International Monetary Fund

Displaying 81-120 of 532 results

  • 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 // Oct 2010

    Deconstructing The International Business Cycle: Why Does A U.S. Sneeze Give The Rest Of The World A Cold?

    The 2008 crisis underscored the interconnectedness of the international business cycle, with U.S. shocks leading to the largest global slowdown since the 1930s. The authors estimate spillover effects across major advanced country regions in a Structural VAR (SVAR) using pre-crisis data. This new method freely estimates the contemporaneous correlation matrix...

    Provided By International Monetary Fund

  • White Papers // Oct 2010

    Spillovers From Europe Into Morocco And Tunisia

    This paper examines the economic and financial linkages between Morocco and Tunisia and their European partners. Using structural vector auto regressions, the authors find that growth shocks in European partner countries generate significant responses on growth in both Morocco and Tunisia. For Tunisia, exports and, to a much lesser extent,...

    Provided By International Monetary Fund

  • White Papers // Oct 2010

    The Impact Of The Great Recession On Emerging Markets

    This paper examines the impact of the recent global crisis on Emerging Market Economies (EMs). The cross-country analysis shows that the impact of the crisis was more pronounced in those EMs that had initial weaker fundamentals and greater financial and trade linkages. This effect is observed along a number of...

    Provided By International Monetary Fund

  • White Papers // Oct 2010

    Financial Contagion Through Bank Deleveraging: Stylized Facts And Simulations Applied To The Financial Crisis

    The financial crisis has highlighted the importance of various channels of financial contagion across countries. This paper first presents stylized facts of international banking activities during the crisis. It then describes a simple model of financial contagion based on bank balance sheet identities and behavioral assumptions of deleveraging. Cascade effects...

    Provided By International Monetary Fund

  • White Papers // Oct 2010

    International Capital Flows And Development: Financial Openness Matters

    Does capital flow from rich to poor countries? The authors revisit the Lucas paradox and explore the role of capital account restrictions in shaping capital flows at various stages of economic development. They find that, when accounting for the degree of capital account openness, the prediction of the neoclassical theory...

    Provided By International Monetary Fund

  • White Papers // Oct 2010

    Is Social Spending Procyclical?

    This paper studies the cyclical behavior of public spending on health and education in 150 countries during 1987 - 2007. It finds that spending on education and health is procyclical in developing countries and acyclical in developed countries. In addition, education and health expenditures follow an asymmetric pattern in developing...

    Provided By International Monetary Fund

  • White Papers // Oct 2010

    Financial Frictions, Investment, And Institutions

    Financial frictions have been identified as key factors affecting economic fluctuations and growth. But, can institutional reforms reduce financial frictions? Based on a canonical investment model, the authors consider two potential channels: financial transaction costs at the firm level; and required return at the country level. They empirically investigate the...

    Provided By International Monetary Fund

  • White Papers // Oct 2010

    Monetary Policy Matters: New Evidence Based On A New Shock Measure

    Conventional VAR and non-VAR methods of identifying the effects of monetary policy shocks on the economy have found a negative output response to monetary tightening using U.S. data over the 1960s-1990s. However, the authors show that these methods fail to find this contractionary effect when the sample is restricted to...

    Provided By International Monetary Fund

  • White Papers // Oct 2010

    Government Investment And Fiscal Stimulus

    Effects of government investment are studied in an estimated neoclassical growth model. The analysis focuses on two dimensions that are critical for understanding government investment as a fiscal stimulus: implementation delays for building public capital and expected fiscal adjustments to deficit-financed spending. Implementation delays can produce small or even negative...

    Provided By International Monetary Fund

  • White Papers // Oct 2010

    Australian Banking System Resilience: What Should Be Expected Looking Forward? An International Perspective

    This paper reviews Australian banks' performance from an international perspective, with a focus on changes in capital and liquidity risk. The paper analyses the extent of any vulnerability that might arise from a potential deterioration in the funding markets and discusses whether liquidity rules, such as those being considered by...

    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

  • White Papers // Oct 2010

    What Can International Cricket Teach Us About The Role Of Luck In Labor Markets?

    How important is luck in determining labor market outcomes? The authors address this question using a new dataset of all international test cricketers who debuted between 1950 and 1985. They present evidence that a player's debut performance is strongly affected by an exogenous source of variation: whether the debut series...

    Provided By International Monetary Fund

  • White Papers // Oct 2010

    Nonperforming Loans In The GCC Banking System And their Macroeconomic Effects

    According to a dynamic panel estimated over 1995 - 2008 on around 80 banks in the GCC region, the NPL ratio worsens as economic growth becomes lower and interest rates and risk aversion increase. This model implies that the cumulative effect of macroeconomic shocks over a three year horizon is...

    Provided By International Monetary Fund

  • White Papers // Oct 2010

    Monetary Transmission In Low Income Countries

    This paper reviews monetary transmission mechanisms in Low-Income Countries (LICs) to identify aspects of the channels that may operate differently in LICs relative to advanced and emerging economies. Given the weak institutional frameworks, reduced role of securities markets, imperfect competition in the banking sector and the resulting high cost of...

    Provided By International Monetary Fund

  • White Papers // Oct 2010

    Bank Lending In Turkey: Effects Of Monetary And Fiscal Policies

    This paper analyzes the impact of monetary and fiscal policies on Turkish banks' lending activities in the post-crisis period. In particular, the authors show that changes in monetary policy have affected credit growth through their impact on the cost of external funds and liquidity constraints. In addition, following the shift...

    Provided By International Monetary Fund

  • White Papers // Oct 2010

    Why Has the Euro Been So Weak?

    The weakness of the euro has been surprising given the widely-held expectation that it would be a strong currency. This paper critically examines explanations for the slide in the euro, finding that many are questionable on conceptual or empirical grounds. Two explanations are instead advanced that appear to be consistent...

    Provided By International Monetary Fund

  • White Papers // Sep 2010

    Recent Credit Stagnation In The MENA Region: What To Expect? What Can Be Done?

    This paper examines the recent credit slowdown among Middle Eastern and North African (MENA) countries from three analytical angles. First, it finds that, similar to other regions and to its past history, a credit boom preceded the current slowdown, and that a protracted period of sluggish growth is likely going...

    Provided By International Monetary Fund

  • White Papers // Sep 2010

    Monetary Transmission Of Global Imbalances In Asian Countries

    The paper explores the linkages between the global and domestic monetary gaps, and estimates the effects of monetary gaps on output growth, inflation, and net saving rates using panel data for 20 Asian countries for 1980 - 2008. The authors find a significant pass-through of the global monetary gap to...

    Provided By International Monetary Fund

  • White Papers // Sep 2010

    Cyclical Behavior Of Inventories And Growth Projections: Recent Evidence From Europe And The United States

    In the United States and a few European countries, inventory behavior is mainly the outcome of demand shocks: a standard buffer-stock model best characterizes these economies. But most of the European countries are described by a modified buffer-stock model where supply shocks dominate. In contrast to the United States, inventories...

    Provided By International Monetary Fund

  • White Papers // Sep 2010

    How Commodity Price Curves And Inventories React To A Short-Run Scarcity Shock

    How does a commodity market adjust to a temporary scarcity shock which causes a shift in the slope of the futures price curve? The authors find long-run relationships between spot and futures prices, inventories and interest rates, which means that such shocks lead to an adjustment back towards a stable...

    Provided By International Monetary Fund

  • White Papers // Sep 2010

    Macroprudential Regulation Under Repo Funding

    The use of collateral has become one of the most widespread risk mitigation techniques. While it brings stabilizing effects to the individual lender the authors argue that it may exacerbate systemic risk through margin call activation. They show how a liquidity shock to the cash lender may propagate as a...

    Provided By International Monetary Fund

  • White Papers // Sep 2010

    Protection For Free? The Political Economy Of U.S. Tariff Suspensions

    This paper studies the political influence of individual firms on Congressional decisions to suspend tariffs on U.S. imports of intermediate goods. The authors develop a model in which firms influence the government by transmitting information about the value of protection, via costless messages (cheap-talk) and costly messages (lobbying). They estimate...

    Provided By International Monetary Fund

  • White Papers // Sep 2010

    Mother, Can I trust The Government? Sustained Financial Deepening - A Political Institutions View

    Only a minority of countries have succeeded in establishing a developed financial system, despite widespread financial liberalization. Confronted with this finding, the "political institutions view" claims that sustained financial deepening is most likely to take place in institutional environments where governments effectively impose constraints on their own powers in order...

    Provided By International Monetary Fund

  • White Papers // Sep 2010

    Commodity Windfalls, Polarization, And Net Foreign Assets: Panel Data Evidence On The Voracity Effect

    This paper examines the effect that windfalls from international commodity price booms have on net foreign assets in a panel of 145 countries during the period 1970-2007. The main finding is that windfalls from international commodity price booms lead to a significant increase in net foreign assets, but only in...

    Provided By International Monetary Fund

  • White Papers // Sep 2010

    Bank Capital And Uncertainty

    An important role for bank capital is that of a buffer against unexpected losses. As uncertainty about these losses increases, the theory predicts an increase in the optimal level of bank capital. This paper investigates this implication empirically with U.S. Commercial Banks data and finds statistically significant and robust evidence...

    Provided By International Monetary Fund

  • White Papers // Sep 2010

    Investment-Specific Technology Shocks And International Business Cycles: An Empirical Assessment

    In this paper, the authors first introduce investment-specific technology (IST) shocks to an otherwise standard international real business cycle model and show that a thoughtful calibration of them along the lines of Raffo (2009) successfully addresses the "quantity", "international comovement", "Backus-Smith", and "price" puzzles. Second, they use OECD data for...

    Provided By International Monetary Fund

  • White Papers // Sep 2010

    Why Does Bad News Increase Volatility And Decrease Leverage?

    The literature on leverage until now shows how an increase in volatility reduces leverage. However, in order to explain pro-cyclical leverage it assumes that bad news increases volatility. This paper suggests a reason why bad news is more often than not associated with higher future volatility. The authors show that,...

    Provided By International Monetary Fund

  • White Papers // Sep 2010

    The End Of An Era? The Medium And Long-Term Effects Of The Global Crisis On Growth

    This paper investigates the medium- and long-term growth effects of the global financial crises on Low-Income Countries (LICs). Using several methodological approaches, including impulse response function analysis, growth spells techniques and panel regressions, The authors show that external demand (ED) shocks are not historically associated with sharp declines in output...

    Provided By International Monetary Fund

  • White Papers // Sep 2010

    Information Content Of DQAF Indicators - Empirical Entropy Analysis

    The study presents an analysis of the information content of IMF's Data Quality Assessment Framework (DQAF) indicators. There are significant differences in the quantity of information between DQAF dimensions and sub-dimensions. The most informative DQAF dimension is accessibility, followed by the prerequisites of quality and accuracy and reliability. The least...

    Provided By International Monetary Fund

  • White Papers // Sep 2010

    Data Dissemination Standards And The Statistical Quality Of The IMF?s World Economic Outlook Forecasts

    This paper analyzes the effects of IMF member countries participation in the IMF's Data Standards Initiatives (DSI) on the statistical quality of WEO forecasts. Results show that WEO forecasts for SDDS subscribers are in general better than for GDDS participants and those member countries than do not participate in the...

    Provided By International Monetary Fund

  • White Papers // Sep 2010

    The Unequal Benefits Of Fuel Subsidies: A Review Of Evidence For Developing Countries

    This paper reviews evidence on the impact of fuel subsidy reform on household welfare in developing countries. On average, the burden of subsidy reform is neutrally distributed across income groups; a $0.25 decrease in the per liter subsidy results in a 6 percent decrease in income for all groups. More...

    Provided By International Monetary Fund

  • White Papers // Sep 2010

    The Effects Of The Global Crisis On Islamic And Conventional Banks: A Comparative Study

    This paper examines the performance of Islamic banks (IBs) and conventional banks (CBs) during the recent global crisis by looking at the impact of the crisis on profitability, credit and asset growth, and external ratings in a group of countries where the two types of banks have significant market share....

    Provided By International Monetary Fund

  • White Papers // Sep 2010

    Optimal Price Indices For Targeting Inflation Under Incomplete Markets

    In models with complete markets, targeting core inflation enables monetary policy to maximize welfare by replicating the flexible price equilibrium. The authors develop a two-sector two-good new-Keynesian model to study the optimal choice of price index in markets with financial frictions. They find that, in the presence of financial frictions,...

    Provided By International Monetary Fund

  • White Papers // Sep 2010

    To Starve Or Not To Starve The Beast?

    For thirty years prominent voices have advocated a policy of "starving the beast" - cutting taxes to force government spending cuts. This paper analyzes the macroeconomic and welfare consequences of this policy using a two-country general equilibrium model. Under several strong assumptions the policy, if fully implemented, produces domestic output...

    Provided By International Monetary Fund

  • White Papers // Aug 2010

    Peaks, Spikes, And Barrels: Modeling Sharp Movements In Oil Prices

    Global oil markets were roiled by sharp price swings in 2008, and economists are still divided over the reasons for the unusual volatility. Those emphasizing fundamentals point to inelastic supply and demand curves, others view the phenomenon mostly as a result of financial investors flocking into commodity markets. This paper...

    Provided By International Monetary Fund

  • White Papers // Aug 2010

    Output And Unemployment Dynamics During The Great Recession: A Panel Unobserved Components Analysis

    This paper analyzes the sources of output and unemployment dynamics in the world economy during the Great Recession. This analysis is based on a panel unobserved components model of the world economy, disaggregated into its fifteen largest national economies. The authors find that excess supply pressure was primarily transmitted from...

    Provided By International Monetary Fund

  • White Papers // Aug 2010

    Fiscal Deficits, Public Debt, And Sovereign Bond Yields

    The recent sharp increase in fiscal deficits and government debt in many countries raises questions regarding their impact on long-term sovereign bond yields. While economic theory suggests that this impact is likely to be adverse, empirical results have been less clear cut, have generally ignored nonlinear effects of deficits and...

    Provided By International Monetary Fund

  • White Papers // Aug 2010

    A Monetary Policy Model Without Money For India

    A New Keynesian model estimated for India yields valuable insights. Aggregate demand reacts to interest rate changes with a lag of at least three quarters, with inflation taking seven quarters to respond. Inflation is inertial and persistent when it sets in, irrespective of the source. Exchange rate pass-through to domestic...

    Provided By International Monetary Fund

  • White Papers // Aug 2009

    Counterparty Risk, Impact on Collateral Flows And Role For Central Counterparties

    Counterparty risk in the United States stemming from exposures to OTC derivatives payables (after netting) is now concentrated in five banks - Goldman Sachs, JPMorgan, Bank of America, Morgan Stanley and Citi. This paper analyzes how such risks have shifted over the past year. The author estimates that the adverse...

    Provided By International Monetary Fund

  • White Papers // Aug 2009

    Is China's Export-Oriented Growth Sustainable?

    This paper assesses the sustainability of China's export-oriented growth over the medium to longer term. It shows that maintaining the current export-oriented growth would require significant gains in market share through lower prices in a range of industries. This, in turn, could be achieved through a combination of increases in...

    Provided By International Monetary Fund

  • White Papers // Aug 2009

    Interest Rate Liberalization In China

    What might interest rate liberalization do to intermediation and the cost of capital in China? China's most binding interest rate control is a ceiling on the deposit rate, although lending rates are also regulated. Through case studies and model-based simulations, the author finds that liberalization will likely result in higher...

    Provided By International Monetary Fund

  • White Papers // Aug 2009

    Does Good Financial Performance Mean Good Financial Intermediation In China?

    Chinese banks generate large profits and have relatively low nonperforming loans. However, good financial performance does not, in itself, guarantee that banks efficiently intermediate the economy's financial resources. This paper first examines how efficient Chinese banks are in financial intermediation, using the stochastic production frontier approach. Quality of loans are...

    Provided By International Monetary Fund

  • White Papers // Aug 2009

    Employment Effects Of Growth Rebalancing In China

    This paper gauges the potential effects on employment of rebalancing China's export-oriented growth model toward domestic demand, particularly private consumption. Shifting to a private consumption-led growth likely means more demand for existing and new services as well as reorienting the production of tradable goods toward domestic markets. In China's case,...

    Provided By International Monetary Fund

  • White Papers // Aug 2009

    The Challenge Of Enforcement In Securities Markets: Mission Impossible?

    Weaknesses in the enforcement of regulation have been targeted by the G-20 as a priority concern for reform. But enforcement efforts in securities markets have proven difficult and uneven. The recent scandal in the United States, wherein a Ponzi scheme orchestrated by Bernard Madoff went undetected by the U.S. authorities...

    Provided By International Monetary Fund

  • White Papers // Aug 2009

    Measures Of Underlying Inflation In Sri Lanka

    During the first half of 2008, Sri Lanka witnessed significantly higher inflation than most other emerging Asian countries. Inflation has since declined amid declining world commodity prices and tight monetary policy. Given the sensitivity to global commodity prices, a core inflation measure could be useful for monetary policy. The purpose...

    Provided By International Monetary Fund

  • White Papers // May 2009

    Development Aid And Economic Growth: A Positive Long-Run Relation

    This paper analyzes the growth impact of official development assistance to developing countries. The approach is different from that of previous studies in two major ways. First, the author disentangles the effects of two kinds of aid: developmental and non-developmental. Second, the specifications allow for the effect of aid on...

    Provided By International Monetary Fund

  • White Papers // May 2009

    Macroeconomic Responses To Terms-Of-Trade Shocks: A Framework For Policy Analysis For The Argentine Economy

    This paper presents a version of the global integrated monetary fiscal (GIMF) model adapted and calibrated to the Argentine economy. The model replicates the effect of the strong improvement in Argentina's terms of trade stemming from higher world commodity prices as well as other key economic trends in Argentina during...

    Provided By International Monetary Fund

  • White Papers // May 2009

    Out Of The Box Thoughts About The International Financial Architecture

    The Global Credit Crisis of 2008 - 09 has underscored the urgency of reforming the international financial architecture. While a number of short-term reforms are already in train, this paper contemplates more ambitious reforms of the international financial architecture that might be implemented over the next ten years. It proposes...

    Provided By International Monetary Fund

  • White Papers // May 2009

    The Macroeconomics Of Scaling Up Aid: The Gleneagles Initiative For Benin

    This paper assesses the macroeconomic implications of scaling up aid for Benin in line with the Gleneagles commitment to double aid to poor countries over the next three years to reach $85 per capita by 2010 and keep it at that level thereafter. The analysis suggests that the additional aid...

    Provided By International Monetary Fund

  • White Papers // May 2009

    Sub-Saharan Africa's Integration In The Global Financial Markets

    The paper uses a unique database covering 44 countries in sub-Saharan Africa (SSA) countries between 2000 and 2007 to study the determinants of the allocation and composition of flows across countries, as well as channels through which private capital flows could affect growth. In the sample, the degree of financial...

    Provided By International Monetary Fund

  • White Papers // May 2009

    Financial Deepening In The CFA Franc Zone: The Role Of Institutions

    During the 1980s and early 1990s many Sub-Saharan African (SSA) countries undertook reforms to promote financial sector deepening. Nevertheless, financial sectors in SSA countries remain among the shallowest in the world and, within Sub-Saharan Africa, financial depth in the CFA franc zone is even more limited. This paper sets out...

    Provided By International Monetary Fund

  • White Papers // May 2009

    An Alternative Explanation For The Resource Curse: The Income Effect Channel

    The paper provides an alternative explanation for the "Resource curse" based on the income effect resulting from high government current spending in resource rich economies. Using a simple life cycle framework, the author shows that private investment in the non-resource sector is adversely affected if private agents expect extra government...

    Provided By International Monetary Fund

  • White Papers // May 2009

    Spillovers To Emerging Equity Markets: An Econometric Assessment

    After more than a year of relatively small spillovers from the financial turmoil in advanced economies, equity prices in emerging markets (EM) succumbed to the dramatic worsening of financial distress in mid-September 2008. Still, in spring 2009, despite their steep and abrupt declines, emerging equity prices as a group were...

    Provided By International Monetary Fund

  • White Papers // May 2009

    Credit Risk Spreads In Local And Foreign Currencies

    The paper shows how - in a Merton-type model with bankruptcy - the currency composition of debt changes the risk profile of a company raising a given amount of financing, and thus affects the cost of debt. Foreign currency borrowing is cheaper when the exchange rate is positively correlated with...

    Provided By International Monetary Fund

  • White Papers // May 2009

    Estimating Default Frequencies And Macrofinancial Linkages In The Mexican Banking Sector

    The credit risk measures the author develops in this paper are used to investigate macrofinancial linkages in the Mexican banking system. Domestic and external macro-financial variables are found to be closely associated with banking soundness. At the aggregate level, high external volatility and domestic interest rates are associated with higher...

    Provided By International Monetary Fund

  • White Papers // May 2009

    From Bear Stearns To Anglo Irish: How Eurozone Sovereign Spreads Related To Financial Sector Vulnerability

    This paper attempts to explain the recent rise and differentiation of sovereign spreads across the countries of the eurozone. Following the onset of the subprime crisis in July 2007, spreads rose but mainly on account of common global factors. The rescue of Bear Stearns in March 2008 marked a turning...

    Provided By International Monetary Fund

  • White Papers // Sep 2009

    Fiscal Sustainability In Remittance-Dependent Economies

    The author investigates the impact of remittances on public debt sustainability and detail how the traditional debt-to-GDP ratio can be modified to create a more accurate representation of debt sustainability for a country that receives significant remittance inflows. The main result is that inclusion of remittances into the traditional debt...

    Provided By International Monetary Fund

  • White Papers // Sep 2009

    What Drives China's Interbank Market?

    Interest rates in China comprise a mix of both market determined interest rates (interbank rates and bond yields), and regulated interest rates (lending and deposit rates), reflecting China's gradual process of interest rate liberalization. The author argues using a theoretical model and empirical analysis, that the regulation of key retail...

    Provided By International Monetary Fund

  • White Papers // Sep 2009

    Search In The Labor Market Under Imperfectly Insurable Income Risk

    This paper develops a general equilibrium model with unemployment and noncooperative wage determination to analyze the importance of incomplete markets when risk-averse agents are subject to idiosyncratic employment shocks. A version of the model calibrated to the U.S. shows that market incompleteness affects individual behavior and aggregate conditions: it reduces...

    Provided By International Monetary Fund

  • White Papers // Sep 2009

    One Money, One Market - A Revised Benchmark

    The introduction of the euro generated substantial interest in measuring the impact of currency unions (CUs) on trade flows. Rose's (2000) initial estimates suggested a tripling of trade and created a literature in search of "more reasonable" CU effects. A recent meta-analysis of this literature shows that subsequent papers quantify...

    Provided By International Monetary Fund

  • White Papers // Aug 2009

    Euro Area Monetary Policy In Uncharted Waters

    The author analyzes the European Central Bank's (ECB's) response to the global financial crisis. The results suggests that even during the crisis, the core part of ECB's monetary policy transmission - from policy rates to market rates - has continued to operate, but at a decreased efficiency and also find...

    Provided By International Monetary Fund

  • White Papers // Aug 2009

    Establishing Conversion Values For New Currency Unions: Method And Application To The Planned Gulf Cooperation Council (GCC) Currency Union

    A key issue in creating a new currency union is setting the rates to convert national currencies into the new union currency. Planned unions in the Gulf region and Africa are seeking methods to set the conversion rates when their new currencies are created. The author proposes a forward-looking econometric...

    Provided By International Monetary Fund

  • White Papers // Aug 2009

    International Evidence On Recovery From Recessions

    Although negative shocks have persistent effects on output on average, this paper shows that macroeconomic policies and the structure of the economy can influence the speed of recovery and mitigate the persistence of the shock. Indeed, monetary and fiscal stimulus and foreign aid can spur a rebound, with impacts that...

    Provided By International Monetary Fund

  • White Papers // Aug 2009

    Understanding The Growth Of African Financial Markets

    This paper examines empirically the determinants of financial market development in Africa with an emphasis on banking systems and stock markets. The results show that income level, creditor rights protection, financial repression, and political risk are the main determinants of banking sector development in Africa, and that stock market liquidity,...

    Provided By International Monetary Fund

  • White Papers // Aug 2009

    Spillovers Of The U.S. Subprime Financial Turmoil To Mainland China And Hong Kong SAR: Evidence From Stock Markets

    This paper focuses on evidence from stock markets as it investigates the spillovers from the United States to mainland China and Hong Kong SAR during the subprime crisis. Using both univariate and multivariate GARCH models, this paper finds that China's stock market is not immune to the financial crisis, as...

    Provided By International Monetary Fund

  • White Papers // Aug 2009

    An Assessment Of External Price Competitiveness For Mozambique

    This paper conducts an assessment of external price competitiveness for Mozambique. A variety of indicators suggest that Mozambique has recently lost external price competitiveness with respect to its major trading partners. Consistent with these indicators, an exchange rate assessment indicates that the metical is overvalued by 26 to 41 percent...

    Provided By International Monetary Fund

  • White Papers // Aug 2009

    The Composition Matters: Capital Inflows And Liquidity Crunch During A Global Economic Crisis

    This paper studies whether capital flows affect the degree of credit crunch faced by a country's manufacturing firms during the 2007-09 crisis. Examining 3823 firms in 24 emerging countries, it's found that the decline in stock prices was more severe for firms that are intrinsically more dependent on external finance...

    Provided By International Monetary Fund

  • White Papers // Aug 2009

    Panacea, Curse, Or Nonevent? Unconventional Monetary Policy In The United Kingdom

    The Bank of England's current "Quantitative easing" strategy has given rise to a controversial debate about the effects and risks of unconventional monetary policy. The present paper makes two contributions to this debate. First, it provides a systematic overview of unconventional policy options, drawing from existing theoretical and empirical studies....

    Provided By International Monetary Fund

  • White Papers // Aug 2009

    Recent Advances In Credit Risk Modeling

    As is well known, most models of credit risk have failed to measure the credit risks in the context of the global financial crisis. In this context, financial industry representatives, regulators and academics worldwide have given new impetus to efforts to improve credit risk modeling for countries, corporations, financial institutions,...

    Provided By International Monetary Fund

  • White Papers // Jul 2009

    Country Experiences With The Introduction And Implementation Of Inflation Targeting

    This paper is a monograph entitled, "On Implementing Full-Fledged Inflation-Targeting Regimes: Saying What You Do and Doing What You Say." It describes the experiences of a number of countries with the introduction and implementation of inflation targeting regimes. It discusses their motivation for introducing IT; how they fared in meeting...

    Provided By International Monetary Fund

  • White Papers // Jul 2009

    How Effective Is Fiscal Policy Response In Systemic Banking Crises?

    This paper studies the effects of fiscal policy response in 118 episodes of systemic banking crisis in advanced and emerging market countries during 1980 - 2008. It finds that timely countercyclical fiscal measures contribute to shortening the length of crisis episodes by stimulating aggregate demand. Fiscal expansions that rely mostly...

    Provided By International Monetary Fund

  • White Papers // Jul 2009

    Macroeconomic Fluctuations In The Caribbean: The Role Of Climatic And External Shocks

    This paper develops country-specific VAR models with block exogeneity restrictions to analyze how exogenous factors affect business cycles in the Eastern Caribbean. It finds that external shocks play a key role, explaining more than half of macroeconomic fluctuations in the region. Domestic business cycles are especially vulnerable to changes in...

    Provided By International Monetary Fund

  • White Papers // Jul 2009

    Fiscal Cycles In The Caribbean

    The sharp increase in debt in the Caribbean since the mid-1990s has focused attention on the conduct of fiscal policy in the region. This paper aims to diagnose how fiscal policy has behaved during this period by looking at three main cycles of the economy: the business, election, and natural...

    Provided By International Monetary Fund

  • White Papers // Aug 2009

    Putting The Parts Together: Trade, Vertical Linkages, And Business Cycle Comovement

    Countries that trade more with each other exhibit higher business cycle correlation. This paper examines the mechanisms underlying this relationship using a large cross-country industry-level panel dataset of manufacturing production and trade. The author shows that sector pairs that experience more bilateral trade exhibit stronger co-movement. Vertical linkages in production...

    Provided By International Monetary Fund

  • White Papers // Aug 2009

    Credit Growth In Sub-Saharan Africa - Sources, Risks, And Policy Responses

    In this paper, the author analyzes credit growth in Sub-Saharan Africa over the past decade focusing on the post-2002 rapid credit growth in select countries. The author develops regression models of the fundamental determinants of bank credit and uses them to examine whether they can fully explain developments in rapid...

    Provided By International Monetary Fund

  • White Papers // Aug 2009

    Setting Up A Sovereign Wealth Fund: Some Policy And Operational Considerations

    This paper offers a policy and operational "Roadmap" to policymakers considering setting up an SWF. It should also be of interest to policymakers in countries where SWFs are already in place, to review their existing policies and operations. Finally, it offers an opportunity to identify areas where research in macroeconomics...

    Provided By International Monetary Fund

  • White Papers // Aug 2009

    Incorporating Market Information Into The Construction Of The Fan Chart

    Economic forecasts are inherently uncertain. While this is widely recognized, policymakers often face difficulties in communicating to the broader public the extent of the uncertainty involved. Often times, this difficulty stems from the fact that the forecasts are not based on a single model, but rather on a suite of...

    Provided By International Monetary Fund

  • White Papers // Aug 2009

    Towards A Principal-Agent Based Typology Of Risks In Public-Private Partnerships

    There is a strong economic rationale for close cooperation between the public and private sectors. This has resulted in a significant increase in the demand for the provision of public services through instruments combining public and private money such as public-private partnerships (PPPs or P3s). The author describes these arrangements...

    Provided By International Monetary Fund