China’s Rebalancing Explained in 6 Charts


By Longmei Zhang

Version in 中文 (Chinese)

The word “rebalancing” is often used to describe China’s economic transition. But what does it mean? And how much is China rebalancing? A recent IMF paper attempts to answer these questions.  Continue reading

Five Lessons from a Review of Recent Crisis Programs


Vivek Arora.Feb2015-thumbBy Vivek Arora

Version in 中文 (Chinese), Español (Spanish)

IMF lending increased to unprecedented levels in the aftermath of the global financial crisis. As difficulties emerged, we extended financial support to countries across the world—in the euro area, Africa, Asia, the Middle East, and emerging economies in Europe.

The IMF tried to draw lessons in real time as the crisis evolved in order to adapt our operations. We reviewed individual programs and, from time to time, paused and took stock of our experience across countries.

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Rethinking Policy at the IMF


By iMFdirect

The global financial crisis led to a broad rethink of macroeconomic and financial policies in the global academic and policy community. Eight months into the job as IMF Chief Economist, Maury Obstfeld reflects on the IMF’s role in this rethinking and in furthering economic and financial stability.

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Fiscal Costs of Hidden Deficits: Beware—When It Rains, It Pours


By Elva Bova, Marta Ruiz-Arranz, Frederik Toscani, and Elif Ture

(Version in Español)

Budgets can be full of surprises. And not always good ones. Often times, debt increases significantly because an unforeseen obligation materializes. These contingent liabilities, as they are known in the economist’s jargon, can have significant economic and fiscal costs. In fact, on many occasions, large and unexpected increases in debt across the world were due to the materialization of contingent liabilities. That is why they are often called hidden deficits.

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China’s Housing Market: Defying the Odds?


by iMFdirect

Housing is on everyone’s mind. The collapse of housing bubbles can be very costly.

  • In Japan, house prices rose by about 40 percent during the mid-1980s; the collapse was followed by a ‘lost decade’ in which incomes did not grow and house prices fell by over 40 percent.
  • In the United States, house prices increased by about 30 percent between 2001 and 2006; their collapse was followed by the global financial crisis.

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Top Five Policy Priorities to Brighten America’s Economic Future


Deniz IganBy Deniz Igan

(version in Español)

There was a time in the not-so-distant past when science fiction could make us look forward to a better world. We had uplifting visions of the future in shows like Star Trek and Back to the Future. Today, the menu of options only offers a dystopian world ruined by poverty and violence (think The Hunger Games, Divergent, or Elysium).

It sure is easy to get pessimistic these days. Six years after the financial crisis, the recovery in the United States has been fragile and weaker than anything we have seen in the post-WWII period. Growth figures, in large part, have been serial disappointments, disrupted by government shutdowns, debt ceiling showdowns, or meteorologically-triggered slowdowns.

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The Long-term Price of Financial Reform


by André Oliveira Santos and Douglas J. Elliott

In response to the global crisis, policymakers around the world are instituting the broadest reform of financial regulation since the Great Depression.

Some in the financial industry claim the long-run economic costs of these global reforms outweigh the benefits. But our new research strongly suggests the opposite—the reforms are well worth the money.

Granted, just as adding fenders, safety belts, airbags, and crash avoidance features can make cars slower, we know that additional safety measures can slow down the economy in years when there is no crisis. The payoff comes from averting or minimizing a disaster.

Five years after the onset of the current crisis, we sadly know all too well the cost in terms of economic growth, so the potential gains in avoiding future crises are very large.

Our study finds that the likely long-term increase in credit costs for borrowers is about one quarter of a percentage point in the United States and lower elsewhere. This is roughly the size of one small move by the Federal Reserve or other central banks. A move of that size rarely has much effect on a national economy, suggesting relatively small economic costs from these reforms.

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