International Monetary Fund

Displaying 281-320 of 747 results

  • White Papers // Feb 2010

    Fiscal Policy In Oil Producing Countries During The Recent Oil Price Cycle

    This paper presents a detailed analysis of the average fiscal policy responses of oil producing countries (OPCs) to the recent oil price cycle. The author finds that OPCs worsened their non-oil primary balances substantially during 2003 - 2008 driven by an increase in primary spending. However, this trend was partially...

    Provided By International Monetary Fund

  • White Papers // Feb 2010

    Cross-Border Investment In Small International Financial Centers

    This paper documents and assesses the role of small financial centers in the international financial system using a newly-assembled dataset. It presents estimates of the foreign asset and liability positions for a number of the most important small financial centers, and places these into context by calculating the importance of...

    Provided By International Monetary Fund

  • White Papers // Feb 2010

    Growth And Capital Flows With Risky Entrepreneurship

    This paper shows that the behavior of entrepreneurs facing incomplete financial markets and risky investment can explain why growth accelerations in developing countries tend to be associated with current account improvements. The uninsurable risk of losing invested capital forces entrepreneurs to rely on self-financing, so that when business opportunities open...

    Provided By International Monetary Fund

  • White Papers // Feb 2010

    Monetary Policy Transmission In Mauritius Using A VAR Analysis

    Applying commonly used vector autoregression (VAR) techniques, this paper investigates the transmission mechanism of monetary policy on output and prices for Mauritius, using data for 1999 - 2009. The results show that (i) an unexpected monetary policy tightening - an increase in the Bank of Mauritius policy interest rate -...

    Provided By International Monetary Fund

  • White Papers // Feb 2010

    Spillovers To Central America In Light Of The Crisis: What A Difference A Year Makes

    This paper investigates Central America's external linkages over the last fifteen years of increased integration in light of the 2008 - 09 global recessions. Using structural VAR models, it is found that a one percent shock to U.S. growth shifts economic activity in Central America by 0.7 to 1 percent,...

    Provided By International Monetary Fund

  • White Papers // Feb 2010

    The Global Integrated Monetary And Fiscal Model (GIMF)? Theoretical Structure

    This paper presents a comprehensive overview of the theoretical structure of the International Monetary Fund's Global Integrated Monetary and Fiscal Model (GIMF). GIMF is a multicountry dynamic general equilibrium model that is used extensively inside the IMF, and also at a small number of central banks, for policy and risk...

    Provided By International Monetary Fund

  • White Papers // Feb 2010

    Evaluation Of The Oil Fiscal Regime In Russia And Proposals For Reform

    Oil revenue plays a central role in Russia's economic development. Thus, the recent decline in oil production and investment, and the possible contribution of the current fiscal regime to these developments, have prompted a reassessment of the oil tax system in Russia. Some important changes have already been made, while...

    Provided By International Monetary Fund

  • White Papers // Feb 2010

    Optimal Monetary Policy With Overlapping Generations Of Policymakers

    This paper studies the effect of imperfect central bank commitment on inflationary outcomes. The author presents a model in which the monetary authority is a committee that consists of members who serve overlapping, finite terms. Older and younger generations of Monetary Policy Committee (MPC) members decide on policy by engaging...

    Provided By International Monetary Fund

  • White Papers // Feb 2010

    Constraints On Trade In The MENA region

    The author estimates gravity models to see whether trade volumes of countries in the MENA region are significantly lower than what would be expected given their economic, cultural and geographical characteristics. The empirical results show that the variables used in standard gravity models cannot explain a significant part of MENA's...

    Provided By International Monetary Fund

  • White Papers // Feb 2010

    Constraints On Growth In The MENA Region

    This paper contributes to the empirical literature on growth in the MENA region by attempting to quantify the impact of the various constraints faced by local businesses highlighted by the World Bank's Business Enterprise surveys. To the best of the author's knowledge the dataset has not been used in any...

    Provided By International Monetary Fund

  • White Papers // Feb 2010

    Systemic Risks And The Macroeconomy

    This paper presents a modeling framework that delivers joint forecasts of indicators of systemic real risk and systemic financial risk, as well as stress-tests of these indicators as impulse responses to structural shocks identified by standard macroeconomic and banking theory. This framework is implemented using large sets of quarterly time...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    Inflation In Tajikistan: Forecasting Analysis And Monetary Policy Challenges

    This paper attempts to explain short- and long-term dynamics of - and forecast - inflation in Tajikistan using the Vector Error Correction Model (VECM) and Autoregressive Moving Average Model (ARMA). By analyzing different transmission channels through the VECM, the author was able to evaluate their relative dominance, magnitude, and speed...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    Recovery Determinants Of Distressed Banks: Regulators, Market Discipline, Or The Environment?

    Based on detailed regulatory intervention data among German banks during 1994 - 2008, the author tests if supervisory measures affect the likelihood and the timing of bank recovery. Severe regulatory measures increase both the likelihood of recovery and its duration while weak measures are insignificant. With the benefit of hindsight,...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    International Pricing Of Emerging Market Corporate Debt: Does The Corporate Matter?

    The pricing of emerging market assets is thought to principally reflect changes in global sentiments and country risk. In turn, country risk is a reflection of a lack of sufficient information, agency problems (inability of a foreign lender to monitor a distant borrower), and sovereign risk. For these reasons, it...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    The Global Financial Crisis And Workers' Remittances To Africa: What's The Damage?

    One of the distinguishing features of the global financial crisis of 2007 - 09 is its effect on remittances. Until the financial crisis, remittances had proven to be a remarkably dependable source of income for households in developing economies, growing robustly regardless of the state of the business cycle. But...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    Financial Shocks And TFP Growth

    The paper investigates how changes in industries' funding costs affect total factor productivity (TFP) growth. Based on panel regressions using 31 U.S. and Canadian industries between 1991 and 2007, and using industries' dependence on external funding as an identification mechanism, the author shows that increases in the cost of funds...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    The Location Of Domestic And Foreign Production Affiliates By French Multinational Firms

    Economists interested in location choices usually focus their attention on investments abroad. This neglects the fact that multinational enterprises continue to invest domestically while undertaking foreign expansion. This paper compares investments at home and abroad. Our firm-level dataset shows an important home bias in productive investments. Part of this "Excessive"...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    An Estimated Model With Macrofinancial Linkages For India

    This paper develops a small open economy dynamic stochastic general-equilibrium model with macro-financial linkages. The model includes a financial accelerator - entrepreneurs are assumed to partially finance investment using domestic and foreign currency debt - to assess the importance of financial frictions in the amplification and propagation of the effects...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    Dissecting Taylor Rules In A Structural VAR

    This paper uncovers Taylor rules from estimated monetary policy reactions using a structural VAR on U.S. data from 1959 to 2009. These Taylor rules reveal the dynamic nature of policy responses to different structural shocks. The author finds that U.S. monetary policy has been far more responsive over time to...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    The Outlook For Financing Japan's Public Debt

    Despite the rapid rise in public debt and large fiscal deficits, Japanese Government Bond (JGB) yields have remained fairly stable. Possible factors include: Japan's sizeable pool of household savings, presence of large and stable institutional investors, and strong home bias. These factors are likely to persist for some time, but...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    Responding To Banking Crises: Lessons From Cross-Country Evidence

    A common legacy of banking crises is a large increase in government debt, as fiscal resources are used to shore up the banking system. Do crisis response strategies that commit more fiscal resources lower the economic costs of crises? Based on evidence from a sample of 40 banking crises the...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    China: Does Government Health And Education Spending Boost Consumption?

    Consumption in China is unusually low and has continued to decline as a share of GDP over the past decade. A key policy question is how to reverse this trend, and rebalance growth away from reliance on exports and investment and toward consumption. This paper investigates whether the sizable increase...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    Estimating Poland's Potential Output: A Production Function Approach

    This paper develops a methodology based on the production-function approach to estimate potential output of the Polish economy. The paper concentrates on obtaining a robust estimate of the labor input by deriving Poland's natural rate of unemployment. The estimated unemployment gap is found to track well pressures on resource constraints....

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    Are Financial Crises Alike?

    This paper investigates whether financial crises are alike by considering whether a single modeling framework can fit multiple distinct crises in which contagion effects link markets across national borders and asset classes. The crises considered are Russia and LTCM in the second half of 1998, Brazil in early 1999, dot-com...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    Canada's Potential Growth: Another Victim Of The Crisis?

    This paper investigates the impact of the current financial crisis on Canada's potential GDP growth. Using a simple accounting framework to decompose trend GDP growth into changes in capital, labor services and total factor productivity, the author finds a sizeable drop in Canadian potential growth in the short term. The...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    Exchange Rate Choices Of Microstates

    In this paper the author firsts explain why most microstates (countries with less than 2 million inhabitants) have gained independence only in the last 30 years. Despite the higher costs and risks microstates face, their ability to better accommodate local preferences combined with a more integrated world economy probably explains...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    After The Crisis: Lower Consumption Growth But Narrower Global Imbalances?

    This paper estimates consumption dynamics in the G-7 economies, paying particular attention to the possibility of precautionary behavior in the face of uncertainty. The author finds that in the short run, continued income uncertainty will significantly dampen consumption growth. As such, consumption in the G-7 economies is unlikely to be...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    Sovereign Default Risk And Private Sector Access To Capital In Emerging Markets

    Top down spillovers of sovereign default risk can have serious consequences for the private sector in emerging markets. This paper analyzes the effects of these spillovers using firm-level data from 31 emerging market economies. The author assesses how sovereign risk affects corporate access to international capital markets, in the form...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    Macrofinancial Linkages Of The Strategic Asset Allocation Of Commodity-Based Sovereign Wealth Funds

    This paper analyses the links between the investment strategies of a commodity-based SWF and the macroeconomic framework of the owner country. The author examines some basic macrofinancial linkages of an SWF's strategic asset allocation (SAA) strategies with regard to the government budget, monetary policy, and exchange rate movements. Based on...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    The Spillover Effects Of The Global Crisis On Economic Activity In MENA Emerging Market Countries-An Analysis Using The Financial Stress Index

    The estimated spillover of the global crisis to emerging market (EM) economies in the Middle East and North Africa (MENA) indicates that nearly two-thirds of the increased financial stress in MENA EM countries after the Lehman shock is attributable to direct or indirect spillovers of financial stress in advanced economies....

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    What Level Of Public Debt Could India Target?

    This paper discusses possible medium-term public debt targets for India, based on evidence from the economic literature on prudent levels of public debt and the feasibility for the country to meet a particular target over the next 5-6 years. While recognizing the challenges in determining an appropriate debt target, cross-country...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    Correlations In Emerging Market Bonds: The Role Of Local And Global Factors

    This paper examines the co-movement in emerging market bond returns and disentangles the influence of external and domestic factors. The conceptual framework, set in the context of asset allocation, allows one to describe the channels through which shocks originating in a particular emerging or mature market are transmitted across countries...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    The Impact Of The Global Crisis On Canada: What Do Macro-Financial Linkages Tell Us?

    This paper builds a Bayesian VAR estimation model of growth for Canada, by focusing specifically on the role of external and domestic financial indicators, including credit conditions. A variance decomposition shows that financial conditions explain one-third of the total variability in Canada's real GDP growth, although changes in U.S. real...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    Inherited Or Earned? Performance Of Foreign Banks In Central And Eastern Europe

    Using a combination of propensity score matching and difference-in-difference techniques the author investigates the impact of foreign bank ownership on the performance and market power of acquired banks operating in Central and Eastern Europe. This approach allows one to control for selection bias as larger but less profitable banks were...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    Investment By Large Firms In Argentina

    Strong growth in investment made a key contribution to the economic recovery in Argentina earlier this decade. This paper uses firm-level data to assess changes in financing constraints and the linkages between real investment at the firm level and macroeconomic developments in the real exchange rate and real interest rates....

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    Public Debt Sustainability And Management In A Compound Option Framework

    This paper introduces the Asset and Liability Management (ALM) compound option model. The model builds on the observation that the public sector net worth in a multi-period setting corresponds to the value of an option on an option on total government assets. Hence, the ALM compound option model is better...

    Provided By International Monetary Fund

  • White Papers // Jan 2010

    Post-Crisis Bank Behavior: Lessons From Mercosur

    Did the occurrence of systemic banking crises in the 1990s and 2000s significantly alter the behavior of banks in the Mercosur? The objective of this paper is to answer this question by analyzing changes in bank behavior after crises in the Mercosur region. To the author's knowledge, this is the...

    Provided By International Monetary Fund

  • White Papers // Dec 2009

    The Housing Cycle In Emerging Middle Eastern Economies And Its Macroeconomic Policy Implications

    This paper examines housing finance and housing price dynamics in selected emerging Middle Eastern economies over the past two decades. It finds that (i) mortgage markets have experienced rapid development, which has led to lower private per capita consumer spending volatility this decade; (ii) a downward price correction occurred in...

    Provided By International Monetary Fund

  • White Papers // Dec 2009

    A Fistful Of Dollars: Lobbying And The Financial Crisis

    Using detailed information on lobbying and mortgage lending activities, the author finds that lenders lobbying more on issues related to mortgage lending (i) had higher loan-to-income ratios, (ii) securitized more intensively, and (iii) had faster growing portfolios. Ex-post, delinquency rates are higher in areas where lobbyist' lending grew faster and...

    Provided By International Monetary Fund

  • White Papers // Dec 2009

    Jointly Optimal Monetary And Fiscal Policy Rules Under Borrowing Constraints

    This paper studies the welfare properties of an economy where both monetary and fiscal policy follow simple rules, and where a subset of agents is borrowing constrained. The optimized fiscal rule is far more aggressive than automatic stabilizers, and stabilizes the income of borrowing constrained agents, rather than output. The...

    Provided By International Monetary Fund

  • White Papers // Mar 2009

    International Currency Portfolios

    This paper develops a theory of international currency portfolios that holds in general equilibrium, and that is therefore not subject to the criticisms directed at the portfolio balance literature of the 1980s. It shows that, under plausible assumptions about fiscal policy, the relationship between the rates of return of different...

    Provided By International Monetary Fund

  • White Papers // Mar 2009

    The Italian Labor Market: Recent Trends, Institutions, And Reform Options

    Despite improvements in labor market performance over the past decade, owing in part to past reforms, Italy's employment and productivity outcomes continue to lag behind those of its European peers. This paper reviews Italy's institutional landscape and labor market trends from a cross-country perspective, and discusses possible avenues for further...

    Provided By International Monetary Fund

  • White Papers // Mar 2009

    Sovereign Default, Private Sector Creditors And The IFIs

    This paper builds a model of a sovereign borrower that has access to credit from private sector creditors and an IFI. Private sector creditors and the IFI offer different debt contracts that are modelled based on the institutional frameworks of these two types of debt. The author analyzes the decisions...

    Provided By International Monetary Fund

  • White Papers // Mar 2009

    Competition In The Financial Sector: Overview Of Competition Policies

    As in other sectors, competition in finance matters for allocative, productive and dynamic efficiency. Theory suggests, however, that unfettered competition is not first best given the special features of finance. The author reviews these analytics and describes how to assess the degree of competition in markets for financial services. Existing...

    Provided By International Monetary Fund

  • White Papers // Mar 2009

    Exchange Rates And Wages In An Integrated World

    This paper analyzes how the pass-through from exchange rate to domestic wages depends on the degree of integration between domestic and foreign labor markets. Using data from 66 countries over the period 1981 - 2005, it's found that the elasticity of domestic wages to real exchange rate is 0.1 after...

    Provided By International Monetary Fund

  • White Papers // Mar 2009

    The Second Transition: Eastern Europe In Perspective

    The countries of Eastern Europe achieved two remarkable transitions in the short period of the last two decades: from plan to market and, then, in the run-up to and entry into the European Union, they rode a wave of global trade and financial market integration. Focusing on the second transition,...

    Provided By International Monetary Fund

  • White Papers // Mar 2009

    Deleveraging After Lehman-Evidence From Reduced Rehypothecation

    Rehypothecation is the practice that allows collateral posted by, say, a hedge fund to their prime broker to be used again as collateral by that prime broker for its own funding. In the United Kingdom, such use of a customer's assets by a prime broker can be for an unlimited...

    Provided By International Monetary Fund

  • White Papers // Jan 2009

    How Can Burundi Raise Its Growth Rate? The Impact Of Civil Conflicts And State Intervention On Burundi's Growth Performance

    For the last thirty years, Burundi's low economic growth has led to a significant decline in per capita GDP. The purpose of this paper is to analyze the factors that contributed to this poor performance and to shed light on supply-side constraints that prevent Burundi's economy from growing faster. The...

    Provided By International Monetary Fund

  • White Papers // Jan 2009

    Benford's Law And Macroeconomic Data Quality

    This paper examines the usefulness of testing the conformity of macroeconomic data with Benford's law as indicator of data quality. Most of the macroeconomic data series tested conform with Benford's law. However, questions emerge on the reliability of such tests as indicators of data quality once conformity with Benford's law...

    Provided By International Monetary Fund

  • White Papers // Jan 2009

    Distress In European Banks: An Analysis Based On A New Dataset

    The global financial crisis has highlighted the importance of early identification of weak banks: when problems are identified late, solutions are much more costly. Until recently, Europe has seen only a small number of outright bank failures, which made the estimation of early warning models for bank supervision very difficult....

    Provided By International Monetary Fund

  • White Papers // Jan 2009

    The Role For Counter-Cyclical Fiscal Policy In Singapore

    Singapore's policymakers have often used fiscal policy as a counter-cyclical tool. Empirical results based on a structural auto regression framework suggest that fiscal policy can be used for demand management, although the impact may be somewhat short lived. The short-lived impact could reflect a number of factors, including the absence...

    Provided By International Monetary Fund

  • White Papers // Jan 2009

    Australia And New Zealand Exchange Rates: A Quantitative Assessment

    The paper describes three empirical models commonly used to conduct exchange rate assessments and applies them to data for Australia and New Zealand. The baseline results using data and medium-term projections available as of October 2008, suggest that the Australian and New Zealand dollars were broadly in line with fundamentals,...

    Provided By International Monetary Fund

  • White Papers // Jan 2009

    Regional Financial Interlinkages And Financial Contagion Within Europe

    This paper focuses on financial interlinkages within Europe and potential contagion channeled through these interlinkages. It discusses the increased role of external financing as a source of funding for credit growth; analyzes potential channels of contagion through financial linkages; and assesses the magnitude of cross-border exposures between emerging and western...

    Provided By International Monetary Fund

  • White Papers // Jan 2009

    A European Mandate For Financial Sector Supervisors In The EU

    The EU is deliberating the introduction of an explicit "European mandate" for financial sector supervisors to supplement national mandates. Suggestions are made on (i) the formulation of a European mandate; (ii) the policy areas to which it should apply; (iii) which institutions should be given a European mandate; (iv) the...

    Provided By International Monetary Fund

  • White Papers // Jan 2009

    Banking Stability Measures

    This paper defines a set of banking stability measures which take account of distress dependence among the banks in a system, thereby providing a set of tools to analyze stability from complementary perspectives by allowing the measurement of (i) common distress of the banks in a system, (ii) distress between...

    Provided By International Monetary Fund

  • White Papers // Jan 2009

    Yen Bloc Or Yuan Bloc: An Analysis Of Currency Arrangements In East Asia

    This paper examines the role of Japan against that of China in the exchange rate regime in East Asia in light of growing interest in forming a currency union in the region. The analysis suggests that currency unions with China tend to generate higher average welfare gains for East Asian...

    Provided By International Monetary Fund

  • White Papers // Jan 2009

    Recent French Export Performance: Is There A Competitiveness Problem?

    Recently, the export performance of France relative to its own past and relative to a major trading partner, Germany, deteriorated. That deterioration seems related to the geographical destination and product composition of trend exports. Faced with an increase in unit labor costs or in its terms of trade, France adjusts...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    Ponzi Schemes In The Caribbean

    In several Caribbean states, unregulated investment schemes grew quickly in recent years by claiming unusually high monthly returns and through a system of referrals by existing members. These are features shared with traditional Ponzi schemes and pyramid schemes. This paper describes the growth of such schemes, their subsequent collapse, and...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    Inflation Targeting Under Imperfect Policy Credibility

    This paper presents a model for Inflation Targeting under imperfect policy credibility. It modifies the conventional model in three ways: an endogenous policy credibility process, by which monetary policy can gain or lose credibility over time; non-linearities in the inflation equation and in the credibility generating process; and an explicit...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    The Size Of Government And U.S.-European Differences In Economic Performance

    An influential strand of recent research has claimed that large governments in European countries explain their weaker long-term economic performance compared to the U.S. On the other hand, despite these alleged costs, large governments have been popular with electorates. This paper seeks to shed light on this apparent inconsistency; it...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    Remittances: An Automatic Output Stabilizer?

    Remittance flows appear to be falling worldwide for the first time in decades as a result of the ongoing financial turmoil. It is suspected that the drop in remittance income into developing and emerging markets will have a destabilizing effect on these economies. The paper estimates the impact of remittances...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    Inflation Hedging For Long-Term Investors

    Long-term investors face a common problem - how to maintain the purchasing power of their assets over time and achieve a level of real returns consistent with their investment objectives. While inflation-linked bonds and derivatives have been developed to hedge the effects of inflation, their limited supply and liquidity lead...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    Global Imbalances And Petrodollars

    Oil exporters have run large current account surpluses. The author explores oil exporters' role in the understanding and the resolution of global imbalances. Current account dynamics are estimated for oil-exporting countries and the rest of the world and finds that fiscal policy has a much stronger effect on current account...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    Chile's Structural Fiscal Surplus Rule: A Model-Based Evaluation

    This paper analyzes Chile's structural balance fiscal rule in the face of copper price shocks originating in foreign copper demand. It uses a version of the IMF's Global Integrated Monetary and Fiscal Model (GIMF) that includes a copper sector. Two results are obtained. First, Chile's current fiscal rule performs well...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    IT Framework Design Parameters

    This is the third chapter of a forthcoming monograph entitled "On Implementing Full-Fledged Inflation-Targeting Regimes: Saying What You Do and Doing What You Say." It examines a number of elements in the design of an inflation-targeting framework. These include the definition of the target variable, the relevance of core measures...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    Why Inflation Targeting?

    This is the second chapter of a forthcoming monograph entitled "On Implementing Full-Fledged Inflation-Targeting Regimes: Saying What You Do and Doing What You Say." The author begins by discussing the costs of inflation, including their role in generating boom-bust cycles. Following a general discussion of the need for a nominal...

    Provided By International Monetary Fund

  • White Papers // Apr 2009

    Adding Latin America To The Global Projection Model

    This is the fourth of a series of papers that are being written as part of a larger project to estimate a small quarterly Global Projection Model (GPM). The GPM project is designed to improve the toolkit to which economists have access for studying both own-country and cross-country linkages. In...

    Provided By International Monetary Fund

  • White Papers // Feb 2009

    In Search Of WTO Trade Effects: Preferential Trade Agreements Promote Trade Strongly, But Unevenly

    This paper is the first that simultaneously controls for the three described sources of omitted variable bias in a large bilateral trade dataset. The approach highlights that the omission of any of the controls renders the WTO coefficients biased upward. On the contrary, if all controls are included, e.g. by...

    Provided By International Monetary Fund

  • White Papers // Feb 2009

    Are Capital Controls Effective In The 21st Century? The Recent Experience Of Colombia

    This paper assesses the effects of capital controls imposed in Colombia in 2007 on capital flows and exchange rate dynamics. The results suggest that the controls were successful in reducing external borrowing, but had no statistically significant impact on the volume of non-FDI flows as a whole. The author finds...

    Provided By International Monetary Fund

  • White Papers // Feb 2009

    The Cost Of Aggressive Sovereign Debt Policies: How Much Is The Private Sector Affected?

    This paper proposes a new empirical measure of cooperative versus conflictual crisis resolution following sovereign default and debt distress. The index of government coerciveness is presented as a proxy for excusable versus inexcusable default behaviour and used to evaluate the costs of default for the domestic private sector, in particular...

    Provided By International Monetary Fund

  • White Papers // Feb 2009

    Current Account Determinants For Oil-Exporting Countries

    The paper aims at characterizing the main determinants of the medium-term current account balance for oil-exporting countries using dynamic panel estimation techniques. Previous studies included a very limited number of oil-exporting countries in their samples, raising concerns about the applicability of the estimated coefficients for oil countries. Furthermore, current approaches...

    Provided By International Monetary Fund

  • White Papers // Feb 2009

    The Value Of Institutions For Financial Markets: Evidence From Emerging Markets

    This paper investigates the value of political institutions for financial markets, using panel data from emerging market countries. The author tests the hypothesis that changes in political institutions, such as improvements in democratic rights and increased government accountability, have a direct effect on sovereign interest rate spreads. The author finds...

    Provided By International Monetary Fund

  • White Papers // Feb 2009

    An Investigation Of Some Macro-Financial Linkages Of Securitization

    Policy-makers have attributed the scale of the credit crisis and its profound impact on money markets (as well as financial sector stability) to the fast rise of securitization and the way it has arguably complicated both the conduct of monetary policy and the effect of interest rate transmission to the...

    Provided By International Monetary Fund

  • White Papers // Feb 2009

    Why Isn't South Africa Growing Faster? A Comparative Approach

    The purpose of this paper is to examine factors that have constrained South Africa's growth since the end of apartheid by comparing its GDP components and its saving and investment performance with those of 10 faster-growing countries. The study finds that sluggish investment has undermined growth since 1996 and that...

    Provided By International Monetary Fund

  • White Papers // Feb 2009

    Can Markets Compute Equilibria?

    Recent turmoil in financial and commodities markets has renewed questions regarding how well markets discover equilibrium prices, particularly when those markets are highly complex. A relatively new critique questions whether markets can realistically find equilibrium prices if computers cannot. For instance, in a simple exchange economy with Leontief preferences, the...

    Provided By International Monetary Fund

  • White Papers // Feb 2009

    Regional Financial Spillovers Across Europe: A Global VAR Analysis

    The recent financial crisis raises important issues about the transmission of financial shocks across borders. In this paper, a global vector autoregressive (GVAR) model is constructed to assess the relevance of international spillovers following a historical slowdown in U.S. equity prices. The GVAR model contains 27 country-specific models, including the...

    Provided By International Monetary Fund

  • White Papers // Jan 2009

    Monetary And Fiscal Rules In An Emerging Small Open Economy

    This paper develops an optimal rules-based interpretation of the 'three pillars macroeconomic policy framework': a combination of a freely floating exchange rate, an explicit target for inflation, and a mechanism than ensures a stable government debt-GDP ratio around a specified long run. The author shows how such monetary-fiscal rules need...

    Provided By International Monetary Fund

  • White Papers // Jan 2009

    Causes, Benefits, And Risks Of Business Tax Incentives

    This paper provides an updated overview of tax incentives for business investment. It begins by noting that tax competition is likely to be a major force driving countries' tax reforms, and discusses tax incentives as a possible response to this. This is complemented by other arguments for and against tax...

    Provided By International Monetary Fund

  • White Papers // Jan 2009

    Capital Inflows And The Real Exchange Rate: Can Financial Development Cure The Dutch Disease?

    This paper argues that, in improving the efficient allocation of resources, financial sector development could dampen the appreciation effect of capital inflows. Using dynamic panel data techniques, the paper finds that the exchange rate appreciation effect of FDI inflows is indeed attenuated when financial and capital markets are larger and...

    Provided By International Monetary Fund

  • White Papers // Jan 2009

    An Index Number Formula Problem: The Aggregation Of Broadly Comparable Items

    There is a consensus as to which price index number formula is best when price and quantity/value information are available for the aggregation of heterogeneous items. The economic theoretic approach to index number formulas supports superlative index numbers, primarily the Fisher, T?rnqvist, and Walsh indexes, all of which give similar...

    Provided By International Monetary Fund