursive out-of-sample forecasting exercise, they find that the indicators generally produce good GDP...

    Provided By International Monetary Fund

  • White Papers // Feb 2011

    Global Shocks And Their Impact On Low-Income Countries: Lessons From The Global Financial Crisis

    This paper investigates the short-run effects of the 2007 - 09 global financial crisis on growth in (mainly non-fuel exporting) Low-Income Countries (LICs). Four conclusions stand out. First, for many individual LICs, 2009 was not extraordinarily calamitous; however, aggregate LIC output declined sharply because LICs were unusually synchronized. Second, the...

    Provided By International Monetary Fund

  • White Papers // Feb 2011

    Overborrowing, Financial Crises And 'Macroprudential' Policy

    This paper studies over borrowing, financial crises and macro-prudential policy in an equilibrium model of business cycles and asset prices with collateral constraints. Agents in a decentralized competitive equilibrium do not internalize the negative effects of asset fire-sales on the value of other agents' assets compared with a constrained social...

    Provided By International Monetary Fund

  • White Papers // Jan 2011

    Investment Objectives Of Sovereign Wealth Funds-A Shifting Paradigm

    While SWF investment objectives to some extent reflect inherent characteristics, notable differences in Strategic Asset Allocation (SAA) exist even amongst SWFs of similar types. Even so, this paper shows that the global crisis may have changed SWF's asset allocations in ways that may not be ideal or justified in all...

    Provided By International Monetary Fund

  • White Papers // Jan 2011

    Trade And Trade Finance In The 2008-09 Financial Crisis

    Global merchandise trade sharply declined in late 2008 and early 2009, and some press and financial market reports assigned a large role for the decline to trade finance. However, the available evidence suggests that shocks to trade finance were not the major factor in the decline in trade. Surveys of...

    Provided By International Monetary Fund

  • White Papers // Jan 2011

    To Fire Or To Hoard? Explaining Japan's Labor Market Response In The Great Recession

    The Great Recession pushed Japan's unemployment rate to historic highs, but the increase has been small by international standards and small relative to the large output shock. This paper explores Japan's cyclical labor market response to the global financial crisis. These findings suggest that the employment responsiveness has been historically...

    Provided By International Monetary Fund

  • White Papers // Jan 2011

    Interpreting Currency Movements During The Crisis: What's The Role Of Interest Rate Differentials?

    Using an adaptation of the Uncovered Interest Parity (UIP) condition, this paper analyzes the drivers behind the large, symmetric exchange rate swings observed during the financial crisis of 2008 - 2010. Employing a Nelson-Siegel model, the authors estimate yield curves and decompose the exchange rate movements into changes they attribute...

    Provided By International Monetary Fund

  • White Papers // Jan 2011

    The Impact Of Fiscal Consolidation And Structural Reforms On Growth In Japan

    With Japan's public debt reaching historical levels, the need for fiscal consolidation and structural reforms have increased. As fiscal consolidation will require a sustained and large adjustment in the fiscal balance, its growth effect is a concern particularly for the short run. This paper uses the IMF's Global Integrated Monetary...

    Provided By International Monetary Fund

  • White Papers // Jan 2011

    How Does Political Instability Affect Economic Growth?

    This paper is to empirically determine the effects of political instability on economic growth. Using the system-GMM estimator for linear dynamic panel data models on a sample covering up to 169 countries, and 5-year periods from 1960 to 2004, the author find that higher degrees of political instability are associated...

    Provided By International Monetary Fund

  • White Papers // Jan 2011

    The Spanish Labor Market In A Cross-Country Perspective

    The Spanish labor market is not working: the unemployment rate is structurally very high; wages are not very responsive to labor market conditions, causing a high cyclicality of unemployment; and the labor market is highly dual. Compared with the EU15, Spanish labor market institutions and policies stand out by the...

    Provided By International Monetary Fund

  • White Papers // Jan 2011

    What Is Driving Financial De-dollarization In Latin America?

    In the last decade, a group of Latin American countries (Bolivia, Paraguay, Peru, and Uruguay) experienced a gradual, yet sustained decline in financial dollarization. This paper documents the stylized facts and uses a standard VAR approach to examine the drivers of both deposit and credit de-dollarization. It finds that the...

    Provided By International Monetary Fund

  • White Papers // Jan 2011

    Capital Flows, Exchange Rate Flexibility, And The Real Exchange Rate

    This paper analyzes the impact of capital inflows and exchange rate flexibility on the real exchange rate in developing countries based on panel co-integration techniques. The results show that public and private flows are associated with a real exchange rate appreciation. Among private flows, portfolio investment has the highest appreciation...

    Provided By International Monetary Fund

  • White Papers // Jan 2011

    The Effects Of Housing Prices And Monetary Policy In A Currency Union

    The recent boom-and-bust cycle in housing prices has refreshed the debate on the drivers of housing cycles as well as the appropriate policy response. The authors analyze the case of Spain, where housing prices have soared since it joined the EMU. They present evidence based on a VAR model, and...

    Provided By International Monetary Fund

  • White Papers // Jan 2011

    Monetary Policy Transmission In An Emerging Market Setting

    Some emerging economies have a relatively ineffective monetary policy transmission owing to weaknesses in the domestic financial system and the presence of a large and segmented informal sector. At the same time, small open economies can have a substantial monetary policy transmission through the exchange rate channel. In order to...

    Provided By International Monetary Fund

  • White Papers // Jan 2011

    Asian Financial Integration: Trends And Interruptions

    The paper compares trends in financial integration within Asia with those in industrialized countries and other regional groups. Declines in cross-country dispersion in equity returns and interest rates suggest increased Asian integration, with the process interrupted by crises and global volatility. Cross-border equity and bond holdings have also increased, but...

    Provided By International Monetary Fund

  • White Papers // Jan 2011

    How Does Trade Evolve In The Aftermath Of Financial Crises?

    The authors analyze trade dynamics following past episodes of financial crises. Using an augmented gravity model and 179 crisis episodes from 1970-2009, They find that there is a sharp decline in a country's imports in the year following a crisis - 19 percent, on average - and this decline is...

    Provided By International Monetary Fund

  • White Papers // Jan 2011

    A Barrel Of Oil Or A Bottle Of Wine: How Do Global Growth Dynamics Affect Commodity Prices?

    This paper investigates the causes of extreme fluctuations in commodity prices from 1990 to 2010. Analyzing two very distinct commodities - crude oil and fine wine, the authors find that macroeconomic factors are the main determinants of commodity prices. Although supply constraints have the expected effect, aggregate demand growth is...

    Provided By International Monetary Fund

  • White Papers // Jan 2011

    Government Debt Issuance In The Euro Area: The Impact Of The Financial Crisis

    This paper documents and analyzes crisis-related changes in government debt issuance practices in the 16 euro zone countries and Denmark. Using a newly constructed database on primary market debt issuance during 2007 - 09, the authors find evidence of a shift away from pre-crisis standards of best funding practices -...

    Provided By International Monetary Fund

  • White Papers // Jan 2011

    Armenia: An Assessment Of The Real Exchange Rate And Competitiveness

    This paper uses a range of different methodologies to estimate the equilibrium real exchange rate in Armenia with both single-country and panel estimation techniques. The authors estimate a country specific autoregressive distributed lag model and then proceed with the estimation of a co-integrated panel consisting of transition economies in Europe...

    Provided By International Monetary Fund

  • White Papers // Dec 2010

    Lessons From The Financial Crisis On Modelling Systemic And Sovereign Risk

    The complex interactions, spillovers and feedbacks of the global crisis that began in 2007 remind us how important it is to improve the authors' analyzes and modelling of financial crises and sovereign risk. This paper provides a broad framework to examine how vulnerabilities can build up and suddenly erupt in...

    Provided By International Monetary Fund

  • White Papers // Dec 2010

    When And Why Worry About Real Exchange Rate Appreciation?

    The authors review the literature on Dutch disease, and document that shocks that trigger foreign exchange inflows (such as natural resource booms, surges in foreign aid, remittances, or capital inflows) appreciate the real exchange rate, generate factor reallocation, and reduce manufacturing output and net exports. They also observe that real...

    Provided By International Monetary Fund

  • White Papers // Dec 2010

    What Caused The Global Financial Crisis?- Evidence On The Drivers Of Financial Imbalances 1999?2007

    This paper investigates empirically the drivers of financial imbalances ahead of the global financial crisis. Three factors may have contributed to the build-up of financial imbalances: rising global imbalances (capital flows), monetary policy that might have been too loose, inadequate supervision and regulation. Panel data regressions are performed for OECD...

    Provided By International Monetary Fund

  • White Papers // Dec 2010

    Into The Great Unknown: Stress Testing With Weak Data

    Stress testing has become the risk management tool du jour in the wake of the global financial crisis. In countries where the information reported by financial institutions is considered to be of sufficiently good quality, and supervisory and regulatory standards are high, stress tests can be of significant value. In...

    Provided By International Monetary Fund

  • White Papers // Dec 2010

    Determinants Of Emerging Market Sovereign Bond Spreads: Fundamentals Vs Financial Stress

    This paper analyses the determinants of emerging market sovereign bond spreads by examining the short and long-run effects of fundamental (macroeconomic) and temporary (financial market) factors on these spreads. During the current global financial and economic crisis, sovereign bond spreads widened dramatically for both developed and emerging market economies. This...

    Provided By International Monetary Fund

  • White Papers // Dec 2010

    Managing Public Debt And Its Financial Stability Implications

    This paper explores the relationship between the level and management of public debt and financial stability, and explains the channels through which the two are interlinked. It suggests that the broader implications of a debt management strategy and its implementation should be carefully analyzed by debt managers and policy makers...

    Provided By International Monetary Fund

  • White Papers // Dec 2010

    U.S. Monetary Shocks And Global Stock Prices

    This paper studies how U.S. monetary policy affects global stock prices. The authors find that global stock prices respond strongly to changes in U.S. interest rate policy, with stock prices increasing (decreasing) following unexpected monetary loosening (tightening). This impact is more pronounced for sectors that depend on external financing, and...

    Provided By International Monetary Fund

  • White Papers // Dec 2010

    Can Covered Bonds Resuscitate Residential Mortgage Finance In The United States?

    This paper considers the case for mortgage covered bonds as an alternative to the originate-to-distribute mortgage funding model. It argues that the economic incentives provided to market participants under the covered bonds model are less susceptible to moral hazard even while retaining the key benefits of securitization such as capital...

    Provided By International Monetary Fund

  • White Papers // Jun 2011

    The Role Of Monetary Policy In Turkey During The Global Financial Crisis

    Turkey is an interesting case study because it was one of the hardest hit emerging economies by the global financial crisis, with a year-over-year contraction of 15 percent during the first quarter of 2009. At the same time, anticipating the fallout from the crisis, the Central Bank of the Republic...

    Provided By International Monetary Fund

  • White Papers // May 2011

    Precautionary Savings And Global Imbalances In World General Equilibrium

    In this paper, the authors assess the implications of precautionary savings for global imbalances by considering a world economy model composed by the US, the Euro Area, Japan, China, oil-exporting countries, and the rest of the world. These areas are assumed to differ only with respect to GDP volatility which...

    Provided By International Monetary Fund

  • White Papers // May 2011

    Sectoral Composition Of Foreign Direct Investment And External Vulnerability In Eastern Europe

    In the run up to the global crisis, countries in Central Eastern and Southeastern Europe attracted large capital inflows and some of them built up large external imbalances. This paper investigates whether these imbalances are linked to the sectoral composition of FDI. It shows that FDI in the tradable sectors...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    Lifting Euro Area Growth: Priorities For Structural Reforms And Governance

    To live up to its growth potential and secure its inclusive social model, the euro area must make better use of its available labor. In the aftermath of the crisis, boosting growth is essential to prevent unemployment from becoming a long-term problem and to facilitate the return to fiscal sustainability....

    Provided By International Monetary Fund

  • White Papers // Dec 2010

    Lessons From The Financial Crisis On Modelling Systemic And Sovereign Risk

    The complex interactions, spillovers and feedbacks of the global crisis that began in 2007 remind us how important it is to improve the authors' analyzes and modelling of financial crises and sovereign risk. This paper provides a broad framework to examine how vulnerabilities can build up and suddenly erupt in...

    Provided By International Monetary Fund

  • White Papers // Dec 2008

    Improving The Investment Performance Of Public Pension Funds: Lessons For The Social Insurance Fund Of Cyprus From The Experience Of Four OECD Countries

    Public pension funds have the potential to benefit from low operating costs because they enjoy economies of scale and avoid large marketing costs. But this important advantage has in most countries been dissipated by poor investment performance. The latter has been attributed to a weak governance structure, lack of independence...

    Provided By International Monetary Fund

  • White Papers // Oct 2009

    Optimal Policy With Occasionally Binding Credit Constraints

    The authors study optimal policy in a small-open economy in which a foreign borrowing constraint binds occasionally. In the model that they set up scope for policy arises because of the pecuniary externality stemming from the presence of a key relative price in the borrowing constraint. The objective of the...

    Provided By International Monetary Fund

  • White Papers // Jun 2011

    The Cost Of Volatile Investment In An Emerging Economy

    The author measures the welfare gains from eliminating fluctuations in investment in an emerging economy such as Argentina. The estimated welfare effects are an order of magnitude higher than those for the US and arise with moderate degrees of diminishing returns to investment. This paper calculates the welfare costs associated...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    Do Credit Shocks Matter? A Global Perspective

    This paper examines the importance of credit market shocks in driving global business cycles over the period 1988:1-2009:4. The authors first estimate common components in various macroeconomic and financial variables of the G-7 countries. They then evaluate the role played by credit market shocks using a series of VAR models....

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    Government Involvement In Corporate Debt Restructuring: Case Studies From The Great Recession

    The paper examines recent episodes of government involvement in corporate debt restructurings. It argues that corporate debt restructuring is an important step toward recovery from a financial crisis. The authors then discuss the rationale for, and modalities of, the state intervention in corporate debt workouts through reviewing six countries with...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    On The Estimation Of Term Structure Models and An Application To the United States

    This paper discusses the estimation of models of the term structure of interest rates. After reviewing the term structure models, specifically the Nelson-Siegel Model and Affine Term-Structure Model, this paper estimates the terms structure of Treasury bond yields for the United States with pre-crisis data. This paper uses a software...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    Bilateral Financial Linkages And Global Imbalances: A View On The Eve Of The Financial Crisis

    The authors present a novel and comprehensive dataset of bilateral gross and net external positions in various financial instruments for the main advanced and emerging economies and regions, designed to improve the understanding of cross-border financial linkages. The data show no strong correspondence between country or region pairs with the...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    Slowdown Of Credit Flows In Jordan In The Wake Of The Global Financial Crisis: Supply Or Demand Driven?

    This paper estimates a disequilibrium model of credit supply and demand to evaluate the relative role of these factors in the slowdown of credit flows in the Jordanian economy in the wake of the global financial crisis. The empirical analysis suggests that the credit stagnation is mainly driven by the...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    Determinants Of The Foreign Exchange Risk Premium In Gulf Cooperation Council Countries

    This paper analyzes macroeconomic determinants of the foreign exchange risk premium in two Gulf Cooperation Council (GCC) countries that peg their currencies to the U.S. dollar: Saudi Arabia and the United Arab Emirates. The analysis is based on the stochastic discount factor methodology, which imposes a no arbitrage condition on...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    Should Advanced Countries Adopt A Fiscal Responsibility Law?

    Fiscal Responsibility Laws (FRLs) appear to be more popular in middle-income countries than advanced countries, even though their success is limited. The reasons why few advanced countries have a FRL include: the existing legal framework for the budget system is adequate; supranational rules and political agreements in EU countries; failed...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    IMF Applications Of Purchasing Power Parity Estimates

    The IMF's main uses of the International Comparison Program's (ICP) estimates of Purchasing Power Parity (PPP)-adjusted Gross Domestic Product (GDP) are as an element of the formula used to help guide decisions on its members' quotas and in the World Economic Outlook (WEO). The paper outlines these uses and considers...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    Post-Crisis Fiscal Policy Priorities For The ASEAN-5

    This paper focuses on post-crisis fiscal priorities in the ASEAN-5 economies - Indonesia, Malaysia, Philippines, Singapore and Thailand. Sound economic fundamentals and timely and forceful policy responses to the crisis, including fiscal stimulus, contributed to rapid economic recovery in the ASEAN-5. As growth rebounds, these economies are beginning to identify,...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    Riding The Roller Coaster: Fiscal Policies Of Nonrenewable Resource Exporters In Latin America And The Caribbean

    This paper analyzes recent fiscal policies of nonrenewable resource exporting countries in Latin America and the Caribbean in the context of sharp swings in resource prices. Fiscal policies were predominantly procyclical during the boom period 2003-08 but to significantly differing degrees within the sample. Countries that pursued more conservative fiscal...

    Provided By International Monetary Fund

  • White Papers // Oct 2010

    Assessing The Risk Of Private Sector Debt Overhang In The Baltic Countries

    Between 2000 and 2007 nonfinancial private sector credit expanded rapidly in the Baltic countries, resulting in a non-negligible build-up of debt. Could this legacy debt hold back the economic recovery of the region? This paper analyzes the setting in each of the three countries and, with the help of an...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    Asset Prices In Affine Real Business Cycle Models

    Recursive preferences and time variation in means and volatilities have become important features of consumption-based asset pricing literature. The introduction of these features into real business cycle (RBC) models has allowed the study of the joint behavior of real and financial variables along the business cycle. As the analysis of...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    Structural Breaks In Fiscal Performance: Did Fiscal Responsibility Laws Have Anything To Do With Them?

    In recent years, many countries have adopted Fiscal Responsibility Laws to strengthen fiscal institutions and promote fiscal discipline in a credible, predictable and transparent manner. Still, results on the effectiveness of these laws remain tentative. In this paper, the authors test empirically whether fiscal performance, measured as the level of...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    Bankers Without Borders? Implications Of Ring-Fencing For European Cross-Border Banks

    This paper presents a stylized analysis of the effects of ring-fencing (i.e., different restrictions on cross-border transfers of excess profits and/or capital between a parent bank and its subsidiaries located in different jurisdictions) on cross-border banks. Using a sample of 25 large European banking groups with subsidiaries in Central, Eastern...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    A Historical Public Debt Database

    This paper describes the compilation of the first truly comprehensive database on gross government debt-to-GDP ratios, covering nearly the entire IMF membership (174 countries) and spanning an exceptionally long time period. The database was constructed by bringing together a number of other datasets and information from original sources. For the...

    Provided By International Monetary Fund

  • White Papers // Oct 2010

    After The Crisis: Assessing The Damage In Italy

    Italy's deep-rooted structural problems resulted in an unsatisfactory productivity performance and a dismal growth over the last 15 years. The global financial crisis has exacerbated these long-standing weaknesses, taking a heavy toll on Italy's economy. With output back to its end- 2001 level, Italy's output losses associated with the crisis...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    Monetary And Fiscal Policy Interactions In The Post-war U.S.

    A New Keynesian model allowing for an Active Monetary and Passive Fiscal policy (AMPF) regime and a Passive Monetary and Active Fiscal policy (PMAF) regime is fit to various U.S. samples from 1955 to 2007. Data in the pre-Volcker periods strongly prefer an AMPF regime, but the estimation is not...

    Provided By International Monetary Fund

  • White Papers // Oct 2010

    Crisis And Recovery: Role Of The Exchange Rate Regime In Emerging Market Countries

    This paper examines the role of the exchange rate regime in explaining how emerging market economies fared in the recent global financial crisis, particularly in terms of output losses and growth resilience. After controlling for regime switches during the crisis, using alternative definitions for pegs, and taking account of other...

    Provided By International Monetary Fund

  • White Papers // Oct 2010

    On The Distributive Effects Of Terms Of Trade Shocks: The Role Of Non-tradable Goods

    The authors introduce non-tradable goods to the Heckscher-Ohlin-Samuelson (HOS) model to study the distributive effects of terms of trade shocks. They show that the employment of resources in activities producing exclusively for the local market induces a crucial association between domestic spending and factor demand and prices, which is absent...

    Provided By International Monetary Fund

  • White Papers // Oct 2010

    Business Cycle Fluctuations, Large Shocks, And Development Aid: New Evidence

    The authors examine the cyclical properties of development aid using bilateral data for 22 donors and over 100 recipients during 1970‒2005. The authors find that bilateral aid flows are on average procyclical with respect to business cycles in donor and recipient countries. However, they become countercyclical when recipient countries face...

    Provided By International Monetary Fund

  • White Papers // Dec 2010

    When And Why Worry About Real Exchange Rate Appreciation?

    The authors review the literature on Dutch disease, and document that shocks that trigger foreign exchange inflows (such as natural resource booms, surges in foreign aid, remittances, or capital inflows) appreciate the real exchange rate, generate factor reallocation, and reduce manufacturing output and net exports. They also observe that real...

    Provided By International Monetary Fund

  • White Papers // Dec 2010

    What Caused The Global Financial Crisis?- Evidence On The Drivers Of Financial Imbalances 1999?2007

    This paper investigates empirically the drivers of financial imbalances ahead of the global financial crisis. Three factors may have contributed to the build-up of financial imbalances: rising global imbalances (capital flows), monetary policy that might have been too loose, inadequate supervision and regulation. Panel data regressions are performed for OECD...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    The Transmission Mechanism In Armenia: New Evidence From A Regime Switching VAR Analysis

    The introduction of inflation targeting in 2006, together with important economic developments such as dedollarization, marked the beginning of a new macroeconomic framework in Armenia, which is likely to have changed the effectiveness of monetary policy. This paper is the first attempt to analyze whether the transmission mechanism in Armenia...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    Export Tax And Pricing Power: Two Hypotheses On The Cocoa Market In C?te D'Ivoire

    The paper models export taxation of a primary commodity in a large country under two hypotheses about the structure of its export market. The first is perfect competition among exporters, where there is an indefinite number of buyers of the local product and at least a partial pass-through of international...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    Inequality, Leverage And Crises

    The paper studies how high leverage and crises can arise as a result of changes in the income distribution. Empirically, the periods 1920-1929 and 1983-2008 both exhibited a large increase in the income share of the rich, a large increase in leverage for the remainder, and an eventual financial and...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    Growth And Crisis, Unavoidable Connection?

    In emerging economies periods of rapid growth and large capital inflows can be followed by sudden stops and financial crises. The author shows that, in the presence of financial markets imperfections, a simple modification of a neoclassical growth model can account for these facts. The author studies a growth model...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    Financial Innovation And Risk, The Role Of Information

    Financial innovation has increased diversification opportunities and lowered investment costs, but has not reduced the relative cost of active (informed) investment strategies relative to passive (less informed) strategies. What are the consequences? The author studies an economy with linear production technologies, some more risky than others. Investors can use low...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    Private Sector Consumption And Government Consumption And Debt In Advanced Economies: An Empirical Study

    This paper explores the hypothesis that the propensity to consume out of income varies in a non-linear fashion with fiscal variables, and in particular with government debt per capita. Using data from eighteen OECD countries the paper examines whether there is any empirical evidence to support the hypothesis that households...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    A New Index Of Currency Mismatch And Systemic Risk

    This paper constructs a new measure of currency mismatch in the banking sector that controls for bank lending to unhedged borrowers. This measure explicitly takes into account the indirect exchange rate risk that banks undertake when they lend to borrowers that will not be able to repay in the event...

    Provided By International Monetary Fund

  • White Papers // Nov 2010

    Emerging Asia's Impact On Australian Growth: Some Insights From GEM

    Over the last decade, GDP growth in emerging Asia was roughly twice as fast as average world growth. The IMF's Global Economy Model (GEM) is used to estimate the impact that emerging Asia's growth differential has had on Australia. The simulation analysis, which replicates some key features from the last...

    Provided By International Monetary Fund

  • White Papers // Oct 2010

    A Perspective On Predicting Currency Crises

    Currency crises are difficult to predict. It could be that the authors are choosing the wrong variables or using the wrong models or adopting measurement techniques not up to the task. The authors set up a Monte Carlo experiment designed to evaluate the measurement techniques. In this study, the methods...

    Provided By International Monetary Fund

  • White Papers // Oct 2010

    The Euro's Effect On Trade Imbalances

    When does trade become a one-way relationship? The authors study bilateral trade balances for a sample of 18 European countries over the period from 1948 through 2008. They find that, with the introduction of the euro, trade imbalances among euro area members widened considerably, even after allowing for permanent asymmetries...

    Provided By International Monetary Fund