International Monetary Fund

Displaying 161-200 of 509 results

  • White Papers // Jun 2010

    Monetary Policy Analysis And Forecasting In The Group Of Twenty

    This paper develops a panel unobserved components model of the monetary transmission mechanism in the world economy, disaggregated into twenty national economies along the lines of the Group of Twenty. A variety of monetary policy analysis and forecasting applications of the estimated model are demonstrated. These include the measurement of...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Procyclicality In Central Bank Reserve Management: Evidence From The Crisis

    A decade-long diversification of official reserves into riskier investments came to an abrupt end at the beginning of the global financial crisis, when many central bank reserve managers started to withdraw their deposits from the banking sector in an apparent flight to quality and safety. The authors estimate that reserve...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Vietnam: Bayesian Estimation Of Output Gap

    The paper constructs a new output gap measure for Vietnam by applying Bayesian methods to a two-equation AS-AD model, while treating the output gap as an unobservable series to be estimated together with other parameters. Model coefficients are easily interpretable, and the output gap series is consistent with a broader...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Balance Sheet Vulnerabilities Of Mauritius During A Decade Of Shocks

    After reviewing the economic reform strategy of Mauritius for the past 10 years in the face of several external shocks, the authors apply a balance sheet analysis (BSA) focusing on currency, maturity, and intersectoral mismatches. In reviewing developments over this decade, they find that the currency and maturity mismatches have...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Subnational Health Spending And Soft Budget Constraints In OECD Countries

    Government spending on health has grown as a percent of GDP over the last 40 years in industrialized countries. Widespread decentralization of healthcare systems has often accompanied this increase in spending. In this paper, the authors explore the effect of soft budget constraints on subnational health spending in a sample...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Resolution Of Banking Crises: The Good, The Bad, And The Ugly

    This paper presents a new database of systemic banking crises for the period 1970-2009. While there are many commonalities between recent and past crises, both in terms of underlying causes and policy responses, there are some important differences in terms of the scale and scope of interventions. Direct fiscal costs...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Can You Map Global Financial Stability?

    The Global Financial Stability Map was developed as a tool to interpret the risks and conditions that impact financial stability in a graphical manner. It complements other existing tools for assessing financial stability, and seeks to overcome some of the drawbacks of earlier approaches. This paper provides the motivation for...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Inflation Dynamics In Yemen: An Empirical Analysis

    Yemen has had a high and volatile rate of inflation in recent years. This paper studies the underlying determinants of inflation dynamics in Yemen using three different approaches: (i) a single equation model, (ii) a Structural Vector Autoregression Model, and (iii) a Vector Error Correction Model. The outcomes suggest that...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Banking Efficiency And Financial Development In Sub-Saharan Africa

    This study assesses the determinants of banking system efficiency in sub-Saharan Africa (SSA) and asks what, besides the degree of efficiency, explains the low level of financial development in the region. It uses stochastic frontier analysis to measure efficiency and a generalized method of moments system to explain financial development....

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Commodity Prices And Inflation In The Middle East, North Africa, And Central Asia

    Inflation followed a strikingly uniform pattern in all countries of the Middle East, North Africa, and Central Asia during the period 1996-2009, falling until about 2000 and then rising. International fuel prices do not help explain this pattern. This conclusion is robust even when different cross sections of countries are...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    On The Optimal Adherence To Money Targets In A New-Keynesian Framework

    Many low-income countries continue to describe their monetary policy framework in terms of targets on monetary aggregates. This contrasts with most modern discussions of monetary policy, and with most practice. The authors extend the new-Keynesian model to provide a role for "M" in the conduct of monetary policy, and examine...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    How Expensive Is Norway? New International Relative Price Measures

    In this paper, the authors derived two new measures of international relative prices for Norway. Developments in these new measures follow rather closely movements in the CPI-based real effective exchange rate through the 1990s, but diverge after 2000 - suggesting that the costs of living in Norway relative to its...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    FDI Flows To Low-Income Countries: Global Drivers And Growth Implications

    What accounts for variations in FDI flows from advanced to developing countries? How have FDI inflows explained cross-country growth experiences? In this paper the authors tackle both these questions empirically for a large sample of middle and low-income countries. Two key results emerge: (i) lower borrowing costs and positive real-side...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Demand Spillovers And The Collapse Of Trade In The Global Recession

    This paper uses a global input-output framework to quantify US and EU demand spillovers and the elasticity of world trade to GDP during the global recession of 2008-2009. The authors find that 20-30 percent of the decline in the US and EU demand was borne by foreign countries, with NAFTA,...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Fire Sales And The Financial Accelerator

    During periods of financial turmoil, increases in risk lead to higher default, foreclosure, and fire sales. This paper introduces a costly liquidation process for foreclosed collateral and endogenous recovery rates in a dynamic stochastic general equilibrium model of the financial accelerator. Consistent with empirical evidence, the authors find that recovery...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Beyond Aid: How Much Should African Countries Pay To Borrow?

    Post debt relief, the number of African countries considering accessing international capital markets, often to fund large infrastructure projects, is increasing. Potential risks of capital inflows are well known but the literature offers little help to estimate the cost of borrowing internationally for the first time. This paper proposes a...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Current Account Imbalances In The Southern Euro Area

    The paper examines the causes, consequences, and potential cures of the large current account deficits in the Southern Euro Area (SEA). These were mostly driven by a decline in private saving rates. But it was the European Monetary Union and the Euro, which enabled these countries to maintain investment rates,...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Tax Revenue Downturns: Anatomy And Links To Imports

    The authors study historical tax revenue downturn episodes - where tax revenue-to-GDP ratios decline sharply - and explore the link between tax revenues and imports. They document that downturn episodes of at least 1 percentage point of GDP in one year are common. The tax types that account for these...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    In Search Of Lost Revenue: Why Restoring Fiscal Soundness After A Crisis Is Harder Than It Looks

    This note argues that because fiscal deficit after a crisis owe much to a drop in tax revenues and a sluggish revenue growth, its adjustment has to rely more on revenue augmentation than commonly thought. Cutting extra spending in the wake of the crisis would not balance the book, while...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    World Food Prices And Monetary Policy

    The large swings in world food prices in recent years renew interest in the question of how monetary policy in small open economies should react to such imported price shocks. The authors examine this issue in a canonical open economy setting with sticky prices and where food plays a distinctive...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    The Fundamental Determinants Of Credit Default Risk For European Large Complex Financial Institutions

    This paper attempts to identify the fundamental variables that drive the credit default swaps during the initial phase of distress in selected European Large Complex Financial Institutions (LCFIs). It uses yearly data over 2004 - 08 for 29 European LCFIs. The results from a dynamic panel data estimator show that...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Currency Hedging For International Portfolios

    This paper examines the benefits from hedging the currency exposure of international investments in single- and multi-country equity and bond portfolios from the perspectives of German, Japanese, British and American investors. Over the period 1975 to 2009, hedging of currency risk substantially reduced the volatility of foreign investments at a...

    Provided By International Monetary Fund

  • White Papers // May 2010

    Transition Economies: How Appropriate Is The Size And Scope Of Government?

    This paper assesses changes in the size and scope of government in 24 transition economies. Whereas these governments have retrenched in terms of public expenditures in relation to GDP, as well as public employment as a share of population, some indicators suggest that size remains high (e.g.. rising indebtedness, a...

    Provided By International Monetary Fund

  • White Papers // May 2010

    Treasury Single Account: Concept, Design, And Implementation Issues

    A treasury single account (TSA) is an essential tool for consolidating and managing governments' cash resources, thus minimizing borrowing costs. In countries with fragmented government banking arrangements, the establishment of a TSA should receive priority in the public financial management reform agenda. Drawing on the lessons of the Fund's work...

    Provided By International Monetary Fund

  • White Papers // May 2010

    What Explains The Rise In Food Price Volatility?

    The macroeconomic effects of large food price swings can be broad and far-reaching, including the balance of payments of importers and exporters, budgets, inflation, and poverty. For market participants and policymakers, managing low frequency volatility - i.e., the component of volatility that persists for longer than one harvest year -...

    Provided By International Monetary Fund

  • White Papers // May 2010

    The Potential Contribution Of Fiscal Policy To Rebalancing And Growth In New Zealand

    New Zealand's key policy challenge is to rebalance the economy and reduce external vulnerabilities. The country has weathered the global financial crises relatively well but faces a number of challenges. Persistent current account deficits have increased net foreign liabilities to 90 percent of GDP, which presents a major macro-economic and...

    Provided By International Monetary Fund

  • White Papers // May 2010

    Potential Growth Of Australia And New Zealand In The Aftermath of The Global Crisis

    Using a production function method, this paper assesses the impact of the global crisis on the potential growth of Australia and New Zealand. The two countries have not been hit hard by the global crisis, but have large net external liabilities. The paper finds that the main negative impact of...

    Provided By International Monetary Fund

  • White Papers // May 2010

    Mining Taxation: An Application To Mali

    Given the predominance of the fiscal transmission channel, it is important that the design of the mineral tax regime gives the state a fair share of the benefits. Using optimal control theory, this paper estimates that the optimal royalty tax in Mali is about 3.5 percent. By reducing the royalty...

    Provided By International Monetary Fund

  • White Papers // May 2010

    Dynamic Loan Loss Provisions In Uruguay

    This paper assesses the merits of countercyclical loan loss provisioning in Uruguay. Using a stress test methodology, it quantifies the protection against macroeconomic shocks provided by the stock of dynamic provisions accumulated since 2001 and finds that medium-sized shocks would be fully absorbed, offsetting the additional costs caused by rising...

    Provided By International Monetary Fund

  • White Papers // May 2010

    International Transmission Of Bank And Corporate Distress

    The paper evaluates how increases in banks' and nonfinancial corporates' default risk are transmitted in the global economy, using in a vector autoregression model for 30 advanced and emerging economies for the period from January 1996 to December 2008. The results point to two-way causality between bank and corporate distress...

    Provided By International Monetary Fund

  • White Papers // May 2010

    U.S. Bank Behavior In The Wake Of The 2007-2009 Financial Crisis

    The paper examines the slowdown of lending by large U.S. banks over the period 2007Q3 - 2009Q2, focusing on: (i) whether capital or liquidity was the binding constraint; (ii) factors influencing banks' decision to hold capital; and (iii) their pricing behavior. Using quarterly data for the largest U.S. banks, the...

    Provided By International Monetary Fund

  • White Papers // May 2010

    The Credit Boom In The EU New Member States: Bad Luck Or Bad Policies?

    In the past decade, most of the EU New Member States experienced a severe credit-boom bust cycle. This paper argues that the credit boom-bust cycle was to a large extent the result of factors external to the region ("bad luck"). Rapid credit growth followed from a high liquidity in global...

    Provided By International Monetary Fund

  • White Papers // May 2010

    Financial Innovation, The Discovery Of Risk, And The U.S. Credit Crisis

    Uncertainty about the riskiness of new financial products was an important factor behind the U.S. credit crisis. The authors show that a boom-bust cycle in debt, asset prices and consumption characterizes the equilibrium dynamics of a model with a collateral constraint in which agents learn "by observation" the true riskiness...

    Provided By International Monetary Fund

  • White Papers // May 2010

    Fiscal Stimulus And Credibility In Emerging Countries

    Across a sample of thirty four emerging countries, the evidence shows the frequent existence of a pro-cyclical fiscal impulse. However, the scope for countercyclical policy increases with the availability of international reserves as it enhances credibility and mitigates concerns about the effect of expansionary fiscal policy on the cost of...

    Provided By International Monetary Fund

  • White Papers // May 2010

    Recoveries In the Middle East, North Africa, And Pakistan: Have Macroeconomic Policies Been Effective?

    This paper identifies and documents the properties of output gap recessions and recoveries in the Middle East, North Africa, and Pakistan (MENAP) during the 1980 to 2008 period. It goes on to investigate the key determinants of the recoveries. The duration of MENAP countries' recessions and recoveries has increased from...

    Provided By International Monetary Fund

  • White Papers // May 2010

    Fiscal Policy And The Current Account

    This paper examines the relationship between fiscal policy and the current account, drawing on a larger country sample than in previous studies and using panel regressions, vector autoregressions, and an analysis of large fiscal and external adjustments. On average, a strengthening in the fiscal balance by 1 percentage point of...

    Provided By International Monetary Fund

  • White Papers // May 2010

    Sovereign Spreads: Global Risk Aversion, Contagion Or Fundamentals?

    Over the past year, euro area sovereign spreads have exhibited an unprecedented degree of volatility. This paper explores how much of these large movements reflected shifts in (i) global risk aversion (ii) country-specific risks, directly from worsening fundamentals, or indirectly from spillovers originating in other sovereigns. The analysis shows that...

    Provided By International Monetary Fund

  • White Papers // May 2010

    ASEAN: A Chronicle Of Shifting Trade Exposure And Regional Integration

    The paper characterizes trade exposure and regional integration in six ASEAN economies during 1997−2008. For this, the paper uses the 2000 Asian Input Output Tables which are extrapolated using National Income Accounts and COMTRADE data. On the demand side, the paper shows that the level and geographical nature of external...

    Provided By International Monetary Fund

  • White Papers // May 2010

    The Linkage between The Oil And Non-Oil Sectors: A Panel VAR Approach

    Recent empirical studies have shown an inverse relation between natural resource intensity and long-term growth, implying that the natural resources generally impede economic growth through various channels (the "natural resource curse"). This paper departs from these studies by exploring the inter-sectoral linkages between oil and non-oil sectors in a cross-country...

    Provided By International Monetary Fund

  • White Papers // May 2010

    Determinants Of Investment Grade Status In Emerging Markets

    Emerging market countries seek investment grade status to lower financing costs for the sovereign, expand the pool of potential investors to institutional investors, and allow corporates the possibility of reducing their borrowing costs. Using a random effects binomial logit model on a sample of 48 emerging markets, the paper finds...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Balance Sheet Vulnerabilities Of Mauritius During A Decade Of Shocks

    After reviewing the economic reform strategy of Mauritius for the past 10 years in the face of several external shocks, the authors apply a balance sheet analysis (BSA) focusing on currency, maturity, and intersectoral mismatches. In reviewing developments over this decade, they find that the currency and maturity mismatches have...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Subnational Health Spending And Soft Budget Constraints In OECD Countries

    Government spending on health has grown as a percent of GDP over the last 40 years in industrialized countries. Widespread decentralization of healthcare systems has often accompanied this increase in spending. In this paper, the authors explore the effect of soft budget constraints on subnational health spending in a sample...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Resolution Of Banking Crises: The Good, The Bad, And The Ugly

    This paper presents a new database of systemic banking crises for the period 1970-2009. While there are many commonalities between recent and past crises, both in terms of underlying causes and policy responses, there are some important differences in terms of the scale and scope of interventions. Direct fiscal costs...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Can You Map Global Financial Stability?

    The Global Financial Stability Map was developed as a tool to interpret the risks and conditions that impact financial stability in a graphical manner. It complements other existing tools for assessing financial stability, and seeks to overcome some of the drawbacks of earlier approaches. This paper provides the motivation for...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Inflation Dynamics In Yemen: An Empirical Analysis

    Yemen has had a high and volatile rate of inflation in recent years. This paper studies the underlying determinants of inflation dynamics in Yemen using three different approaches: (i) a single equation model, (ii) a Structural Vector Autoregression Model, and (iii) a Vector Error Correction Model. The outcomes suggest that...

    Provided By International Monetary Fund

  • White Papers // May 2010

    Treasury Single Account: Concept, Design, And Implementation Issues

    A treasury single account (TSA) is an essential tool for consolidating and managing governments' cash resources, thus minimizing borrowing costs. In countries with fragmented government banking arrangements, the establishment of a TSA should receive priority in the public financial management reform agenda. Drawing on the lessons of the Fund's work...

    Provided By International Monetary Fund

  • White Papers // May 2010

    What Explains The Rise In Food Price Volatility?

    The macroeconomic effects of large food price swings can be broad and far-reaching, including the balance of payments of importers and exporters, budgets, inflation, and poverty. For market participants and policymakers, managing low frequency volatility - i.e., the component of volatility that persists for longer than one harvest year -...

    Provided By International Monetary Fund

  • White Papers // May 2010

    The Potential Contribution Of Fiscal Policy To Rebalancing And Growth In New Zealand

    New Zealand's key policy challenge is to rebalance the economy and reduce external vulnerabilities. The country has weathered the global financial crises relatively well but faces a number of challenges. Persistent current account deficits have increased net foreign liabilities to 90 percent of GDP, which presents a major macro-economic and...

    Provided By International Monetary Fund

  • White Papers // May 2010

    Potential Growth Of Australia And New Zealand In The Aftermath of The Global Crisis

    Using a production function method, this paper assesses the impact of the global crisis on the potential growth of Australia and New Zealand. The two countries have not been hit hard by the global crisis, but have large net external liabilities. The paper finds that the main negative impact of...

    Provided By International Monetary Fund

  • White Papers // May 2010

    Mining Taxation: An Application To Mali

    Given the predominance of the fiscal transmission channel, it is important that the design of the mineral tax regime gives the state a fair share of the benefits. Using optimal control theory, this paper estimates that the optimal royalty tax in Mali is about 3.5 percent. By reducing the royalty...

    Provided By International Monetary Fund

  • White Papers // May 2010

    Dynamic Loan Loss Provisions In Uruguay

    This paper assesses the merits of countercyclical loan loss provisioning in Uruguay. Using a stress test methodology, it quantifies the protection against macroeconomic shocks provided by the stock of dynamic provisions accumulated since 2001 and finds that medium-sized shocks would be fully absorbed, offsetting the additional costs caused by rising...

    Provided By International Monetary Fund

  • White Papers // May 2010

    International Transmission Of Bank And Corporate Distress

    The paper evaluates how increases in banks' and nonfinancial corporates' default risk are transmitted in the global economy, using in a vector autoregression model for 30 advanced and emerging economies for the period from January 1996 to December 2008. The results point to two-way causality between bank and corporate distress...

    Provided By International Monetary Fund

  • White Papers // May 2010

    Fiscal Stimulus And Credibility In Emerging Countries

    Across a sample of thirty four emerging countries, the evidence shows the frequent existence of a pro-cyclical fiscal impulse. However, the scope for countercyclical policy increases with the availability of international reserves as it enhances credibility and mitigates concerns about the effect of expansionary fiscal policy on the cost of...

    Provided By International Monetary Fund

  • White Papers // May 2010

    Recoveries In the Middle East, North Africa, And Pakistan: Have Macroeconomic Policies Been Effective?

    This paper identifies and documents the properties of output gap recessions and recoveries in the Middle East, North Africa, and Pakistan (MENAP) during the 1980 to 2008 period. It goes on to investigate the key determinants of the recoveries. The duration of MENAP countries' recessions and recoveries has increased from...

    Provided By International Monetary Fund

  • White Papers // May 2010

    Fiscal Policy And The Current Account

    This paper examines the relationship between fiscal policy and the current account, drawing on a larger country sample than in previous studies and using panel regressions, vector autoregressions, and an analysis of large fiscal and external adjustments. On average, a strengthening in the fiscal balance by 1 percentage point of...

    Provided By International Monetary Fund

  • White Papers // May 2010

    Sovereign Spreads: Global Risk Aversion, Contagion Or Fundamentals?

    Over the past year, euro area sovereign spreads have exhibited an unprecedented degree of volatility. This paper explores how much of these large movements reflected shifts in (i) global risk aversion (ii) country-specific risks, directly from worsening fundamentals, or indirectly from spillovers originating in other sovereigns. The analysis shows that...

    Provided By International Monetary Fund

  • White Papers // May 2010

    ASEAN: A Chronicle Of Shifting Trade Exposure And Regional Integration

    The paper characterizes trade exposure and regional integration in six ASEAN economies during 1997−2008. For this, the paper uses the 2000 Asian Input Output Tables which are extrapolated using National Income Accounts and COMTRADE data. On the demand side, the paper shows that the level and geographical nature of external...

    Provided By International Monetary Fund

  • White Papers // May 2010

    The Linkage between The Oil And Non-Oil Sectors: A Panel VAR Approach

    Recent empirical studies have shown an inverse relation between natural resource intensity and long-term growth, implying that the natural resources generally impede economic growth through various channels (the "natural resource curse"). This paper departs from these studies by exploring the inter-sectoral linkages between oil and non-oil sectors in a cross-country...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Banking Efficiency And Financial Development In Sub-Saharan Africa

    This study assesses the determinants of banking system efficiency in sub-Saharan Africa (SSA) and asks what, besides the degree of efficiency, explains the low level of financial development in the region. It uses stochastic frontier analysis to measure efficiency and a generalized method of moments system to explain financial development....

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Commodity Prices And Inflation In The Middle East, North Africa, And Central Asia

    Inflation followed a strikingly uniform pattern in all countries of the Middle East, North Africa, and Central Asia during the period 1996-2009, falling until about 2000 and then rising. International fuel prices do not help explain this pattern. This conclusion is robust even when different cross sections of countries are...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    On The Optimal Adherence To Money Targets In A New-Keynesian Framework

    Many low-income countries continue to describe their monetary policy framework in terms of targets on monetary aggregates. This contrasts with most modern discussions of monetary policy, and with most practice. The authors extend the new-Keynesian model to provide a role for "M" in the conduct of monetary policy, and examine...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    How Expensive Is Norway? New International Relative Price Measures

    In this paper, the authors derived two new measures of international relative prices for Norway. Developments in these new measures follow rather closely movements in the CPI-based real effective exchange rate through the 1990s, but diverge after 2000 - suggesting that the costs of living in Norway relative to its...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    FDI Flows To Low-Income Countries: Global Drivers And Growth Implications

    What accounts for variations in FDI flows from advanced to developing countries? How have FDI inflows explained cross-country growth experiences? In this paper the authors tackle both these questions empirically for a large sample of middle and low-income countries. Two key results emerge: (i) lower borrowing costs and positive real-side...

    Provided By International Monetary Fund

  • White Papers // May 2010

    U.S. Bank Behavior In The Wake Of The 2007-2009 Financial Crisis

    The paper examines the slowdown of lending by large U.S. banks over the period 2007Q3 - 2009Q2, focusing on: (i) whether capital or liquidity was the binding constraint; (ii) factors influencing banks' decision to hold capital; and (iii) their pricing behavior. Using quarterly data for the largest U.S. banks, the...

    Provided By International Monetary Fund

  • White Papers // May 2010

    The Credit Boom In The EU New Member States: Bad Luck Or Bad Policies?

    In the past decade, most of the EU New Member States experienced a severe credit-boom bust cycle. This paper argues that the credit boom-bust cycle was to a large extent the result of factors external to the region ("bad luck"). Rapid credit growth followed from a high liquidity in global...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Demand Spillovers And The Collapse Of Trade In The Global Recession

    This paper uses a global input-output framework to quantify US and EU demand spillovers and the elasticity of world trade to GDP during the global recession of 2008-2009. The authors find that 20-30 percent of the decline in the US and EU demand was borne by foreign countries, with NAFTA,...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Fire Sales And The Financial Accelerator

    During periods of financial turmoil, increases in risk lead to higher default, foreclosure, and fire sales. This paper introduces a costly liquidation process for foreclosed collateral and endogenous recovery rates in a dynamic stochastic general equilibrium model of the financial accelerator. Consistent with empirical evidence, the authors find that recovery...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Beyond Aid: How Much Should African Countries Pay To Borrow?

    Post debt relief, the number of African countries considering accessing international capital markets, often to fund large infrastructure projects, is increasing. Potential risks of capital inflows are well known but the literature offers little help to estimate the cost of borrowing internationally for the first time. This paper proposes a...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Current Account Imbalances In The Southern Euro Area

    The paper examines the causes, consequences, and potential cures of the large current account deficits in the Southern Euro Area (SEA). These were mostly driven by a decline in private saving rates. But it was the European Monetary Union and the Euro, which enabled these countries to maintain investment rates,...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    Tax Revenue Downturns: Anatomy And Links To Imports

    The authors study historical tax revenue downturn episodes - where tax revenue-to-GDP ratios decline sharply - and explore the link between tax revenues and imports. They document that downturn episodes of at least 1 percentage point of GDP in one year are common. The tax types that account for these...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    In Search Of Lost Revenue: Why Restoring Fiscal Soundness After A Crisis Is Harder Than It Looks

    This note argues that because fiscal deficit after a crisis owe much to a drop in tax revenues and a sluggish revenue growth, its adjustment has to rely more on revenue augmentation than commonly thought. Cutting extra spending in the wake of the crisis would not balance the book, while...

    Provided By International Monetary Fund

  • White Papers // May 2010

    Financial Innovation, The Discovery Of Risk, And The U.S. Credit Crisis

    Uncertainty about the riskiness of new financial products was an important factor behind the U.S. credit crisis. The authors show that a boom-bust cycle in debt, asset prices and consumption characterizes the equilibrium dynamics of a model with a collateral constraint in which agents learn "by observation" the true riskiness...

    Provided By International Monetary Fund

  • White Papers // Jul 2010

    Budget Consolidation: Short-Term Pain And Long-Term Gain

    The paper evaluates the costs and benefits of fiscal consolidation using simulations based on the IMFs global DSGE model GIMF. Over the longer run, well-targeted permanent reductions in budget deficits lead to a considerable increase in both the growth rate and the level of output. The gains may be enhanced...

    Provided By International Monetary Fund

  • White Papers // Jul 2010

    Exchange Rate Assessment For Sub-Saharan Economies

    This paper provides an exchange rate assessment for sub-Saharan African economies by using methodologies similar to those developed by the International Monetary Fund's Consultative Group on Exchange Rate Issues. As in the World Economic Outlook (IMF, 2009a), the unbalanced panel dataset covers 182 countries from 1973 to 2014. The authors...

    Provided By International Monetary Fund

  • White Papers // Jun 2010

    World Food Prices And Monetary Policy

    The large swings in world food prices in recent years renew interest in the question of how monetary policy in small open economies should react to such imported price shocks. The authors examine this issue in a canonical open economy setting with sticky prices and where food plays a distinctive...

    Provided By International Monetary Fund

  • White Papers // Jul 2010

    The Macroeconomics Of Medium-Term Aid Scaling-Up Scenarios

    The publishers develop a model to analyze the macroeconomic effects of a scaling-up of aid and assess the implications of different policy responses. The model features key structural characteristics of low-income countries, including varying degrees of public investment efficiency and a learning-by-doing (LBD) externality that captures Dutch disease effects. On...

    Provided By International Monetary Fund

  • White Papers // Jul 2010

    Inflation And Conflict In Iraq: The Economics Of Shortages Revisited

    Containing inflation has turned out to be one of the most challenging aspects of economic management in Iraq. This paper posits that conventional as well as unconventional factors explain inflation dynamics in the recent past. The authors build a theoretical model based on the insights into the workings of socialist...

    Provided By International Monetary Fund

  • White Papers // Jul 2010

    External Finance, Sudden Stops, And Financial Crisis: What Is Different This Time?

    This paper develops a two-country DSGE model to investigate the transmission of a global financial crisis to a small open economy. The authors find that economies hit by a sudden stop arising from financial distress in the global economy are likely to face a more prolonged crisis than sudden stop...

    Provided By International Monetary Fund

  • White Papers // Jul 2010

    Should African Monetary Unions Be Expanded?

    This paper develops a full-fledged cost-benefit analysis of monetary integration, and applies it to the currency unions actively pursued in Africa. The benefits of monetary union come from a more credible monetary policy, while the costs derive from real shock asymmetries and fiscal disparities. The model is calibrated using African...

    Provided By International Monetary Fund

  • White Papers // Jul 2010

    Of Runes And Sagas: Perspectives On Liquidity Stress Testing Using An Iceland Example

    The global financial crisis revealed weaknesses in the stress testing exercises performed on financial institutions and systems around the world. These failures were most evident in the area of liquidity risk, where now-obvious vulnerabilities were left largely undetected, with stress tests having largely focused on solvency risk. This paper uses...

    Provided By International Monetary Fund