International Monetary Fund

Displaying 201-240 of 679 results

  • 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 // 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

    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 // 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 // Mar 2010

    Inflation Targeting Turns 20

    Of particular relevance, in the wake of the global commodity price spikes and financial shocks of the past three years, is whether inflation targeting is more resilient to shocks than are other policy frameworks. Throughout most of the period since inflation targeting was widely adopted, global macroeconomic conditions were benign...

    Provided By International Monetary Fund

  • White Papers // Mar 2010

    What Is Inflation?

    Consumers' cost of living depends on the prices of many goods and services and the share of each in the household budget. To measure the average consumer's cost of living, government agencies conduct household surveys to identify a basket of commonly purchased items and track over time the cost of...

    Provided By International Monetary Fund

  • White Papers // Mar 2010

    Inflation Expectations And Monetary Policy In India: An Empirical Exploration

    This paper pursues a computationally intensive approach to generate future inflation, followed by an exploration of the determinants of inflation expectations by estimating a new Keynesian type Phillips curve that takes into account country-specific characteristics, the stance of monetary and fiscal policies, marginal costs and exogenous supply shocks. The empirical...

    Provided By International Monetary Fund

  • White Papers // Mar 2010

    Credit Conditions And Recoveries From Recessions Associated With Financial Crises

    Recoveries from recessions associated with a financial crisis tend to be sluggish. This paper presents evidence that stressed credit conditions are an important factor constraining the pace of recovery. In particular, using industry-level data, the author finds that industries relying more on external finance grow more slowly than other industries...

    Provided By International Monetary Fund

  • White Papers // Mar 2010

    Price Setting In A Model With Production Chains: Evidence From Sectoral Data

    Reconciling the high frequency of price changes at the micro level and their apparent rigidity at the aggregate level has been the subject of considerable debate in macroeconomics recently. In this paper I show that incorporating production chains in a standard New-Keynesian model replicates two stylized facts about the data....

    Provided By International Monetary Fund

  • White Papers // Mar 2010

    Basel Core Principles And Bank Risk: Does Compliance Matter?

    The recent financial crisis has sparked widespread calls for reforms of regulation and supervision. The initial reaction to the crisis was one of disbelief: how could such extensive financial distress emerge in countries where the supervision of financial risk had been thought to be the best in the world? Indeed,...

    Provided By International Monetary Fund

  • White Papers // Mar 2010

    Crisis Management And Resolution For A European Banking System

    This paper proposes an integrated crisis management and resolution framework for the EU's single banking market. It comprises a European Resolution Authority (ERA), armed with the mandate and the tools to deal cost-effectively with failing systemic cross-border banks, and is designed to address many fundamental operational and incentive problems. It...

    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 // 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

  • White Papers // Jul 2010

    Automatic Stabilizers And The Size Of Government: Correcting A Common Misunderstanding

    The size of government is a commonly used variable in many analytical studies on the effects of fiscal policy. An accepted practice is to measure it as the ratio of government spending to GDP. However, this is not the correct metric when computing the stabilization effects of nondiscretionary fiscal policy....

    Provided By International Monetary Fund

  • White Papers // Jul 2010

    The Impact Of Capital And Foreign Exchange Flows On The Competitiveness Of Developing Countries

    Attracting capital and foreign exchange flows is crucial for developing countries. Yet, these flows could lead to real exchange rate appreciation and may thus have detrimental effects on competitiveness, jeopardizing exports and growth. This paper investigates this dilemma by comparing the impact of six types of capital and foreign exchange...

    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

    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

    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 // 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

    Sustainable Real Exchange Rates In The New EU Member States: What Did The Great Recession Change?

    The Great Recession affected export and import patterns in the sample countries, and these changes, coupled with a more volatile external environment, have profound impact on the estimates of real exchange rate misalignments and projections of sustainable real exchange rates. The authors find that real misalignments in several countries with...

    Provided By International Monetary Fund

  • White Papers // Aug 2010

    Estimates Of The Output Gap In Armenia With Applications To Monetary And Fiscal Policy

    This paper employs several econometric techniques to estimate the Armenian output gap. The findings indicate that the output gap is significantly positive in 2007 and 2008 and decreased dramatically in 2009. The paper uses these results to estimate a New Keynesian Phillips curve for Armenia, suggesting a significant role of...

    Provided By International Monetary Fund

  • White Papers // Aug 2010

    Can Global Liquidity Forecast Asset Prices?

    During the period leading up to the global financial crisis many asset classes registered rapid price increases. This coincided with a significant rise in global liquidity. This paper attempts to determine the extent to which the rise in asset prices was influenced by developments in global liquidity. The authors confirm...

    Provided By International Monetary Fund

  • White Papers // Aug 2010

    Islamic Banking: How Has It Diffused?

    This paper investigates the determinants of the pattern of Islamic bank diffusion around the world using country-level data for 1992 - 2006. The analysis illustrates that income per capita, share of Muslims in the population and status as an oil producer are linked to the development of Islamic banking, as...

    Provided By International Monetary Fund

  • White Papers // Aug 2010

    Measuring Financial Barriers Among East African Community Countries

    This paper seeks to quantify existing financial barriers among East African Community (EAC) member countries based on analysis of each member country's foreign exchange market. The primary contribution of this paper is the generation of an aggregate measure of financial barriers for the three relatively more advanced members (Kenya, Uganda,...

    Provided By International Monetary Fund

  • White Papers // Aug 2010

    The Effectiveness Of Macroeconomic Commitment In Weak(er) Institutional Environments

    This paper analyzes the institutional conditions affecting the establishment and effectiveness of independent central banks and of budgetary institutions. It draws on the recent theory developed by North, Wallis and Weingast on the transition from a closed and fragile state to an open economic and political environment. The paper presents...

    Provided By International Monetary Fund

  • White Papers // Aug 2010

    The Dynamic Effects Of Commodity Prices On Fiscal Performance In Latin America

    The recent boom and bust in commodity prices has raised concerns about the impact of volatile commodity prices on Latin American countries' fiscal positions. Using a novel quarterly data set??which includes unique country-specific commodity price indices and a comprehensive measure of public expenditures? This paper analyzes the dynamic effects of...

    Provided By International Monetary Fund

  • White Papers // Aug 2010

    A Macro Model Of The Credit Channel In A Currency Union Member: The Case Of Benin

    This paper applies and extends a theoretical model built by Agenor and Montiel (2007) by exploring the effectiveness of government bonds and monetary policy in a small, open, credit-based economy with a fixed exchange rate. The model is applied to Benin, a member of a currency union, using a general...

    Provided By International Monetary Fund

  • White Papers // Jul 2010

    The Dark Side Of Bank Wholesale Funding

    Banks increasingly use short-term wholesale funds to supplement traditional retail deposits. Existing literature mainly points to the "bright side" of wholesale funding: sophisticated financiers can monitor banks, disciplining bad but refinancing good ones. This paper models a "dark side" of wholesale funding. In an environment with a costless but noisy...

    Provided By International Monetary Fund

  • White Papers // Jul 2010

    Peru: Drivers Of De-dollarization

    Peru has successfully pursued a market-driven financial de-dollarization during the last decade. Dollarization of credit and deposit of commercial banks - across all sectors and maturities - has declined, with larger declines for commercial credit and time and saving deposits. The analysis presented in this paper confirms that de-dollarization has...

    Provided By International Monetary Fund

  • White Papers // Jul 2010

    Does Procyclical Fiscal Policy Reinforce Incentives To Dollarize Sovereign Debt?

    This paper explores the link between the cyclical patterns of macroeconomic and policy variables and the currency composition of domestic sovereign debt in emerging market countries. The empirical analysis is anchored in an equilibrium model, in which the dollarization of sovereign debt arises as a result of the optimal portfolio...

    Provided By International Monetary Fund

  • White Papers // Jul 2010

    Local Housing Market Cycle And Loss Given Default: Evidence From Sub-Prime Residential Mortgages

    This paper studies the impact of housing market cycles on loss given default (LGD). Previous studies have shown that the current loan-to-value ratio (CLTV) is the most important determinant of LGD. This paper establishes another linkage which is between the house price cycles before the time of mortgage origination and...

    Provided By International Monetary Fund

  • White Papers // Jul 2010

    How Do International Financial Flows To Developing Countries Respond To Natural Disasters?

    This paper uses multivariate dynamic panel analysis to examine the response of international financial flows to natural disasters. The models estimated for a large sample of developing countries point to differentiated responses of specific types of financial flows. The results show that remittance inflows increase significantly in response to shocks...

    Provided By International Monetary Fund

  • White Papers // Jul 2010

    China's Economic Growth: International Spillovers

    This paper presents some facts on China's role in the world economy and measures the impact of China's growth on growth in the rest of the world in the short and long term. Shortrun estimates based on VARs and error-correction models suggest that spillover effects of China's growth have increased...

    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 // Dec 2011

    Employment Protection and Business Cycles in Emerging Economies

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

    Provided By International Monetary Fund