International Monetary Fund

Displaying 201-240 of 747 results

  • 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

    Does Financial Globalization Induce Better Macroeconomic Policies?

    Monetary and fiscal policies around the world are in better shape today than two decades ago. This paper studies whether financial globalization has helped induce governments to pursue better macroeconomic policies (the "Discipline effect"). The empirical tests have two innovations. First, the authors recognize potential endogeneity of the observed capital...

    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 // Apr 2010

    Collateral, Netting And Systemic Risk In The OTC Derivatives Market

    To mitigate systemic risk, some regulators have advocated the greater use of centralized counterparties (CCPs) to clear Over-The-Counter (OTC) derivatives trades. Regulators should be cognizant that large banks active in the OTC derivatives market do not hold collateral against all the positions in their trading book and the paper proves...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    Determinants Of China's Private Consumption: An International Perspective

    This paper gauges the key determinants of China's private consumption in relation to GDP using data on the Chinese economy and evidence from other countries' experiences. The results suggest there is nothing "Special" about consumption in China. Rather, the challenge is to explain why the conditioning variables - notably a...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    Public Investment As A Fiscal Stimulus: Evidence From Japan's Regional Spending During The 1990s

    How effective was public investment in stimulating the Japanese economy during the economic stagnation of the 1990s? Using a dataset of regional public investment spending, this paper finds that investment multipliers were higher than for public consumption, although they were relatively low and declining over time. This paper also finds...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    Power Laws In Firm Size And Openness To Trade: Measurement And Implications

    Existing estimates of power laws in firm size typically ignore the impact of international trade. Using a simple theoretical framework, this paper shows that international trade systematically affects the distribution of firm size: the power law exponent among exporting firms should be strictly lower in absolute value than the power...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    The Global Financial Crisis And Its Impact On The Chilean Banking System

    This paper explores how the global turmoil affected the risk of banks operating in Chile, and provides evidence that could help strengthen work on vulnerability indicators and off-site supervision. The analysis is based on the study of default risk codependence, or CoRisk, between Chilean banks and global financial institutions. The...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    Balance Sheet Network Analysis Of Too-Connected-To-Fail Risk In Global And Domestic Banking Systems

    The recent financial crisis experienced in 2008/9 has raised concerns on the adverse consequences associated with externalities inherent in the financial system. One particular concern associated with the increased pace of globalization and financial integration is interconnectedness risk, or the Too-Connected-to-Fail (TCTF) problem. The TCTF problem, in turn, brings up...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    Implementing Official Dollarization

    This paper identifies key aspects that countries willing to officially dollarize must necessarily address. Based on country experiences, it discusses the critical institutional bases that are necessary to unilaterally introduce a new legal tender, describes the relevant operational issues to smooth the transition toward the use of the new currency,...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    Cross-Border Financial Surveillance: A Network Perspective

    Effective cross-border financial surveillance requires the monitoring of direct and indirect systemic linkages. This paper illustrates how network analysis could make a significant contribution in this regard by simulating different credit and funding shocks to the banking systems of a number of selected countries. After that, the author shows that...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    House Price Determinants In Selected Countries Of The Former Soviet Union

    This paper analyses the recent boom-bust cycle in the housing markets of selected Former Soviet Union (FSU) countries. The analysis is based on a newly constructed database on house prices in the FSU countries. The estimations suggest that house price developments can largely be explained by the dynamics of fundamentals,...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    The Structural Manifestation Of The 'Dutch Disease': The Case Of Oil Exporting Countries

    The Dutch disease is the process by which a boom in a natural resource sector results in shrinking non-resource tradables. This process leads to increased specialization in the resource and non-tradable sectors leaving the economy more vulnerable to resource-specific shocks. This paper illustrates a theoretical model to examine the Dutch...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    The Global Credit Crunch And Foreign Banks' Lending To Emerging Markets: Why Did Latin America Fare Better?

    The recent global financial turmoil raised questions about the stability of foreign banks' financing to emerging market countries. While foreign banks' lending growth to most emerging market regions contracted sharply, lending to Latin America and the Caribbean (LAC) was significantly more resilient. Analyzing detailed BIS data on global banks' lending...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    Development Accounting And The Rise Of TFP

    This paper presents evidence that the contribution of differences in total factor productivity (TFP) to income differences across countries steadily increased between 1970 and 2000. The author verifies that the finding is neither imputable to measurement errors in input factors nor dependent on the assumption of factor neutral differences in...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    Quantitative Properties Of Sovereign Default Models: Solution Methods Matter

    This paper studies the sovereign default model that has been used to account for the cyclical behavior of interest rates in emerging market economies. This model is often solved using the discrete state space technique with evenly spaced grid points. The author shows that this method necessitates a large number...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    Regulatory Capital Charges For Too-Connected-To-Fail Institutions: A Practical Proposal

    The recent financial crisis has highlighted once more that interconnectedness in the financial system is a major source of systemic risk. The author suggests a practical way to levy regulatory capital charges based on the degree of interconnectedness among financial institutions. Namely, the charges are based on the institution's incremental...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    Absorption Boom And Fiscal Stance: What Lies Ahead In Eastern Europe?

    This paper estimates revenue and expenditure pro-cyclicality with respect to output and domestic absorption in new member states of the European Union and Croatia to assess whether these countries used the boom years of 2003-07 to create sufficient fiscal space. The current crisis has found many countries short of fiscal...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    Growth Convergence And Spillovers Among Indian States: What Matters? What Does Not?

    Convergence and spillovers across countries and within countries are old, but recurrent policy concerns, and India is no exception to this rule. This paper examines convergence and spillovers across Indian states using non-stationary panel data techniques. Results on convergence among Indian states are generally found to be similar, but more...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    Bank Efficiency Amid Foreign Entry: Evidence From The Central American Region

    This paper investigates the efficiency of domestic and foreign banks in the Central American region during 2002-07. Using two main empirical approaches, Data Envelopment Analysis and Stochastic Frontier Analysis, the paper finds that foreign banks are not necessarily more efficient than their domestic counterparts. If anything, the regional banks that...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    Boom-Bust Cycle, Asymmetrical Fiscal Response And The Dutch Disease

    This paper examines the behavior of expenditure policy during boom-bust in commodity price cycles, and its implication for real exchange rate movements. To do so, the author introduces a Dutch disease model with downward rigidities in government spending to revenue shock. This model leads to a decoupling between real exchange...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    Beyond The Crisis: Revisiting Emerging Europe's Growth Model

    Focusing on the nexus between economic growth and buildup of external vulnerabilities, this paper provides a systematic account of different growth strategies followed in Central and Eastern Europe in 2000-08 and then uses this growth diagnostics to derive implications for the post-crisis recovery. The main findings point to three policy...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    Transparency And Monetary Policy With Imperfect Common Knowledge

    Is it desirable that central banks be more transparent in the communication of sensible information when agents have diverse private information? In practice, there exists some consensus about the benefits of acting in this way. However, other studies warn that increasing the precision of public information may raise the volatility...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    Regional Financial Integration In The GCC

    This paper investigates the extent of regional financial integration in the member countries of the Gulf Cooperation Council. The limited volume data available suggests that regional integration is non-negligible. Bahrain and Kuwait investments especially are oriented towards the region. The development of stock markets in the region will also improve...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    Russia's Output Collapse And Recovery: Evidence From The Post-Soviet Transition

    The health of the Russian economy still depends heavily on natural resource revenues. The history of the economic collapse and recovery in 1970 - 2004 provides new evidence on the sources of Russian economic growth, while a survey of the economic literature suggests that the Russian economy could be viewed...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    Foreign Participation In Emerging Markets? Local Currency Bond Markets

    This paper estimates the impact of foreign participation in determining long-term local currency government bond yields and volatility in a group of emerging markets from 2000-2009. The results of a panel data analysis of 10 emerging markets show that greater foreign participation in the domestic government bond market tends to...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    The GCC Banking Sector: Topography And Analysis

    The economies of the country members of the Gulf Cooperation Council (GCC) share a number of commonalities. All GCC countries are large oil exporters with fixed exchange rate regimes, which exposes them to the vagaries of international oil prices. The similarities in economic structure imply common sources of strengths and...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    The Embodiment Of Intangible Investment Goods: A Q-Theory Approach

    This paper extends the q-theory of investment to model explicitly the decision of firms to invest in intangibles and measures the contribution of intangible goods to the overall capital stock in the U.S. The model highlights the embodiment of intangible goods in tangibles and the role of relative price movements...

    Provided By International Monetary Fund

  • White Papers // Apr 2010

    Monetary Policy Committees, Learning, And Communication

    This paper considers optimal communication by monetary policy committees in a model of imperfect knowledge and learning. The main policy implications are that there may be costs to central bank communication if the public is perpetually learning about the committee's decision-making process and policy preferences. When committee members have heterogeneous...

    Provided By International Monetary Fund

  • White Papers // Mar 2010

    Fiscal Adjustment In Sudan: Size, Speed And Composition

    This paper aims to identify the optimal size, speed and composition of the medium-term fiscal adjustment in the context of Sudan's limited oil reserves. The permanently sustainable non-oil primary balance approach suggests the need for significant fiscal adjustment over the medium term, requiring a widening of the tax base. Cross-country...

    Provided By International Monetary Fund

  • White Papers // Mar 2010

    Spillovers Of Domestic Shocks: Will They Counteract The "Great Moderation"?

    Even prior to the extreme volatility just observed, output growth volatility - following protracted decline - was flattening or mildly rising in some countries. More widespread was an increasing tendency from the mid-1990s for shocks in one country to transmit rapidly to other countries, creating the potential for heightened global...

    Provided By International Monetary Fund

  • White Papers // Mar 2010

    Fiscal Objectives In The Post IMF Program World: The Case Of Albania

    The paper discusses the challenges facing Albania's fiscal policy following the graduation from the IMF programs. It argues that Albania's public debt remains too high and needs to be reduced. Strengthening the fiscal framework, including by introducing a numerical fiscal rule, could help achieve this objective. This paper discusses two...

    Provided By International Monetary Fund

  • White Papers // Mar 2010

    Estimating The Inflation-Growth Nexus - A Smooth Transition Model

    Motivated by the global inflation episode of 2007 - 08 and concern that high levels of inflation could undermine growth, this paper uses a panel of 165 countries and data for 1960 - 2007 to revisit the nexus between inflation and growth. The author uses a smooth transition model to...

    Provided By International Monetary Fund

  • White Papers // Mar 2010

    Economic Transition And Health Care Reform: The Experience Of Europe And Central Asia

    This paper exploits the staggered adoption of major concurrent health reforms in countries in Europe and Central Asia after 1990 to estimate their impact on public health expenditure, utilization, and avoidable deaths. While the health systems all derived from the same paradigm under central planning, they have since introduced changes...

    Provided By International Monetary Fund

  • White Papers // Mar 2010

    Asset Securitization And Optimal Retention

    This paper builds on recent research by Fender and Mitchell (2009) who show that if financial institutions securitize loans, retaining an interest in the equity tranche does not always induce the securitizer to diligently screen borrowers ex ante. The author first determines the conditions under which this scenario becomes binding...

    Provided By International Monetary Fund

  • White Papers // Mar 2010

    Effects Of Fiscal Stimulus In Structural Models

    The question of whether temporary fiscal stimulus can effectively stimulate aggregate demand has become the subject of a lively debate that is critical for future policy decisions. Empirical studies can provide some guidance, but their estimates are very dispersed, and they have difficulties identifying key issues including the interaction between...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    The Crisis: Basic Mechanisms And Appropriate Policies

    Conditional on no housing price decline, most subprime mortgages appeared relatively riskless: The value of the mortgage might be high relative to the price of the house, but it would slowly decline over time as prices increased. In retrospect, the fallacy of the proposition was in its premise: If and...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    Exposure To Real Estate Losses: Evidence From The US Banks

    This paper implements a three-step procedure to assess the extent of exposure to real estate in commercial banks. Firstly, demonstrates interest rates and income to be the major determinants of delinquency, then adopts a stress testing approach to calculate the impact of any adverse changes in these determinants. This suggests...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    Assessing Exchange Rate Competitiveness In The Eastern Caribbean Currency Union

    This paper uses three methods to assess movements of real exchange rates in the ECCU over time. First, the purchasing power parity hypothesis is tested and then used to provide a benchmark for equilibrium real exchange rates in the region. Second, a fundamentals-based equilibrium real exchange rate approach is used...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    Optimal Reserves In The Eastern Caribbean Currency Union

    In recent years many emerging market countries have increased their holdings of international reserves. These increases in international reserves appear to be extremely high by traditional standards of reserve adequacy. However, when insurance against the effects of sudden stops in external capital flows is introduced as a motive for holding...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    Simple, Implementable Fiscal Policy Rules

    This paper analyzes the scope for systematic rules-based fiscal activism in open economies. Relative to a balanced budget rule, automatic stabilizers significantly improve welfare. But they minimize fiscal instrument volatility rather than business cycle volatility. A more aggressively countercyclical tax revenue gap rule increases welfare gains by around 50 percent,...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    Grants, Remittances, And The Equilibrium Real Exchange Rate In Sub-Saharan African Countries

    This paper builds on the methodology developed by Chudik and Mongardini (2007) to estimate the relationship between grants and remittances and the equilibrium real exchange rate in Sub-Saharan African (SSA) countries using panel techniques. The results indicate that grants and remittances are not associated, in the long run, with an...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    Limited Information Bayesian Model Averaging For Dynamic Panels With Short Time Periods

    Bayesian Model Averaging (BMA) provides a coherent mechanism to address the problem of model uncertainty. In this paper the author extend the BMA framework to panel data models where the lagged dependent variables as well as endogenous variables appear as regressors. The author proposes a Limited Information Bayesian Model Averaging...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    A Coincident Indicator Of The Gulf Cooperation Council (GCC) Business Cycle

    This paper constructs a coincident indicator for the Gulf Cooperation Council (GCC) area business cycle. The resulting coincident indicator provides a reliable measure of the GCC business cycle; over the last decade, the GCC coincident index and the real GDP growth have moved closely together. Since the indicator is constructed...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    The Missing Link Between Financial Constraints And Productivity

    The global financial crisis has reopened the debate on the potential spillover effects from the financial sector to the real economy. This paper adds to that debate by providing new evidence on the link between finance and firm-level productivity, focusing on the case of Estonia. The author contributes to the...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    ECCU Business Cycles: Impact Of The U.S.

    With a fixed peg to the U.S. dollar for more than three decades, the tourism-dependent Eastern Caribbean Currency Union (ECCU) countries share a close economic relationship with the U.S. This paper analyzes the impact of the United States on ECCU business cycles and identifies possible transmission channels. Using two different...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    Financial Stability Frameworks And The Role Of Central Banks: Lessons From The Crisis

    The depth and breadth of the ongoing financial crisis motivates a review of financial stability frameworks and within that the role of central banks in financial stability. This paper contributes in four ways. This paper reviews the tools that are typically at the disposal of central banks (including monetary policy)....

    Provided By International Monetary Fund

  • White Papers // Mar 2009

    From Subprime Loans To Subprime Growth? Evidence For The Euro Area

    The global financial crisis has highlighted the potential of financial conditions for influencing real economic activity. The author examines the linkages between the financial and real sectors in the euro area, finding that (i) bank loan supply responds negatively to declines in bank soundness; (ii) a cutback in bank loan...

    Provided By International Monetary Fund

  • White Papers // Mar 2009

    Five Years After: European Union Membership And Macro-Financial Stability In The New Member States

    The proximity of the European Union, the prospect of membership, and actual entry by the New Member States (NMS) increased economic and financial integration in the region, leading to fast economic growth based on sizeable capital inflows. EU membership helped in developing sound macroeconomic and financial stability frameworks in the...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    Accounting For Output Drops In Latin America

    This paper evaluates what type of models can account for the recent episodes of output drops in Latin America. The author develops an open economy version of the business cycle accounting methodology (Chari, Kehoe, and McGrattan, 2007) in which output fluctuations are decomposed into four sources: total factor productivity (TFP),...

    Provided By International Monetary Fund

  • White Papers // Mar 2009

    A New Keynesian Model Of The Armenian Economy

    This paper develops a small open economy dynamic stochastic general equilibrium (DSGE) model of the Armenian economy. The structure of the model is largely motivated by recent developments in DSGE modeling, with key extensions to incorporate specific structural characteristics of the Armenian economy. The resultant model can be used to...

    Provided By International Monetary Fund

  • White Papers // Mar 2009

    Global Imbalances: The Role Of Emerging Asia

    This paper investigates the role played by emerging Asia in the emergence and evolution of the global trade imbalances. Based on simulations in a general equilibrium model of the world economy, the author finds that a productivity slowdown in the non-tradable sector of these economies in the second half of...

    Provided By International Monetary Fund

  • White Papers // Mar 2009

    Global Imbalances: The Role Of Non-TradableTotal Factor Productivity In Advanced Economies

    This paper investigates the role played by total factor productivity (TFP) in the tradable and non-tradable sectors of the United States, the euro area, and Japan in the emergence and evolution of today's global trade imbalances. Simulation results based on a dynamic general equilibrium model of the world economy, and...

    Provided By International Monetary Fund

  • White Papers // Jul 2009

    Spillovers From The Rest Of The World Into Sub-Saharan African Countries

    This paper investigates the impact of a global slowdown on individual African countries using a series of dynamic panel regressions for countries in the region, relating real growth in domestic output to world growth in trade weighted by partner countries and several control variables: oil prices, non-oil prices, financial variables,...

    Provided By International Monetary Fund

  • White Papers // Jul 2009

    The Quality Of Public Investment

    This paper develops a growth model with specialized goods where inefficient and corrupt bureaucracies interact with the provision of public investment services in affecting the productivity of private capital, specialization, and growth. The model provides potential explanations for the contradictory empirical results on the effects of public investment found in...

    Provided By International Monetary Fund

  • White Papers // Jul 2009

    Do Workers' Remittances Promote Economic Growth?

    Over the past decades, workers' remittances have grown to become one of the largest sources of financial flows to developing countries, often dwarfing other widely-studied sources such as private capital and official aid flows. While it is undeniable that remittances have poverty-alleviating and consumption-smoothing effects on recipient households, a key...

    Provided By International Monetary Fund

  • White Papers // Jul 2009

    Why Are Canadian Banks More Resilient?

    This paper explores factors behind Canadian banks' relative resilience in the credit turmoil. The author identifies two main causes: a higher share of depository funding (vs. wholesale funding) in liabilities, and a number of regulatory and structural factors in the Canadian market that reduced banks' incentives to take excessive risks....

    Provided By International Monetary Fund

  • White Papers // Jul 2009

    How The Financial Crisis Affects Pensions And Insurance And Why The Impacts Matter

    This paper discusses the key sources of vulnerabilities for pension plans and insurance companies in light of the global financial crisis of 2008. It also discusses how these institutional investors transit shocks to the rest of the financial sector and economy. The crisis has re-ignited the policy debate on key...

    Provided By International Monetary Fund

  • White Papers // Jul 2009

    Development Of The Commercial Banking System In Afghanistan: Risks And Rewards

    Lending practices of commercial banks in Afghanistan were analyzed using CAMEL ratings. Statistically significant correlations were found: Banks with worse ratings (a) had more lending to domestic clients and (b) paid less tax. There was no statistically significant relationship between profits and total assets or between lending/assets versus profit/assets. Interviews...

    Provided By International Monetary Fund

  • White Papers // Jul 2009

    Requirements For Using Interest Rates As An Operating Target For Monetary Policy: The Case Of Tunisia

    Over the last two decades, Tunisia has undertaken economic reforms which have allowed access to international capital markets on favorable terms: a good macroeconomic policy track record was established; the prudential framework for the financial sector was strengthened; the foreign exchange system was liberalized; and the Central Bank of Tunisia...

    Provided By International Monetary Fund

  • White Papers // Jul 2009

    In Search Of Successful Inflation Targeting: Evidence From An Inflation Targeting Index

    In a first attempt to treat inflation targeting (IT) as a continuous variable, the author constructs IT subindices for 21 full-fledged ITers on three dimensions: flexibility, transparency, and explicitness. Comparing flexibility and transparency it's found that (1) the impact of flexibility on both the mean and variation of inflation is...

    Provided By International Monetary Fund

  • White Papers // Jul 2009

    Macroeconomic Fundamentals, Price Discovery And Volatility Dynamics In Emerging Markets

    This paper characterizes volatility dynamics in external emerging bond markets and examines how prices and volatility respond to news about macroeconomic fundamentals. As in mature bond markets, macroeconomic surprises in external emerging bond markets are found to affect both conditional returns and volatility, with the effects on volatility being more...

    Provided By International Monetary Fund

  • White Papers // Jul 2009

    Introducing The Euro As Legal Tender - Benefits And Costs Of Eurorization For Cape Verde

    In recent years, recommendations for countries to unilaterally dollarize/eurorize have become common, particularly when the countries lack economic credibility. After exploring the characteristics of dollarizing/eurorizing economies, the author looks at the merits and costs of unilateral eurorization for Cape Verde, a highly tourism based economy that has become increasingly integrated...

    Provided By International Monetary Fund

  • White Papers // Mar 2009

    Commodity Price Volatility, Cyclical Fluctuations, And Convergence: What Is Ahead For Inflation In Emerging Europe?

    This paper assesses the role of international commodity prices, cyclical fluctuations, and convergence in driving inflation in 18 European emerging economies. Country specific VARs and panel estimates indicate that international commodity price shocks have a significant impact on domestic inflation, but the inflation response is asymmetric for positive and negative...

    Provided By International Monetary Fund

  • White Papers // Mar 2009

    Capital Inflows: Macroeconomic Implications And Policy Responses

    This paper examines the macroeconomic implications of, and policy responses to surges in private capital inflows across a large group of emerging and advanced economies. In particular, the author identifies 109 episodes of large net private capital inflows to 52 countries over 1987 - 2007. Episodes of large capital inflows...

    Provided By International Monetary Fund

  • White Papers // Mar 2009

    Procyclicality And Fair Value Accounting

    In light of the uncertainties about valuation highlighted by the 2007 - 2008 market turbulence, this paper provides an empirical examination of the potential procyclicality that fair value accounting (FVA) could introduce in bank balance sheets. The paper finds that, while weaknesses in the FVA methodology may introduce unintended procyclicality,...

    Provided By International Monetary Fund

  • White Papers // Mar 2009

    Can The Eastern Caribbean Currency Union Afford To Grow Old?

    The demographic transition in the Eastern Caribbean Currency Union (ECCU) now underway is rapid compared with international experience, and emigration is playing a particularly large role. This paper describes and quantifies several factors which could magnify the challenge of pension reform. First, for some ECCU countries, continued emigration at historical...

    Provided By International Monetary Fund

  • White Papers // Mar 2009

    Dedollarization In Liberia-Lessons From Cross-Country Experience

    Liberia's experience with a dual currency regime, with the U.S. dollar enjoying legal tender status, dates to its founding as a sovereign country in 1847. Following the end of the most recent episode of civil war in late-2003, the new government has expressed interest in strengthening the role of the...

    Provided By International Monetary Fund

  • White Papers // Mar 2009

    The Macroeconomic Impact Of Scaled-Up Aid: The Case Of Niger

    The author develops a simple macroeconomic model that assesses the effects of higher foreign aid on output growth and other macroeconomic variables, including the real exchange rate. The model is easily tractable and requires estimation of only a few basic parameters. It takes into account the impact of aid on...

    Provided By International Monetary Fund

  • White Papers // Mar 2009

    The Volatility Costs Of Procyclical Lending Standards: An Assessment Using A DSGE Model

    The ongoing financial turmoil has triggered a lively debate on ways of containing systemic risk and lessening the likelihood of boom-and-bust episodes in credit markets. Particularly, it has been argued that banking regulation might attenuate procyclicality in lending standards by affecting the behavior of banks capital buffers. This paper uses...

    Provided By International Monetary Fund

  • White Papers // Mar 2009

    The Inflation-Unemployment Trade-off At Low Inflation

    Wage setters take into account the future consequences of their current wage choices in the presence of downward nominal wage rigidities. Several interesting implications arise. First, a closed-form solution for a long-run Phillips curve relates average unemployment to average wage inflation; the curve is virtually vertical for high inflation rates...

    Provided By International Monetary Fund

  • White Papers // Feb 2009

    Current Account And Precautionary Savings For Exporters Of Exhaustible Resources

    Exporters of exhaustible resources have historically exhibited higher income volatility than other economies, suggesting a heightened role for precautionary savings. This paper uses a parameterized small open economy model to quantify the role of precautionary savings in economies with exhaustible resources, when the only source of uncertainty is the price...

    Provided By International Monetary Fund

  • White Papers // Feb 2009

    Evaluating Historical CGER Assessments: How Well Have They Predicted Subsequent Exchange Rate Movements?

    The IMF's Consultative Group on Exchange Rate issues (CGER) has been conducting exchange rate assessments as part of the surveillance process since 1997. This paper evaluates CGER assessments from 1997 to 2006, by comparing these to subsequent movements in real effective exchange rates (REER). The author finds that CGER's estimated...

    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