Posted on December 7, 2015 by iMFdirect
By Olivier Blanchard, Jonathan D. Ostry, Atish R. Ghosh, and Marcos Chamon
(Version in Español)
With the expected move by the Federal Reserve to raise interest rates before the end of the year, many are asking about the effects on emerging market countries. Will outflows increase, and how will this affect economic activity in emerging markets? To answer that, we need to know if capital inflows are in general expansionary or contractionary.
One would think that the question was settled long ago. But, in fact, it is not. It is a case where theory suggests one thing and practice another. The workhorse model of international macro (the Mundell-Fleming model), for example, suggests that, for a given monetary policy rate, inflows lead to an appreciation, and thus to a contraction in net exports—and a decrease in output. Only if the policy rate is decreased sufficiently can capital inflows be expansionary. Symmetrically, using a model along these lines, Paul Krugman argued in his 2013 Mundell-Fleming lecture that capital outflows are expansionary.
Filed under: Economic outlook, Economic research, Emerging Markets, growth, International Monetary Fund | Tagged: bonds, capital flows, emerging markets, foreign exchange, IMF, interest rates, macroeconomic models, monetary policy, Olivier Blanchard, United States | Leave a comment »
Posted on November 4, 2015 by iMFdirect
By Natalija Novta and Fabiano Rodrigues Bastos
(Versions in Español and Português)
Growth in Latin America and the Caribbean is suffering a double whammy—economic activity has slowed down sharply and the medium-term outlook continues to deteriorate. It is therefore not surprising that policymakers across the region are eagerly searching for ways to revitalize growth.
One answer may be more trade—both within the region and with the rest of the world. Our new study analyzes the export performance in developing and emerging market regions over the past two decades to assess the potential for future export growth in Latin America. We find evidence that most countries in the region “undertrade” compared to what standard models would predict. This has been an entrenched problem for almost a quarter of a century, partly as a result of the region’s geography and a legacy of protectionist policies.
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Español, Fiscal policy, growth, IMF, International Monetary Fund, Investment, Latin America | Tagged: Argentina, Asia, Brazil, Caribbean, Chile, China, Colombia, Japan, Korea, Latin America, Mexico, oil exporters, Regional Economic Outlook: Western Hemisphere, South America, trade, United States, Venezuela | Leave a comment »
Posted on November 2, 2015 by iMFdirect
By Maurice Obstfeld
How quickly should the United States tighten monetary policy and exit from quantitative easing? Is the neutral real interest rate lower than before the crisis? Should we raise inflation targets? What can we learn from the unconventional policies that emerging markets adopted during the crisis? Are we entering an environment of global deflation? And if so, can the existing central bank toolkit stave off that threat?
Seven years after the crisis, the effects of unconventional monetary policies continue to be a matter of debate. There is little consensus not only about the effectiveness of these policies in promoting aggregate demand, but also about possible unintended side effects on financial stability.
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Financial Crisis, IMF, International Monetary Fund, Multilateral Cooperation, Public debt, Reform | Tagged: Ben Bernanke, exchange rate, Federal Reserve, IMF Jacques Polak Research Conference, Jacques Polak, Maurice Obstfeld, Paul Krugman, spillovers, unconventional monetary policy, United States | Leave a comment »
Posted on October 21, 2015 by iMFdirect
By Carlos Caceres, Yan Carrière-Swallow, and Bertrand Gruss
(Versions in Español and Português)
As the U.S. Federal Reserve prepares to raise policy rates for the first time in almost a decade, Latin America is in the midst of a sharp downturn with unemployment on the rise. In this context, many central banks across the region have kept interest rates low to support economic activity. But can monetary policy stay that way as global rates rise? What will the Fed liftoff imply for the region?
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Finance, Financial Crisis, Fiscal policy, growth, IMF, Inequality, International Monetary Fund, Latin America | Tagged: interest rates, Latin America, Mexico, monetary policy, Peru, Regional Economic Outlook: Western Hemisphere, spillovers, U.S. Federal Reserve, United States | Leave a comment »
Posted on October 7, 2015 by iMFdirect
By José Viñals
(Versions in 中文, Français, Русский, and Español)
Today global financial stability is not yet assured and downside risks prevail. Our recommendation is for an urgent upgrade in policies, to avoid downside risks and to achieve our upside scenario of “successful normalization” of monetary and financial conditions. This will secure financial stability and strengthen the economic recovery.
Filed under: Advanced Economies, Asia, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund, Public debt | Tagged: China, emerging economies, euro area, European Central Bank, financial stability, GFSR, Japan, José Viñals, U.S. Federal Reserve, United States | Leave a comment »
Posted on October 6, 2015 by iMFdirect
By Maurice Obstfeld
(Versions in Español, عربي, 中文, Français, Русский and 日本語)
Today, we released the October 2015 World Economic Outlook.
Our forecasts come at a moment when the world economy is at the intersection of at least three powerful forces.
First, China’s economic transformation – away from export- and investment-led growth and manufacturing, in favor of a greater focus on consumption and services. This process, however necessary and healthy in the longer term, has near-term implications for China’s growth and its relations with its trade partners.
Filed under: Advanced Economies, Annual Meetings, Asia, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Europe, growth, IMF, International Monetary Fund, Investment, Latin America, Reform | Tagged: Australia, Brazil, Canada, China, commodiity prices, deflation, emerging markets, exchange rate, forecast, investment, Japan, Latin America, Maurice Obstfeld, monetary policy, Norway, Russia, trade, United States, WEO, World Economic Outlook | Leave a comment »
Posted on September 15, 2015 by iMFdirect
By Ratna Sahay, Martin Cihak, Papa N’Diaye, Adolfo Barajas, and Srobona Mitra
(Version in Français, Español, عربي)
A growing number of policymakers see financial inclusion—greater access to financial services throughout a country’s population—as a way to promote and make economic development work for society. More than 60 countries have adopted national financial inclusion targets and strategies. Opening bank accounts for all in India and encouraging mobile payments platforms in Peru are just two examples. Evidence for individuals and firms suggests that greater access to financial services indeed makes a difference in investment, food security, health outcomes, and other aspects of daily life. Our study looks at the benefits to the economy as a whole.
Filed under: Advanced Economies, Economic research, Emerging Markets, Finance, Financial regulation, Fiscal policy, growth, IMF | Tagged: banks, economic growth, finance, financial inclusion, growth, India, inequality, infrastructure, Middle East, Peru, United States, women | Leave a comment »