Moving On Up: The Growth Story of Frontier Economies


Min ZhuBy Min Zhu

(version in Español)

The growth story for frontier economies isn’t the same as China’s in the last two decades, or the United States a hundred years ago.  These fast growing, low-income countries have their own story, and it’s not what you might think.

In May of this year, I wrote about who they are and how they are different, and now I want to go into a bit more detail about how their economies have been on the rise and how they have moved themselves to the frontier.

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Managing House Price Booms in Emerging Markets


Min ZhuBy Min Zhu

(Versions in 中文)

For the past decade, house prices have steadily increased in the vast majority of the 30 countries that make up the IMF’s House Price Index for Emerging Markets released today at a conference organized by the IMF and the Indian Institute of Management in Bangalore, India (Figure 1).

The index shows a lull in the aftermath of the global financial crisis, followed by an increase for nine consecutive quarters since 2012. This run-up—four times as fast as that in advanced economies—would be even more pronounced if the larger countries in the group such as China and India receive greater weight in the index.

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Emerging Markets & Volatility: Lessons from the Taper Tantrum


By Ratna Sahay and Preya Sharma

You may hear a sigh of relief from emerging market watchers as we approach the end of the year. Yet, against the backdrop of a prolonged period of low interest rates in advanced economies, huge capital flows, and a slowdown in emerging market growth, 2015 promises to keep us all on our toes.  Differences in the timing of exit from unconventional monetary policy in advanced economies will have a global impact. The IMF has been keeping a close eye on developments in emerging markets, providing analysis on issues such as how investors’ differentiate between emerging market countries, the impact of volatile markets, and the factors explaining the slowdown in growth.

In a recent paper, we take a look back at what happened before and during the tapering episode to draw out the key lessons for policymakers. Past experience is clear: decisions by major central banks can have sizable global spillovers. Announcements by the U.S. Federal Reserve, in particular, have been strongly correlated with asset price volatility and capital flows in emerging markets. With expectations of Fed tightening to begin in 2015, we think a better understanding of these events can better inform policymakers’ decisions.

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The First Wealth


Jeff Hayden altBy Jeff Hayden

“The first wealth is health,” American philosopher Ralph Waldo Emerson wrote in 1860.­

Emerson’s quote, cited by Harvard economist and health expert David E. Bloom in Finance and Development’s lead article, reminds us that good health is the foundation on which to build—a life, a community, an economy.­

Humanity has made great strides, developing vaccines and medical techniques that allow us to live longer, healthier lives. Other developments—such as increased access to clean water and sanitation—have helped beat back long-standing ills and pave the way for better health.

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Challenges Ahead: Managing Spillovers


By Olivier Blanchard, Luc Laeven, and Esteban Vesperoni

The last five years have been a reminder of the importance of interconnections and risks in the global economy. They have triggered intense discussions on the optimal way to combine fiscal, monetary, and financial policies to deal with spillovers, and on the need and the scope for coordination of such policies.

The IMF’s 15th Jacques Polak Annual Research Conference, which took place in Washington DC on November 13 and 14, 2014, focused on Cross-Border Spillovers, and took stock of what we know and do not know.  The summary below picks and chooses some papers, and does not do justice to the full set of papers presented and discussed at the conference.  They can all be downloaded, and videos of each session are available, at www.imf.org/external/np/res/seminars/2014/arc.

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Growth: An Essential Part of a Cure for Unemployment


By Davide Furceri and Prakash Loungani

(version in EspañolFrançais中文Русский,  عربي,  日本語)

Unemployment is a global problem. If the unemployed formed their own country, it would be the fifth largest in the world. Of the nearly 200 million people around the world looking for work, half are in emerging markets and about a quarter in advanced economies, reflecting the growing weight of emerging markets in the global labor force (Figure 1).

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Building a Camaraderie of Central Bankers: How Monetary Policymakers in the Caucasus and Central Asia Can Learn From Each Other


Min ZhuBy Min Zhu

(Versions in 中文Русский)

The world’s central bankers are certainly in the news these days. Not a week goes by without the Fed, the European Central Bank or the Bank of Japan taking big and often unprecedented actions to fight deflation, preserve financial stability, or address mediocre growth. We tend to forget, however, that these are not the only central banks that are struggling to adapt their policies to changing circumstances in our connected world.

Take the Caucasus and Central Asia — Armenia, Azerbaijan, Georgia, Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan. Central banking in these former Soviet republics rarely makes international headlines. But figuring out how best to design and run monetary policy is no less a challenge than in the United States or the euro zone.

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