Posted on December 18, 2013 by iMFdirect
By Era Dabla-Norris and Kalpana Kochar
(Version in Español)
The era of remarkable growth in many emerging market economies fueled by cheap money and high commodity prices may very well be coming to an end.
The slowdown reflects not just inadequate global demand, but also structural factors that are rendering previous growth engines less effective, and the fact that economic “good times” reduced the incentives to implement further reforms to enhance productivity. With the end of the period of favorable global financing and trade conditions, the time is nigh for governments to make strong efforts to increase productivity—the essential foundation of sustainable growth and rising living standards. Continue reading
Filed under: Asia, Economic research, Emerging Markets, Employment, Finance, Financial regulation, Financial sector supervision, growth, IMF, International Monetary Fund, Latin America | Tagged: emerging markets, employment, financial markets, Financial regulation, financial supervision, growth, iMFdirect, infrastructure, International Monetary Fund, Labor, productivity | 1 Comment »
Posted on November 6, 2013 by iMFdirect
By Michael Keen
(Version in Español, Français and 中文)
Last night, when you went to bed, you left $40 on the kitchen table. When you woke up this morning, you found only $30—and a note from the government saying, “Thank you very much, we took $10 as a tax payment.” This is, of course, extremely irritating. To an economist, however, it’s close to an ideal form of taxation, since there is nothing you can now do to reduce, avoid, or evade it—the holy grail of what economists call a non-distorting tax.
(This doesn’t mean that you won’t react in some way. Being worse off, you may now work a bit more, or save a bit less. But any other tax raising $1 would make you even worse off, because it would change relative prices (a tax on your earnings would make working less attractive, for instance), and so take your choices even further from those you would make in the absence of taxation.)
Filed under: Economic Crisis, Economic outlook, Economic research, Finance, Financial sector supervision, Fiscal policy, IMF, International Monetary Fund, Politics, Public debt | Tagged: capital levy, debt, Fiscal Monitor, tax cuts, tax policy, taxation | Leave a comment »
Posted on October 2, 2013 by iMFdirect
By Erik Oppers
What’s up with weak credit? Five years into the economic crisis credit is still barely growing, and even declining in many advanced economies. Weak credit growth is a major factor holding back the economic recovery and governments have tried every policy they can come up with to jumpstart credit. Still, banks don’t seem to want to lend. Or is it the corporate sector and households that can’t afford to borrow? Many feel these policies are not working. What are policymakers to do?
Our analysis in the most recent Global Financial Stability Report tries to shed light on all this darkness to help countries figure out how to make these policies work. It turns out there is no cookie-cutter solution: the problem differs from country to country and changes over time. For example, in a number of euro area countries, a lackluster demand for loans limited credit growth early in the crisis, but then banks became reluctant to supply more loans as the crisis in Europe intensified in 2012.
Filed under: Advanced Economies, Economic Crisis, Economic research, Emerging Markets, Finance, Financial sector supervision, Fiscal policy, growth, International Monetary Fund, Politics | Tagged: balance sheets, banks, credit, euro area, financial stability, GFSR, Global Financial Stability Report, lending | Leave a comment »
Posted on September 25, 2013 by iMFdirect
By Helge Berger and Justin Tyson
Sooner or later, and one way or the other, government debt in advanced economies will have to come down from the record levels reached in the wake of the global economic and euro area crises. There is no magic number for how much sovereign debt an economy can shoulder. And, as bringing down debt by cutting government spending or raising taxes comes at the risk of reducing growth and employment in the short term, there are arguments to not proceed too hastily. But eventually debt will have to be put back on a downward path in many countries. This will help rebuild fiscal buffers and cope with the costs of aging. So, what should governments do?
Our new analysis takes a closer look at the historical record and key trade-offs. The bottom line: it is possible to reduce debt when growth is low. Ultimately perseverance should pay off.
Filed under: Economic research, Employment, Finance, Financial Crisis, Financial regulation, Financial sector supervision, Fiscal policy, growth, IMF, International Monetary Fund, Public debt | Tagged: debt, euro, Europe, fiscal consolidation, GDP, government budgets, government debt | Leave a comment »
Posted on July 3, 2013 by iMFdirect
By Min Zhu
In the last two decades, countries have come a long way in shedding greater light on their public finances. The global economic crisis has reminded us, however, that we need to do more to ensure fiscal policymaking is based on reliable data on fiscal outcomes, credible forecasts of fiscal prospects, and a comprehensive assessment of fiscal risks. Working with civil society, governments, and others, the IMF has just presented a revised draft of its Fiscal Transparency Code, and we would like to know what you think of it so we can improve it further. You can comment here.
Filed under: Economic research, Emerging Markets, Finance, Financial Crisis, Financial regulation, Financial sector supervision, Fiscal policy, IMF, International Monetary Fund, Politics, Public debt | Tagged: financial sector, fiscal policy, fiscal transparency, government, Greece, public finances | Leave a comment »
Posted on May 14, 2013 by iMFdirect
by José Viñals and Ceyla Pazarbasioglu
The global regulatory landscape governing banks has changed from its pre-crisis status quo.
In addition to the Group of Twenty advanced and emerging economies led global regulatory reforms, like Basel III, the United States and the United Kingdom have decided to directly impose limits on the scope of banks’ businesses. The European Union is contemplating a similar move.
We discussed these structural banking reforms a few weeks ago with officials from finance ministries, central banks, and supervisory authorities from around the world during the IMF and World Bank Spring Meetings. The design and implementation of these measures will have implications for global financial stability and sustainable growth, so we wanted to bring people together for the first global debate of the issue with G20 and other countries.
Filed under: Advanced Economies, Europe, Finance, Financial Crisis, Financial regulation, Financial sector supervision, G-20, IMF, International Monetary Fund | Tagged: banks, Basel III, European Union, financial supervisors, IMF, iMFdirect, International Monetary Fund, investment banks, Liikanen, regulation, structural measures, too important to fail, United Kingdom, United States, Vickers, Volcker | 1 Comment »
Posted on April 29, 2013 by iMFdirect
By Olivier Blanchard
(Versions in عربي, 中文, Français, Русский, and Español)
The IMF has just hosted a second conference devoted to rethinking macroeconomic policy in the wake of the crisis. After two days of fascinating presentations and discussions, I am certain of one thing: this is unlikely to be our last conference on the subject.
Rethinking and reforms are both taking place. But we still do not know the final destination, be it for the redefinition of monetary policy, or the contours of financial regulation, or the role of macroprudential tools. We have a general sense of direction, but we are largely navigating by sight.
Filed under: Advanced Economies, Asia, Debt Relief, Economic research, Europe, Finance, Financial Crisis, Financial regulation, Financial sector supervision, Fiscal policy, IMF, International Monetary Fund, Politics, Public debt | Tagged: conference, debt, Financial regulation, financial sector, iMFdirect, International Monetary Fund, Italy, Japan, macroeconomic policy, macroeconomics, macroprudential policies, monetary policy, Olivier Blanchard, Spain, United Kingdom | 7 Comments »
Posted on February 25, 2013 by iMFdirect
by José Viñals
Version in Español
It is still winter in the northern hemisphere, but there is never a bad time for spring cleaning. I suggest that policymakers de-clutter their to-do lists by focusing on three priorities.
These policies will help economies grow and will significantly improve financial and monetary stability in 2013 and beyond.
Filed under: Advanced Economies, Europe, Finance, Financial Crisis, Financial regulation, Financial sector supervision, growth, IMF, International Monetary Fund, Politics | Tagged: banks, Basel III, iMFdirect blog, liquidity, macroprudential, to=do list, Vinals | Leave a comment »
Posted on February 15, 2013 by iMFdirect
By Nemat Shafik
During the years that followed the euro’s introduction, financial integration proceeded rapidly and markets and governments hailed it as a sign of success. The widespread belief was that it would benefit both south and north—capital was finally able to flow to where it would best be used and foster real convergence.
But in fact, a lasting convergence in productivity did not materialize across the European Union. Instead, a competitiveness divide emerged. As the financial crisis gripped the euro area in 2010, these and other problems came to the fore.
Three years later, the financial symptoms of the crisis are thankfully receding with a new sense of optimism in markets. But the underlying problems—lack of convergence of productivity and the structural flaws in the architecture of the monetary union—have only been partially addressed.
Filed under: Advanced Economies, Economic Crisis, Employment, Europe, Finance, Financial Crisis, Financial regulation, Financial sector supervision, Fiscal policy, growth, IMF, International Monetary Fund | Tagged: central banks, emerging economies, euro zone, Europe, European Union, financial integration, fiscal integration, fiscal union, Germany, IMF, iMFdirect, International Monetary Fund, Italy, monetary union, productivity, Spain | Leave a comment »
Posted on January 17, 2013 by iMFdirect
by Serkan Arslanalp and Takahiro Tsuda
It’s not news that emerging markets can be vulnerable to bouts of market volatility. Investors often pull sudden stops—they stop buying or start selling off their holdings of government bonds.
But what has become apparent in recent years is that advanced economy government bond markets can also experience investor outflows, and associated runs. At the same time, some traditional and new safe haven countries have seen their borrowing costs drop to historic lows as they experience rising inflows from foreign investors.
Our new research shows that advanced economies’ exposure to refinancing risk and changes in government borrowing costs depend mainly on who is holding the bonds— the demand side for government debt.
Filed under: Advanced Economies, Asia, Emerging Markets, Europe, Finance, Financial Crisis, Financial regulation, Financial sector supervision, G-20, growth, IMF, International Monetary Fund | Tagged: advanced economies emerging economies, Australia, Austria, banks, Belgium, borrowing costs, Canada, debt, debt-to-GDP ratio, demand, Denmark, financial institutions, financial markets, Finland, France, Germany, government bonds, Greece, IMF, iMFdirect, International Monetary Fund, investors, Ireland, Italy, Japan, Korea, Netherlands, New Zealand, Norway, Portugal, refinancing risk, risk, Slovenia, sovereign risk, Spain, supply, Sweden, Switzerland, United States, World Economic Outlook | 4 Comments »