Posted on July 9, 2015 by iMFdirect
By Olivier Blanchard
(Versions in Español and عربي)
Today we published the World Economic Outlook Update.
But first, let me talk about the elephant in the room, namely Greece.
The word elephant may not be right: As dramatic as the events in Greece are, Greece accounts for less than two percent of the Eurozone GDP, and less than one half of one percent of world GDP.
Filed under: Advanced Economies, Asia, Economic Crisis, Economic outlook, Emerging Markets, Europe, Financial Crisis, Globalization, growth, IMF, Inequality, International Monetary Fund, Latin America, Politics, Reform | Tagged: Brazil, economic forecasts, emerging economies, eurozone, Greece, IMF forecast, Japan, Olivier Blanchard, Russia, Spain, United States, WEO, World Economic Outlook | Leave a comment »
Posted on June 10, 2015 by iMFdirect
By Eugenio Cerutti, Jihad Dagher, and Giovanni Dell’Ariccia
Housing finance—considered one of the villains of the recent global financial crisis—was seen, at least until recently, as a vehicle for economic growth and social stability. Broader access to housing finance promotes home ownership, especially for younger and poorer households; which in turn is often linked to social stability, and ultimately economic growth.
But real-estate boom episodes have often ended in busts with dire economic consequences, especially when the boom was financed through fast credit growth. Several countries have seen these boom-bust patterns over the last decade, particularly in some of the hardest hit countries during the global financial crises, such as Ireland, Spain, and the United States. Despite having different mortgage market structures, these three countries saw an astonishing increase in house prices and construction on the back of risky lending which was followed by a painful adjustment period—a mortgage credit boom gone bad.
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Finance, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund, Investment, Reform | Tagged: house prices, household debt, housing market, Ireland, monetary policy, mortgages, real estate, Spain, United States | Leave a comment »
Posted on May 7, 2015 by iMFdirect
By Shekhar Aiyar, Bergljot Barkbu, and Andreas (Andy) Jobst
If financing is the lifeblood of European small businesses, then the effect of the financial crisis was similar to a cardiac arrest. The flow of affordable credit from banks was choked off and small and medium-sized enterprises (SMEs) were hit hardest. Today, with bank lending still recovering from that shock, smart policy actions could open up securitization as a source of financing to help small businesses start up, flourish and grow.
SMEs are vital to the European economy. They account for 99 out of every 100 businesses, two in every three employees, and 58 cents of each euro of value added of the business sector in Europe. Improving access to finance would therefore not only revive small businesses, but also support a strong and lasting recovery for Europe as a whole.
Filed under: Advanced Economies, Economic Crisis, Economic research, Europe, Finance, Globalization, growth, IMF, International Monetary Fund, Investment, Reform | Tagged: bank lending, bond markets, capital markets, credit, EU, Europe, France, Germany, infrastructure, Italy, private investment, Securitization, small and medium-sized enterprises, Spain | Leave a comment »
Posted on March 11, 2015 by iMFdirect
By Jochen Andritzky
(Versions in Español)
In housing crises, high mortgage debt can feed a vicious circle of falling housing prices and economic slowdown. As a result, more households default on their mortgages and the crisis deepens. A new IMF Working Paper studies the differences in the housing crises and policy responses in Iceland, Ireland, Spain, and the United States, and argues that crisis policies geared to provide temporary debt service relief for struggling households, followed by durable loan modifications, can help break this vicious circle.
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Europe, Financial Crisis, growth, IMF, International Monetary Fund, Investment, Reform | Tagged: Foreclosures, house prices, housing market, Iceland, Ireland, loans, mortgages, recession, Spain, United States | Leave a comment »
Posted on March 2, 2015 by iMFdirect
By Jeff Hayden
We drew our inspiration for Finance & Development‘s cover from Diego Rivera’s Detroit Industry murals at the Detroit Institute of Arts. Rivera, a Mexican artist, was commissioned in 1932 to paint the 27-panel visual epic as a tribute to the city’s assembly-line workers, scientists, doctors, secretaries, and laborers, many of whom were struggling at the time to keep their jobs amid the devastation of the Great Depression.
Filed under: Advanced Economies, Asia, Economic outlook, Economic research, Emerging Markets, Employment, Europe, Fiscal policy, Globalization, growth, IMF | Tagged: advanced economies, central banks, economic growth, employment, euro area, F&D, Finance & Development magazine, fiscal policy, forecast, immigration, India, jobs, labor market, Spain, Sub-Saharan Africa, taxes | Leave a comment »
Posted on February 25, 2015 by iMFdirect
By Martine Guerguil
Does the European Union need closer fiscal integration, and in particular a stronger fiscal center, to become more resilient to economic shocks? A new IMF book, Designing a European Fiscal Union: Lessons from the Experience of Fiscal Federations, published by Routledge, examines the experience of 13 federal states to help inform the debate on this issue. It analyzes in detail their practices in devolving responsibilities from the subnational to the central level, compares them to those of the European Union, and draws lessons for a possible future fiscal union in Europe.
The book sets out to answer three sets of questions: (1) What is the role of centralized fiscal policies in federations, and hence the size, features, and functions of the central budget? (2) What institutional arrangements are used to coordinate fiscal policy between the federal and subnational levels? (3) What are the links between federal and subnational debt, and how have subnational financing crises been handled, when they occurred?
Filed under: Advanced Economies, Economic research, Europe, Financial Crisis, Fiscal, Fiscal policy, growth, IMF, International Monetary Fund, Politics, Public debt | Tagged: Austria, Belgium, book launch, Brazil, Canada, debt, euro area, Europe, European Union, fiscal federation, Germany, Mexico, Spain, Switzerland, United States | Leave a comment »
Posted on February 19, 2015 by iMFdirect
By Bergljot Bjørnson Barkbu, S. Pelin Berkmen, and Hanni Schölermann
Investment in the euro area, and particularly private investment, has not recovered since the onset of the global financial crisis.
In fact, the decline in investment has been much more drastic than in other financial crises; and is more in line with the most severe of these crises (see Chart 1). The October 2014 World Economic Outlook showed that many governments cut investment because their finances became strained during the crisis. In addition, housing investment collapsed in some countries, reflecting a natural scaling back after an unsustainable boom. But what is holding back private non-residential investment?
Filed under: Advanced Economies, Economic Crisis, Economic research, Europe, Financial Crisis, growth, IMF, International Monetary Fund, Investment, Reform | Tagged: banking union, euro area, France, Germany, Greece, investment, Ireland, Italy, monetary policy, Portugal, Spain, structural reform | Leave a comment »