Posted on April 30, 2015 by iMFdirect
By Will Kerry and Jean Portier
A year ago our research showed Europe had an €800 billion stock of bad loans. In our latest Global Financial Stability Report we show that the problem has now grown to more than €900 billion. This stock of nonperforming loans is concentrated in the hardest hit economies, with two-thirds located in just six euro area economies. The European Central Bank’s Asset Quality Review confirmed this picture, which revealed that the majority of banks in many of these economies had high levels of nonperforming assets (see chart 1).
Filed under: Advanced Economies, Economic outlook, Economic research, Europe, Financial Crisis, growth, IMF, International Monetary Fund, Investment | Tagged: bank lending, debt overhang, euro area, European Central Bank, GFSR, Global Financial Stability Report, inflation, interest rates, liquidity, nonperforming loans | Leave a comment »
Posted on November 30, 2009 by iMFdirect
By Olivier J. Blanchard
We celebrated the 10th anniversary of the IMF’s research conference with an outstanding group of presenters and a record number of participants. The main topic of this year’s conference was “Financial Frictions and Macroeconomic Adjustment.”
Two days of scholarly exchange among researchers and policymakers focused on various themes related to the crisis. I’ve summarized here some of these themes along with their implications for future research.
1. Household leverage played a critical role in shaping the dynamics during the current U.S. recession. The first paper of the conference provided convincing evidence that the U.S. counties where household leverage had grown the most during the boom were also the ones that experienced the largest busts as measured by home prices, defaults, auto sales, and unemployment. Future research should focus on the policy implications of these findings, especially in the context of the role of monetary policy in mitigating the adverse effects of asset bubbles.
Filed under: Economic Crisis, Economic research, IMF | Tagged: balance sheet adjustment, debt overhang, global banks, household leverage, macrofinancial linkages, Olivier Blanchard, Ricardo Caballero | Leave a comment »
Posted on November 16, 2009 by iMFdirect
By Carlo Cottarelli
One obvious fallout of the global financial crisis is a huge deterioration in fiscal conditions, particularly in advanced countries. The numbers are nothing short of staggering. Gross general government debt in the G-20 advanced economies is projected to approach 120 percent of GDP by 2014, up from about 80 percent in 2007, and this is even assuming no renewal of fiscal stimulus beyond 2010.
Some might think that this comes from an “exotic” form of fiscal policy whereby governments opened their coffers to prop up financial institutions. But only a small part of this debt spike is matched by a rise in financial assets. It really boils down to “plain vanilla” deficits—revenue losses from the recession, fiscal stimulus, and some underlying spending increases that would have occurred even without a recession.
Filed under: Economic Crisis, Financial Crisis, Fiscal Stimulus, IMF | Tagged: debt overhang, debt ratios, fiscal exit strategies, fiscal space, Fiscal Stimulus, government spending, health spending, pensions, population aging | 2 Comments »