nep-mac New Economics Papers
on Macroeconomics
Issue of 2016‒03‒10
146 papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Business Management

  1. Agency Costs, Risk Shocks and International Cycles By Marc-André Letendre; Joel Wagner
  2. The effect of interest rate and communication shocks on private inflation expectations By Paul Hubert
  3. Causes and consequences of the financial crisis and the implications for a more resilient financial and economic system By Hein, Eckhard
  4. Macroeconomic and Financial Effects of Oil Price Shocks: Evidence for the Euro Area By Claudio, Morana
  5. Reconciling the divergence in aggregate U.S. wage series By Champagne, Julien; Kurmann, André; Stewart, Jay
  6. The post-crisis slump in the Euro area and the US: evidence from an estimated three-region DSGE model By Robert Kollmann; Beatrice Pataracchia; Rafal Raciborski; Marco Ratto; Werner Roeger; Lukas Vogel
  7. Macroeconomic Uncertainty Through the Lens of Professional Forecasters By Soojin Jo; Rodrigo Sekkel
  8. Effects of macroeconomic policy shock on the labour market dynamics in Australia By Mukti Nath Subedi
  9. Calvo Wages Vs. Search Frictions: a Horse Race in a DSGE Model of a Small Open Economy By Markus Kirchner; Rodrigo Tranamil
  10. Potential growth of the spanish economy By Pilar Cuadrado; Enrique Moral-Benito
  11. Firm Entry and Macroeconomic Dynamics: A State-level Analysis By Gourio, Francois; Messer, Todd; Siemer, Michael
  12. Earnings inequality, the business cycle, and the life cycle By Diana Alessandrini; Stephen Kosempel; Alessandra Pelloni; Thanasis Stengos
  13. "Looking Into the Abyss? Brazil at the Mid-2010s" By Fernando J. Cardim de Carvalho
  14. The Post-Crisis Slump in the Euro Area and the US: Evidence from an Estimated Three-Region DSGE Model By Robert Kollmann; Beatrice Pataracchia; RAFAL Raciborski; Marco Ratto; Werner Roeger; Lukas Vogel
  15. Growth and Public Debt: What Are the Relevant Tradeoffs? By Kazuo Nishimura; Carine Nourry; Thomas Seegmuller; Alain Venditti
  16. Theories of finance and financial crisis – Lessons for the Great Recession By Nina Dodig; Hansjorg Herr
  17. Les règles de Taylor à l’épreuve de la révolution : cas de l’Égypte. By baaziz, yosra
  18. The wrong impact of Fiscal Imbalance on economic growth and Monetary Policy consequences (A case of Pakistan) By Ahmed, Ovais; Mashkoor, Aasim
  19. Fiscal Councils: Rationale and Effectiveness By Beetsma, Roel; Debrun, Xavier
  20. Preferences and pollution cycles By Stefano Bosi; David Desmarchelier; Lionel Ragot
  21. Republic of Poland: Review Under the Flexible Credit Line Arrangement-Press Release; Staff Report; and Statement by the Alternate Executive Director for the Republic of Poland By International Monetary Fund
  22. How Bad Is Involuntary Part-time Work? By Borowczyk-Martins, Daniel; Lalé, Etienne
  23. Which fiscal union for the euro area? By Agnès Bénassy-Quéré; Xavier Ragot; Guntram B. Wolff
  24. Recognizing the Bias; Financial Cycles and Fiscal Policy By Nina Budina; Borja Gracia; Xingwei Hu; Sergejs Saksonovs
  25. A Macro-Model Approach to Monetary Policy Analysis and Forecasting for Vietnam By Allan Dizioli; Jochen M. Schmittmann
  26. Interest Rate Pass-Through in the Dominican Republic By Francesco Grigoli; José M. Mota
  27. Bank Lending Margins in the Euro Area: The Effects of Financial Fragmentation and ECB Policies By Helen Louri; Petros M. Migiakis
  28. A Utilitarian Measure of Economic Growth By Dan Usher
  29. Liberia: Request for an Extension of the Arrangement Under the Extended Credit Facility-Staff Report and Press Release By International Monetary Fund
  30. Will Macroprudential Policy Counteract Monetary Policy’s Effects on Financial Stability? By Itai Agur; Maria Demertzis
  31. The Feldstein-Horioka Puzzle in the Presence of Structural Breaks: Evidence from China By Dilem Yıldırım; Ethem Erdem Orman
  32. Can the Chinese bond market facilitate a globalizing renminbi? By Ma, Guonan; Yao, Wang
  33. New Zealand: 2015 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for New Zealand By International Monetary Fund
  34. Reglas fiscales y bienestar social para Bolivia:Confrontación del ahorro e inversión de los ingresos hidrocarburíferos By Roger Alejandro Banegas-Rivero
  35. The U.S. Oil Supply Revolution and the Global Economy By Kamiar Mohaddes; Mehdi Raissi
  36. Strengthening Financial Surveillance: A Practical Approach to Systemic Risk Monitoring By Nicolas R. Blancher; Srobona Mitra
  37. Inflation Expectations and a Model-Based Core Inflation Measure in Colombia By Hernando Vargas-Herrera
  38. Margin rate and the cycle: the role of trade openness. By G. Cette; R. Lecat; A. Ould Ahmed Jiddou
  39. Breaking the Spell with Credit-Easing: Self-Confirming Credit Crises in Competitive Search Economies By Gaballo, Gaetano; Marimon, Ramon
  40. "Money, Power, and Monetary Regimes" By Pavlina R. Tcherneva
  41. Asymmetric Credit Growth and Current Account Imbalances in the Euro Area By Robert Unger
  42. Optimal fertility under age-dependent labor productivity By PESTIEAU, P.; PONTHIERE, G.
  43. Monetary Policy Transmission and Financial Stability in a LIC; The Case of Bangladesh By Sohrab Rafiq
  44. Wage Rigidities and Jobless Recovery in Slovakia: New Survey Evidence By Peter Toth; Katarina Valkova
  45. Asymmetric Exchange Rate Pass-through: Evidence from Nonlinear SVARs By Fernando J. Pérez Forero; Marco Vega
  46. Bangladesh: Fifth and Sixth Reviews Under the Extended Credit Facility Arrangement-Press Release and Staff Report By International Monetary Fund
  47. Wage Moderation in Crises; Policy Considerations and Applications to the Euro Area By Jörg Decressin; Raphael A. Espinoza; Ioannis Halikias; Michael Kumhof; Daniel Leigh; Prakash Loungani; Paulo A. Medas; Susanna Mursula; Antonio Spilimbergo; TengTeng Xu
  48. Democratic Republic of the Congo: 2015 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Democratic Republic of the Congo By International Monetary Fund
  49. Efectos del Quantitative Easing sobre los retornos accionarios en mercados emergentes By Bernardo Leyva-Uribe; Jose E. Gomez-Gonzalez; Oscar M. Valencia-Arana; Mauricio Villamizar-Villegas
  50. Kingdom of Lesotho: 2015 Article IV Consultation-Press Release; Staff Report By International Monetary Fund
  51. Islamic Republic of Iran: Selected Issues By International Monetary Fund
  52. More Unequal, But More Mobile? Earnings Inequality and Mobility in OECD Countries By Garnero, Andrea; Hijzen, Alexander; Martin, Sébastien
  53. Inflation and Activity – Two Explorations and their Monetary Policy Implications By Olivier J. Blanchard; Eugenio Cerutti; Lawrence Summers
  54. Dealing with Systemic Sovereign Debt Crises: Fiscal Consolidation, Bail-ins or Official Transfers? By Damiano Sandri
  55. Mexico: 2015 Article IV Consultation-Press Release; and Staff Report By International Monetary Fund
  56. Fiscal Stimulus and Firms: A Tale of Two Recessions By Dobridge, Christine L.
  57. Malta: 2015 Article IV Consultation-Press Release; and Staff Report By International Monetary Fund
  58. Illicit activity and money laundering from an economic growth perspective : a model and an application to Colombia By Villa,Edgar; Misas,Martha A.; Loayza,Norman V.
  59. St. Lucia: 2015 Article IV Consultation-Press Release; and Staff Report By International Monetary Fund
  60. Cote D'Ivoire: Eighth Review Under the Extended Credit Facility Arrangement-Press Release; Staff Report; and Statement by the Executive Director for Cote D'Ivoire By International Monetary Fund
  61. Cost-Benefit Analysis of Leaning Against the Wind; Are Costs Larger Also with Less Effective Macroprudential Policy? By Lars E. O. Svensson
  62. Macroprudential Policies in Southeastern Europe By Dilyana Dimova; Piyabha Kongsamut; Jérôme Vandenbussche
  63. Employment and the Great Recession; The Role of Real Wages By Bas B. Bakker
  64. Multivariate Filter Estimation of Potential Output for the Euro Area and the United States By Ali Alichi; Olivier Bizimana; Silvia Domit; Emilio Fernández Corugedo; Douglas Laxton; Kadir Tanyeri; Hou Wang; Fan Zhang
  65. Nicaragua: 2015 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Nicaragua By International Monetary Fund
  67. Inestabilidad financiera en economías en desarrollo: evidencia para el caso colombiano 1990-2013 By Carlos Daniel Rojas Martínez
  68. The Impact of Unconventional Monetary Policy Measures by the Systemic Four on Global Liquidity and Monetary Conditions By Yevgeniya Korniyenko; Elena Loukoianova
  69. Oil Price shocks and theirs consequences on Sudan’s GDP growth and unemployment rates By Elsiddig Rahma; Noel Perera; Kian Tan
  70. The Republic of Moldova: Staff Report for the 2015 Article IV Consultation and Third Post-Program Monitoring Discussions-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Moldova By International Monetary Fund
  71. A Model of Gender Inequality and Economic Growth By Kim, Jinyoung; Lee, Jong-Wha; Shin, Kwanho
  72. More unequal, but more mobile?: Earnings inequality and mobility in OECD countries By Andrea Garnero; Alexander Hijzen; Sébastien Martin
  73. Togo: Selected Issues By International Monetary Fund
  74. Cameroon: 2015 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Cameroon By International Monetary Fund
  75. Understanding India’s Food Inflation; The Role of Demand and Supply Factors By Rahul Anand; Naresh Kumar; Volodymyr Tulin
  76. Republic of Mozambique: Selected Issues By International Monetary Fund
  77. Morocco: Financial System Stability Assessment By International Monetary Fund
  78. The U.S. economic outlook and implications for monetary policy By Dudley, William
  79. Does consumer sentiment predict consumer spending in Malaysia? an autoregressive distributed lag (ARDL) approach By Mohd Haniff, NorAzza; Masih, Mansur
  80. Jamaica: Tenth Review Under the Arrangement Under the Extended Fund Facility and Request for Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Jamaica By International Monetary Fund
  81. Republic of Estonia: 2015 Article IV Consultation-Press Release; Staff Report; and Informational Annex By International Monetary Fund
  82. Republic of Tajikistan: Financial System Stability Assessment Report By International Monetary Fund
  83. Central African Economic and Monetary Community (CEMAC) Selected Issues By International Monetary Fund
  84. Government Spending Effects in Low-income Countries By Wenyi Shen; Susan S. Yang; Luis-Felipe Zanna
  85. Papua New Guinea: 2015 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Papua New Guinea By International Monetary Fund
  86. The German Labor Market Miracle, 2003 -2015: An Assessment By Michael C. Burda; ; ;
  87. Sri Lanka: Third Post-Program Monitoring Discussion-Staff Report; Press Release; and Statement by the Executive Director for Sri Lanka By International Monetary Fund
  88. Sweden: 2015 Article IV Consultation-Press Release; Staff Report; Information Annex; and Statement by the Executive Director for Sweden By International Monetary Fund
  89. Flexible Fiscal Rules and Countercyclical Fiscal Policy By Martine Guerguil; Pierre Mandon; Rene Tapsoba
  90. Ghana’s macroeconomic crisis: Causes, consequences, and policy responses: By Younger, Stephen D.
  91. Grenada: Third Review Under the Extended Credit Facility, Request for Modification of Performance Criteria, and Financing Assurances Review-Press Release; and Staff Report By International Monetary Fund
  92. Do inflation expectations propagate the inflationary impact of real oil price shocks?: Evidence from the Michigan survey By Miles Parker
  93. Capital Account Liberalization and Inequality By Davide Furceri; Prakash Loungani
  94. The Evolution of Gender Gaps in Industrialized Countries By Claudia Olivetti; Barbara Petrongolo
  95. Defining the Government’s Debt and Deficit By Timothy Irwin
  96. Angola: Selected Issues By International Monetary Fund
  97. Morocco: Third Review under the Arrangement under the Precautionary and Liquidity Line-Press Release; Staff Report; and Statement by the Executive Director for Morocco By International Monetary Fund
  98. Uruguay: 2015 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Uruguay By International Monetary Fund
  99. Wait a Minute: The Efficacy of Discounting versus Non-Pecuniary Payment Steering By Angelika Welte
  100. Combining time-variation and mixed-frequencies: an analysis of government spending multipliers in Italy By Antonello D'Agostino; Jacopo Cimadomo
  101. Mexico: Selected Issues By International Monetary Fund
  102. Non-Linear Exchange Rate Pass-Through in Emerging Markets By Francesca G Caselli; Agustin Roitman
  103. Long-term Gain, Short-Term Pain; Assessing the Potential Impact of Structural Reforms in Chile By Marika Santoro
  104. If the Fed Acts, How Do You React? The Liftoff Effect on Capital Flows By Swarnali Ahmed
  105. Republic of Fiji: 2015 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Fiji By International Monetary Fund
  106. Honduras: First Reviews Under the Stand-By Arrangement and Standby Credit Facility-Press Release; Staff Report; Informational Annex; Staff Supplement; and Statement by the Executive Director for Honduras By International Monetary Fund
  107. How Do Public Debt Cycles Interact with Financial Cycles? By Tigran Poghosyan
  108. Slovak Republic: 2015 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Slovak Republic By International Monetary Fund
  109. Comment on ‘Impact of Current Climate Proposals’ By Robert E. T. Ward
  110. Public Investment in a Developing Country Facing Resource Depletion By Adrian Alter; Matteo Ghilardi; Dalia Hakura
  111. The Price Stability Under Inflation Targeting Regime : An Analysis With a New Intermediate Approach By Zied Ftiti; Walid Hichri
  112. La transition énergétique est-elle favorable aux branches à fort contenu en emploi ? Une approche input-output pour la France By Quentin Perrier; Philippe Quirion
  113. Macroeconomic Stability in Resource-Rich Countries; The Role of Fiscal Policy By Elva Bova; Paulo A. Medas; Tigran Poghosyan
  114. Financial Distortions in China; A General Equilibrium Approach By Diego Anzoategui; Mali Chivakul; Wojciech Maliszewski
  115. Discussion of the paper "Language after Liftoff: Fed Communication Away from the Zero Lower Bound" a speech at the 2016 U.S. Monetary Policy Forum, New York, New York, February 26, 2016. By Powell, Jerome H.
  116. Bosnia and Herzegovina: 2015 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Bosnia and Herzegovina By International Monetary Fund
  117. A reindustrialização de Portugal num contexto de crise e hegemonia industrial dos países emergentes Re-industrialisation of Portugal in the context of crisis and industrial hegemony of emergent countries] By Nuno C. Araújo
  118. Wage-Price Dynamics and Structural Reforms in Japan By Davide Porcellacchia
  119. Effects of Monetary and Macroprudential Policies on Financial Conditions; Evidence from the United States By Aleksandra Zdzienicka; Sally Chen; Federico Diaz Kalan; Stefan Laseen; Katsiaryna Svirydzenka
  120. A contribution of Bayesian approach to experimental economics By Álvaro Hurtado Rendón
  121. Republic of Serbia: Third Review Under the Stand-By Arrangement and Request for Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Serbia By International Monetary Fund
  122. Ireland: Fourth Post-Program Monitoring Discussions-Press Release; and Staff Report By International Monetary Fund
  123. Revisiting the transitional dynamics of business-cycle phases with mixed frequency data By Marie Bessec
  124. Words are the new numbers: A newsy coincident index of business cycles By Leif Anders Thorsrud
  125. Volatility spillovers and macroeconomic announcements: evidence from crude oil markets By Aymen Belgacem; Anna Creti; Khaled Guesmi; Amine Lahiani
  126. Spillovers from Global and Regional Shocks to Armenia By Knarik Ayvazyan; Teresa Daban Sanchez
  127. Robust Measures of Core Inflation for Vietnam By Sanjay Kalra; Bui Thi Trang Dzung
  128. EU integration and the introduction of State aid control in Serbia: Institutional challenges and reform prospects By Milenkovic, Marko
  129. Islamic Republic of Afghanistan: Ex Post Assessment of Longer-Term Program Engagement By International Monetary Fund
  130. Domestic and Cross-Border Auction Cycle Effects of Sovereign Bond Issuance in the Euro Area By Beetsma, Roel; de Jong, Frank; Giuliodori, Massimo; Hanson, Jesper
  131. "Reputational Effects in Sovereign Default" By Konstantin Egorov; Michal Fabinger
  132. Republic of Lithuania; Staff Report for the 2015 Article IV Consultation By International Monetary Fund
  133. Oil price and macroeconomy in India – An evolutionary cospectral coherence approach By Zied Ftiti; Aviral Tiwari; Ibrahim Fatnassi
  134. Peru: Fiscal Transparency Evaluation By International Monetary Fund
  135. The Lender of Last Resort Function after the Global Financial Crisis By Marc Dobler; Simon Gray; Diarmuid Murphy; Bozena Radzewicz-Bak
  136. Saudi Arabia: Selected Issues By International Monetary Fund
  137. Finland: 2015 Article IV Consultation-Press Release; Staff Report; Informational Annex; and Statement by the Executive Director for Finland By International Monetary Fund
  138. Bangladesh: Selected Issues By International Monetary Fund
  139. Uganda: Fifth Review Under the Policy Support Instrument and Request for Waiver of an Assessment Criterion and Modification of Assessment Criteria-Press Release; and Staff Report By International Monetary Fund
  140. Kyrgyz Republic: Selected Issues By International Monetary Fund
  141. Ukraine: Technical Assistance Report-Reforming Management and Oversight of State Assets By International Monetary Fund
  142. United Kingdom: Selected Issues By International Monetary Fund
  143. Estimating Fiscal Multipliers with Correlated Heterogeneity By Emmanouil Kitsios; Manasa Patnam
  144. Malawi: Selected Issues By International Monetary Fund
  145. Austria: Selected Issues By International Monetary Fund
  146. Exploring the relationship between environmentally related taxes and inequality in income sources: An empirical cross-country analysis By OECD

  1. By: Marc-André Letendre; Joel Wagner
    Abstract: We add agency costs as in Carlstrom and Fuerst (1997) into a two-country, two-good international business-cycle model. In our model, changes in the relative price of investment arise endogenously. Despite the fact that technology shocks are uncorrelated across countries, the relative price of investment is positively correlated across countries in our model, much as it is in detrended U.S./euro area data. We also find that the financial frictions tend to increase the volatility of the terms of trade and the international correlations of consumption, hours worked, output and investment. We then compare this model to an alternative model that also includes risk shocks à la Christiano, Motto and Rostango (2014). We use credit spread data (for the United States) to calibrate the AR(1) process for risk shocks. We find that risk shocks are too small to significantly impact the model’s dynamics.
    Keywords: Business fluctuations and cycles, International topics
    JEL: E22 E32 E44 F44
    Date: 2016
  2. By: Paul Hubert (OFCE – Sciences Po)
    Abstract: The European Central Bank publishes inflation projections quarterly. This paper aims at establishing empirically whether they influence private inflation forecasts and whether they may be considered as an enhanced means of implementing policy decisions by facilitating private agents’ information processing. We compare the effect of an ECB inflation projection shock to an ECB interest rate shock.We provide original evidence that ECB inflation projections do influence private inflation expectations positively. We find that ECB projections convey signals about future ECB rate movements. This paper suggests that ECB projections enable private agents to correctly interpret and predict policy decisions.
    Keywords: Monetary Policy, ECB, Private Forecasts, Influence, Structural VAR
    JEL: E52 E58
    Date: 2015–09–01
  3. By: Hein, Eckhard
    Abstract: The increasing dominance of finance starting in the late 1970s/early 1980s in the US and the UK, and somewhat later in other countries, was associated with two fundamental and structural processes generating the contradictions of this phase of development and finally the financial and economic crises starting in 2007: the deregulation of the financial (and economic) system and the massive redistribution of income at the expense of labour and low income households. These fundamental processes provided the conditions for the generation of major imbalances within some of the national economies, on the one hand, and at the international level, on the other hand. These imbalances and contradictions led eventually to the deep financial and economic crisis, starting in 2007. Therefore, a more resilient financial and economic system requires the re-regulation and downsizing of the financial sector, the re-distribution of income (and wealth) from top to bottom and from capital to labour, the re-orientation of macroeconomic policies towards stabilizing domestic demand at non-inflationary full employment levels, and the re-creation of international monetary and economic policy coordination.
    Keywords: financialisation,distribution,growth,financial and economic crisis,resilient financial and economic system
    JEL: D30 E02 E11 E12 E21 E22 E25 E44 E61 E65 G01
    Date: 2016
  4. By: Claudio, Morana
    Abstract: The paper investigates the macroeconomic and financial effects of oil prices shocks in the euro area since its creation in 1999, with a special focus on the recent slump. The analysis is carried out episode by episode, within a time-varying parameter framework, consistent with the view that "not all the oil price shocks are alike", yet without imposing any a priori identification assumption. We find evidence of recessionary effects triggered not only by oil price hikes, but also by oil price slumps in some cases, likewise for the most recent episode, which is also rising deflation risk and financial distress. In addition through uncertainty effects, the current slump might then be depressing aggregate demand by increasing the real interest rate, as ECB monetary policy is already conducted at the zero lower bound. The increase in real money balances following the slump points to the accommodation of the shock by the ECB, concurrent with the implementation of the Quantitative Easing policy (Q.E.). Yet, in so far as Q.E. failed to generate inflationary expectations within the current and expected environment of soft oil prices, the case for a more expansionary use of fiscal policy than in the past would become compelling, in order to counteract the deflationary and recessionary threats to the euro area.
    Keywords: oil price shocks, oil price-macroeconomy relationship, risk factors, semiparametric dynamic conditional correlation model, time-varying parameter models
    JEL: E30 E50 C32
    Date: 2016–02–24
  5. By: Champagne, Julien (Bank of Canada); Kurmann, André (Drexel University); Stewart, Jay (Bureau of Labor Statistics)
    Abstract: According to data from the Labor Productivity and Costs (LPC) program, average hourly real compensation in the United States has grown consistently over time and become markedly more volatile since the mid-1980s. By contrast, data from the Current Employment Statistics (CES) imply that average hourly real earnings has mostly stagnated and become substantially less volatile. We show that differences in earnings concept and differences in worker coverage account for the majority of this divergence in growth and volatility. The results have important implications for the appropriate choice of aggregate wage series for macroeconomic analysis.
    Keywords: Average hourly wages; Earnings-hours decomposition; Labor Productivity and Costs; Current Employment Statistics; Current Population Survey
    JEL: E01 E24 E30 J30
    Date: 2015–12–04
  6. By: Robert Kollmann; Beatrice Pataracchia; Rafal Raciborski; Marco Ratto; Werner Roeger; Lukas Vogel
    Abstract: The global financial crisis (2008-09) led to a sharp contraction in both Euro Area (EA) and US real activity, and was followed by a long-lasting slump. However, the post-crisis adjustment in the EA and the US shows striking differences -in particular, the EA slump has been markedly more protracted. We estimate a three-region (EA, US and Rest of World) New Keynesian DSGE model (using quarterly data for 1999-2014) to quantify the drivers of the divergent EA and US adjustment paths. Our results suggest that financial shocks were key drivers of the 2008-09 Great Recession, for both the EA and the US. The post-2009 slump in the EA mainly reflects a combination of adverse aggregate demand and supply shocks, in particular lower productivity growth, and persistent adverse shocks to capital investment, linked to the continuing poor health of the EA financial system. Adverse financial shocks were less persistent for the US. The financial shocks identified by the model are consistent with observed performance indicators of the EA and US banking systems.
    Keywords: Post-crisis slump, Euro Area, United States, estimated DSGE model, demand and supply shocks and financial shocks
    JEL: F4 F3 E2 E3 E5 E6 C5
    Date: 2016–02
  7. By: Soojin Jo; Rodrigo Sekkel
    Abstract: We analyze the evolution of macroeconomic uncertainty in the United States, based on the forecast errors of consensus survey forecasts of different economic indicators. Comprehensive information contained in the survey forecasts enables us to capture a real-time subjective measure of uncertainty in a simple framework. We jointly model and estimate macroeconomic (common) and indicator-specific uncertainties of four indicators, using a factor stochastic volatility model. Our macroeconomic uncertainty has three major spikes, aligned with the 1973–75, 1980, and 2007–09 recessions, while other recessions were characterized by increases in indicator-specific uncertainties. We also demonstrate for the first time in the literature that the selection of data vintages substantially affects the relative size of jumps in estimated uncertainty series. Finally, our macroeconomic uncertainty has a persistent negative impact on real economic activity, rather than producing “wait-and-see” dynamics.
    Keywords: Business fluctuations and cycles, Econometric and statistical methods
    JEL: C38 E17 E32
    Date: 2016
  8. By: Mukti Nath Subedi (Australian National University)
    Abstract: Fiscal and monetary policy have played an important role in defending the economy from the ravages of global financial crisis (GFC) of 2007-08. Inspired by Australian fiscal and monetary policy performance during GFC, this study investigates the effects of macroeconomic policy shocks on the labour market dynamics in Australia using a vector auto-regression (VAR) method. It examines the dynamic response of output, unit labour cost, total hours worked and employment to changes in government spending and cash rate for 1985:3-2015:1. The results suggest that in response to positive cash rate shock total hours worked and employment react negatively, whereas unit labour cost reacts positively. On the other hand, in response to positive government spending shock, total hours worked and employment response positively, whereas, unit labour cost responds negatively.
    Keywords: Labour market, Vector Autoregression, Macroeconomic policy
    JEL: C32 E24 E69
  9. By: Markus Kirchner; Rodrigo Tranamil
    Abstract: Most existing DSGE models used for monetary policy analysis and forecasting assume that the labor market always clears at a sticky nominal wage (`a la Calvo) through variations along the intensive margin of labor supply (i.e. hours), with no role for the extensive margin (i.e. employment). The latter contrasts with research on the macroeconomics of labor markets that has emphasized the relevance of the extensive margin and employment fluctuations using search and matching theory. Against this background, in this paper we conduct a horse race of a labor market specification with Calvo wages versus a search and matching specification with endogenous separations in an otherwise standard New Keynesian small open economy model, estimated with Chilean data. We conclude that the search and matching specification “wins” by a wide margin as it significantly improves the model’s ability to explain and predict both labor market data and other macroeconomic variables
    Date: 2016–02
  10. By: Pilar Cuadrado (Banco de España); Enrique Moral-Benito (Banco de España)
    Abstract: This paper presents an estimate of the Spanish economy’s potential growth. This estimate is based on a production function methodology that includes certain refi nements on previous versions and generates less procyclical potential output growth estimates than those traditionally considered in the literature. As a result, the (positive) output gap estimated in expansions is higher and that estimated in recessions is lower. According to these results, given the available population projections and under the assumption that total factor productivity (TFP) and structural unemployment will behave in line with historical patterns, the Spanish economy’s potential growth is expected to recover gradually over the coming years but, in line with projections by international organisations, to lower rates than those in the expansion period. However, per capita growth rates fully recover to the pre-crisis levels, which highlights the importance of population projections in shaping the Spanish potential growth.
    Keywords: potential growth, output gap, Spain
    JEL: E23 E32 E13 O47 O52
    Date: 2016–02
  11. By: Gourio, Francois (Federal Reserve Bank of Chicago); Messer, Todd (Federal Reserve Bank of Chicago); Siemer, Michael (Board of the Governors of the Federal Reserve System)
    Abstract: Using an annual panel of U.S. states over the period 1982-2014, we estimate the response of macroeconomic variables to a shock to the number of new firms (startups). We find that these shocks have significant effects that persist for many years on real gross domestic product, productivity and population. This is consistent with simple models of firm dynamics where a “missing generation” of firms affects productivity persistently.
    Keywords: Business cycles; Firms entry; Firms dynamics; Gross Domestic Product; macroeconomics; productivity; population
    JEL: E31 E32 L1 L16
    Date: 2016–01–31
  12. By: Diana Alessandrini (Department of Economics, Auburn University); Stephen Kosempel (Department of Economics and Finance, University of Guelph); Alessandra Pelloni (Department of Economics, University of Rome ``Tor Vergata''); Thanasis Stengos (Department of Economics and Finance, University of Guelph)
    Abstract: We investigate the relationship between short run macroeconomic conditions and earnings inequality. In our empirical work we establish a set of stylized facts: (1) earnings inequality is counter-cyclical; (2) the bottom quintile of the earnings distribution is the most volatile; (3) business cycles have a low or no impact on wage inequality, but they have a strong impact on hours worked inequality; and (4) the impact of an economic contraction on inequality is weaker in economies with higher levels of education. Then, to explain these observations we develop a stochastic Ben-Porath model of human capital accumulation with life cycle dynamics.
    Keywords: Inequality; Business cycles; Human capital accumulation
    JEL: I24 E32 E24
    Date: 2016
  13. By: Fernando J. Cardim de Carvalho
    Abstract: The Brazilian economy in 2015 was afflicted by a lethal combination of decelerating activity and accelerating inflation. Expectations for 2016 are equally or even more adverse, since the effects of rising unemployment emerge only after a lag. The domestic debate has pitted analysts who believe the crisis is due exclusively to past policy mistakes against those who believe that all was well until the government decided to implement austerity policies in 2015. A closer examination of the evidence shows that, in fact, both causes contributed to the crisis. But it also suggests that its depth has a more proximate cause in the political collapse of the federal government in 2015, which led Brazilian society to an impasse for which one cannot yet visualize the solution.
    Keywords: Brazilian Economy; Macroeconomic Policy; Great Recession
    JEL: E31 E32 E60
    Date: 2016–02
  14. By: Robert Kollmann; Beatrice Pataracchia; RAFAL Raciborski; Marco Ratto; Werner Roeger; Lukas Vogel
    Abstract: The global financial crisis (2008-09) led to a sharp contraction in both Euro Area (EA) and US real activity, and was followed by a long-lasting slump. However, the post-crisis adjustment in the EA and the US shows striking differences—in particular, the EA slump has been markedly more protracted. We estimate a three-region (EA, US and Rest of World) New Keynesian DSGE model (using quarterly data for 1999-2014) to quantify the drivers of the divergent EA and US adjustment paths. Our results suggest that financial shocks were key drivers of the 2008-09 Great Recession, for both the EA and the US. The post-2009 slump in the EA mainly reflects a combination of adverse aggregate demand and supply shocks, in particular lower productivity growth, and persistent adverse shocks to capital investment, linked to the continuing poor health of the EA financial system. Adverse financial shocks were less persistent for the US. The financial shocks identified by the model are consistent with observed performance indicators of the EA and US banking systems.
    Keywords: post-crisis slump; euro area; united states; estimated DSGE model; demand and supply shocks and financial shocks
    JEL: F40 F30 E20 E30 E50 E60 C50
    Date: 2016–02
  15. By: Kazuo Nishimura (RIEB, Kobe University & KIER, Kyoto University); Carine Nourry (Aix-Marseille University (Aix-Marseille School of Economics)-CNRS-EHESS); Thomas Seegmuller (Aix-Marseille University (Aix-Marseille School of Economics)-CNRS-EHESS); Alain Venditti (Aix-Marseille University (Aix-Marseille School of Economics)-CNRS-EHESS)
    Abstract: The interplay between growth and public debt is addressed considering a Barro-type [1] endogenous growth model where public spending is financed through taxes on income and public debt. Debt is assumed to be a fixed proportion of GDP which is used as a policy parameter by the government. We first show that when debt is a large enough proportion of GDP, two distinct BGPs may co-exist, one being indeterminate. Therefore, local and global indeterminacy may arise and self-fulfilling expectations appear as a crucial ingredient to understand the impact of debt on growth and on macroeconomic fluctuations. We then exhibit two types of important trade-off associated with self-fulfilling expectations. First, we show that the lowest BGP is always decreasing with respect to the ratio of debt/GDP while the highest one is increasing. As a result, depending on the BGP selected by agents’ expectations, the relationship between debt and growth is not always negative. Second, we show that the highest BGP, which provides the highest welfare, is always locally indeterminate while the lowest is always locally determinate. Therefore, depending on the expectations of agents, when debt is increasing, large fluctuations associated to self-fulfilling believes may occur and be associated at the same time with welfare losses if there is a coordination on the low steady-state. Finally, a simple calibration exercise allows to provide an understanding of the recent experiences of many OECD countries.
    Keywords: Endogenous growth, public spending, public debt, sunspot fluctuations
    JEL: C62 E32 H23
    Date: 2016–02
  16. By: Nina Dodig (Berlin School of Economics and Law, and Institute for International Political Economy Berlin (IPE)); Hansjorg Herr (Berlin School of Economics and Law, and Institute for International Political Economy Berlin (IPE))
    Abstract: This paper presents an overview of different models which explain financial crises, with the aim of understanding economic developments during and possibly after the Great Recession. In the first part approaches based on efficient markets and rational expectations hypotheses are analyzed, which however do not give any explanation for the occurrence of financial crises and thus cannot suggest any remedies for the present situation. A broad range of theoretical approaches analyzing financial crises from a medium term perspective is then discussed. Within this group we focused on the insights of Marx, Schumpeter, Wicksell, Hayek, Fisher, Keynes, Minsky, and Kindleberger. Subsequently the contributions of the Regulation School, the approach of Social Structures of Accumulation and Post-Keynesian approach, which focus on long-term developments and regime shifts in capitalist development, are presented. International approaches to finance and financial crises are integrated into the analyses. We address the issue of relevance of all these theories for the present crisis and draw some policy implications. The paper has the aim to find out to which extent the different approaches are able to explain the Great Recession, what visions they develop about future development of capitalism and to which extent these different approaches can be synthesized.
    Keywords: theories of crisis, Marxian, Institutional, Keynesian, capitalism, finance, financial crisis
    JEL: B14 B15 B24 B25 E11 E12 E13 E32
    Date: 2015–09–01
  17. By: baaziz, yosra
    Abstract: This paper challenges the suitability of a nonlinear Taylor rule in characterizing the monetary policy behavior of Egyptian central bank), especially in turbulent times. More specifically, we investigate the possibility that the Taylor rule should be formulated as a threshold process and examine the validity of such nonlinear Taylor rule as a robust rule for conducting monetary policy in Egypt. Analytical results show that nonlinear Taylor rule holds and that adopting a nonlinear specification instead of the linear leads to a costs reduction in terms of fit: 90 basis point in 2008-Q4 and 20 basis point in post-revolution.
    Keywords: nonlinear Taylor rule; Logistic Smooth Transition Regression (LSTR); special events; costs in terms of fit
    JEL: E52 E58
    Date: 2016–02–27
  18. By: Ahmed, Ovais; Mashkoor, Aasim
    Abstract: This study is to investigate the wrong impact of fiscal imbalance on economic growth of country through contiguous monetary policy made by central bank of Pakistan. The purpose of the empirical study is to determine the solution of monetary policy which emulated fiscal deficit that cause to imbalance in money supply and diverges interest rate on bank borrowings. To keeping view of literatures, reveals the monetary policy and fiscal imbalance relationship which creates the view of fiscal challenges in economy. Data has been collected from prior research studies and literatures. In this study correlation and regression analysis are being used to measure the relationship between monetary and fiscal variables. For this analysis, these statistical measurements evaluated the fiscal imbalance and monetary policy. Besides, the ANOVA and Multicollinearity also were used. The research study is limited to economic statistics from 1980 to 2013 that possibly collected from Pakistan bureau of statistics. The conclusive point of this study that fiscal imbalance could be improvised by adopting monetary policy appropriately implemented in economy that could make sustainable growth in country. By this change, inflation indicates integral part of fiscal deficit and monetary stances. For this study, Correlation and regression analysis showed that predictive approaches of fiscal imbalance with inflation and monetary policy which is not adequately adjusted with economic growth.
    Keywords: Fiscal Imbalance, Monetary Policy, Inflation
    JEL: G0 H3 O1 O2 O23
    Date: 2016–02–27
  19. By: Beetsma, Roel; Debrun, Xavier
    Abstract: The paper discusses the effectiveness of independent fiscal institutions - or fiscal councils - in taming the deficit bias that emerged in the 1970s. After a review of the main theoretical arguments and recent trends about fiscal councils, we develop a stylized model showing how a fiscal council can effectively mitigate the deficit bias even though it has no direct lever on the conduct of fiscal policy. We show that the capacity of the fiscal council to improve the public's understanding of the quality of fiscal policy contributes to better align voters and policymakers' incentives and to tame the deficit bias affecting well-intended governments. After mapping the model's key features into a broad set of criteria likely to contribute to the effectiveness of a fiscal council, we use the 2014 vintage of the IMF dataset on independent fiscal institutions to assess whether existing institutions have been built to work.
    Keywords: deficit bias; Fiscal policy; independent fiscal institutions
    JEL: E61 E62 H11 H62
    Date: 2016–02
  20. By: Stefano Bosi (EPEE, University of Evry); David Desmarchelier (ECONOMIX, University of Paris Ouest); Lionel Ragot (ECONOMIX, University of Paris Ouest and CEPII)
    Abstract: We consider a competitive Ramsey economy where a pollution externality affects both consumption demand and labor supply, and we assume the stock of pollution to be persistent over time. Surprisingly, when pollution jointly increases the consumption demand (compensation effect) and lowers the labor supply (leisure effect), multiple equilibria arise near the steady state (local indeterminacy) through a Hopf bifurcation (limit cycle). This result challenges the standard view of pollution as a flow to obtain local indeterminacy, and depends on the leisure effect which renders the pollution accumulation process more volatile.
    Keywords: Pollution, Endogenous labor supply, Limit cycle, Ramsey model
    JEL: E32 O44
    Date: 2016–02
  21. By: International Monetary Fund
    Abstract: This paper discusses Poland’s performance under the Flexible Credit Line Arrangement. In recent years, Poland’s macroeconomic policies have focused on further strengthening fundamentals and institutional frameworks. Fiscal consolidation has led to an exit from the Excessive Deficit Procedure. Monetary policy has been eased to help lift inflation. Financial sector supervision has been strengthened with a new macroprudential framework. Reserves are broadly adequate against standard metrics. The new government has pledged to maintain prudent policies, including gradual fiscal consolidation over the medium term, and to ensure the continued stability of the banking system. In the period ahead, it will be important to identify specific growth-friendly measures to underpin the fiscal adjustment and reduce implementation risk.
    Keywords: Europe;Poland;market, credit line, monetary fund, financial market, markets
    Date: 2016–01–13
  22. By: Borowczyk-Martins, Daniel (Sciences Po, Paris); Lalé, Etienne (University of Bristol)
    Abstract: We use a set of empirical and analytical tools to conduct parallel analyses of involuntary part-time work and unemployment in the U.S. labor market. In the empirical analysis, we document that the similar cyclical behavior of involuntary part-time work and unemployment masks major differences in the underlying dynamics. Unlike unemployment, variations in involuntary part-time work are mostly explained by its interaction with full-time employment, and since the Great Recession employed workers are at a greater risk of working part-time involuntarily than being unemployed. In the theoretical analysis, we show that the higher probability of regaining full-time employment is key to distinguish involuntary part-time work from unemployment from a worker's perspective. We also quantify the welfare costs of cyclical fluctuations in involuntary part-time work, and the amplification of these costs arising from the elevated levels of involuntary part-time work observed since the Great Recession.
    Keywords: employment, involuntary part-time work, welfare, Great Recession
    JEL: E21 E32 J21
    Date: 2016–02
  23. By: Agnès Bénassy-Quéré; Xavier Ragot; Guntram B. Wolff
    Abstract: HIGHLIGHTS Fully-fledged federations assign fiscal policy stabilisation largely to the federal level, based on a relatively large budget. In the euro area, a large federal budget is unrealistic at the current level of political and societal integration, and fiscal stabilisation will continue to rely mainly on national policies. For aggregate fiscal policy to become more stabilising with respect to the economic cycle, while achieving long-term sustainability, it is necessary (i) to avoid imposing self-defeating fiscal adjustments on crisis countries by making sovereign debt restructuring a real possibility (which involves strengthening the banking sector and extending the remit of the European Stability Mechanism); (ii) to task the planned independent European Fiscal Board with delineating exceptional times during which fiscal coordination is needed on top of monetary policy; (iii) to make national fiscal policies more stabilising by allowing incremental investment and unemployment spending to be shifted from bad to good times based on national adjustment accounts. We also recommend a move towards a European unemployment (re-)insurance scheme targeted at ‘large’ shocks, with varying contributions from countries and a minimum set of labour-market harmonisation criteria, which in any case are desirable for the functioning of monetary union. For footnotes and references, please see the PDF version of this publication. Summary The construction of the euro area left aside the question of a fiscal union, but the crisis re-opened the debate. Of the three classical functions of fiscal policy – provision of public goods, redistribution and stabilisation – only the last provides a clear justification for fiscal policy at euro-area level. Unsustainable fiscal policies in one member state could destabilise the entire euro area, and national policies could also have direct and indirect demand effects with an impact on area-wide inflation. ‘Every man for himself’ is not an option. But coordination is difficult because it involves 19 national budgetary processes and a common central bank. Empirically, fiscal policy in the euro area and elsewhere often tends to accentuate rather than attenuate the economic cycle. The discretionary part of fiscal policy, as opposed to automatic stabilisers, is responsible for this unfortunate feature, while automatic stabilisers generally work well. Fully-fledged federations assign fiscal policy stabilisation largely to the federal level, based on a relatively large budget. In the euro area, a large federal budget is unrealistic at the current level of political and societal integration, and fiscal stabilisation will continue to rely mainly on national policies. We make three recommendations that would lead national fiscal policies to be more stabilising with respect to the economic cycle, while achieving long-term sustainability. First, the euro area should avoid imposing self-defeating fiscal adjustments on crisis countries. To achieve this, sovereign debt restructuring should be made possible by further strengthening the banking sector and extending the remit of the European Stability Mechanism. Second, fiscal policy in exceptionally good or bad times should be guided by the planned independent European fiscal board, while the Stability and Growth Pact (SGP) would apply strictly in ‘normal’ times. Of course, fiscal coordination is mostly needed in exceptional times, when the European Central Bank can no longer by itself stabilise the euro area. Third, the Stability and Growth Pact should be able to adapt in a more flexible way to the economic cycle by shifting incremental investment and unemployment spending from bad to good times based on national adjustment accounts, rather than through unclearly defined discretionary measures as is presently the case. This third proposal would strengthen automatic stabilisers that were in fact cut in some cases during the crisis. In addition, we recommend a move towards ‘federal’ insurance for very large shocks. This should be based on automatic stabilisers and should not involve conditionality when it is activated. The best option is likely to be a European unemployment (re-)insurance scheme for large shocks. All countries that comply with a minimum set of labour-market harmonisation criteria would be required to participate, with their payments into the scheme based on objective criteria. Labour market harmonisation is also desirable for the functioning of monetary union and could be incentivised by the re-insurance scheme. Introduction The idea to complement European Monetary Union with some form of fiscal federalism is not new. In 1977, the MacDougall report suggested the introduction of a small budget of around 5-7 percent of GDP as a first step, the long-term objective being “a Federation in Europe in which federal public expenditure is around 20-25 percent of gross product as in the USA and the Federal Republic of Germany” (Commission of the European Communities, 1977, pp10-11).
    Date: 2016–02
  24. By: Nina Budina; Borja Gracia; Xingwei Hu; Sergejs Saksonovs
    Abstract: This paper argues that asset price cycles have significant effects on fiscal outcomes. In particular, there is evidence of debt bias—the tendency of debt to increase over the cycle— that is significantly larger for house price cycles than stand-alone business cycles. Automatic stabilizers and discretionary fiscal policy generally respond to output fluctuations, whereas revenue increases due to house price booms are largely treated as permanent. Thus, neglecting the direct and indirect impact of asset prices on fiscal accounts encourages procyclical fiscal policies.
    Keywords: Public debt;Financial crises;housing cycles, private debt, debt bias, debt, price, output, prices, International Lending and Debt Problems, All Countries, debt bias.,
    Date: 2015–11–24
  25. By: Allan Dizioli; Jochen M. Schmittmann
    Abstract: The paper develops a small New-Keynesian FPAS model for Vietnam. The model closely matches actual data from 2000-2014. We derive an optimal monetary policy rule that minimizes variability of output, inflation, and the exchange rate. Compared to the baseline model, the optimal rule places a larger weight on output stabilization as the intermediate target to achieve inflation stability, while allowing greater exchange rate flexibility. We analyze the dynamics of key macro variables under various shocks including external and domestic demand shocks and a lift-off of U.S. interest rates. We find that the optimal monetary policy rule delivers greater macroeconomic stability for Vietnam under the shock scenarios.
    Keywords: Vietnam;Monetary policy;Inflation targeting;Asia and Pacific;Bayesian Estimation, exchange rate, interest rates, monetary policy rule, central bank, Forecasting and Simulation, Monetary Policy (Targets, Instruments, and Effects),
    Date: 2015–12–23
  26. By: Francesco Grigoli; José M. Mota
    Abstract: A well-functioning monetary transmission mechanism is critical for monetary policy. As the Dominican Republic recently adopted an inflation targeting regime, it is even more relevant to guarantee that changes in the monetary policy rates are quickly and fully reflected in retail rates, to eventually influence aggregate demand and inflation. This paper estimates the interest rate pass-through of the monetary policy rate to retail rates and explores asymmetries in the adjustment. We find evidence of complete pass-through to retail rates, confirming the effectiveness of the monetary policy transmission mechanism. However, our results also suggest a faster pass-through to lending rates than to deposit rates and asymmetric adjustments of short-term rates, as deposit rates respond faster to policy rate cuts and lending rates respond faster to policy rate hikes. Measures to enhance competition in the financial system could help to achieve a symmetric adjustment of retail rates.
    Keywords: Western Hemisphere;Dominican Republic;asymmetric, interest rate, pass-through, transmission mechanism, monetary policy, interest, lending, deposit, Monetary Policy (Targets, Instruments, and Effects),
    Date: 2015–12–10
  27. By: Helen Louri; Petros M. Migiakis
    Abstract: In the present paper we study the determinants of the margins paid by euro-area non-financial corporations (NFCs) for their bank loans on top of the rates they earn for their deposits (bank lending margins). We use panel VAR techniques, in order to test for causality relationships and produce impulse response functions for eleven euro-area countries from 2003:1 to 2014:12. The countries are separated into two groups (distressed and non-distressed), in order to examine for heterogeneities in the relationships between lending margins; the period is also separated with reference to the peak of the global financial crisis (before and after the collapse of Lehman in September 2008). We find that significant heterogeneities existed even before the global financial crisis and remained in its aftermath, although the magnitude and the direction of the effects exercised by the explanatory variables have changed. Furthermore, apart from finding that market concentration and the prudence of banks’ management increase the lending margins NFCs pay for their loans, there is evidence of substitution effects between financing obtained from banks and corporate bond markets. The provision of ample liquidity from the ECB, in the aftermath of the global financial crisis was found to be effective only for the core countries, suggesting that further policy actions are needed in order to reduce the fragmentation of bank lending and promote financial integration to the benefit of the euro-area real economy.
    Keywords: bank lending margins, financial fragmentation, global financial crisis, ECB, euro area
    JEL: E44 E51 E58 F36 F42
    Date: 2016–02
  28. By: Dan Usher (Queen's University)
    Abstract: A utilitarian measure of economic growth combines changes in the distribution of income with changes in real income per person to show how much better off people are becoming over time. It is the rate of growth of the dollar value of average utility of income. As such , it is seen differently by people with different utility of income functions. A growth rate in U.S. household income of 0.63% per year as ordinarily measured disappears altogether - is transformed into a decline of 0.086% per year - when the utility of income function is sufficiently concave. Strengths, weaknesses and implicit assumptions of the utilitarian measure are discussed.
    Keywords: National Income, Utilitarian, Certainty-equivalence
    JEL: E31 E32 O40
    Date: 2016–02
  29. By: International Monetary Fund
    Abstract: This paper discusses Liberia’s Request for an Extension of the Arrangement Under the Extended Credit Facility (ECF). From mid-2014 to mid-2015, Liberia faced a serious Ebola virus disease crisis, which triggered the declaration of a state of emergency. End-June 2014 performance criteria (PCs) and indicative targets were met, except the revenue floor and the floor net foreign exchange position of the Central Bank of Liberia (CBL), and the ceiling on net domestic assets. The authorities are expected to request waivers for the missed PCs in light of corrective actions undertaken to improve revenue collection and strengthen the net foreign exchange position of the CBL. The IMF staff supports the authorities’ request to extend the ECF arrangement.
    Keywords: Sub-Saharan Africa;Liberia;financial management, monetary fund, foreign exchange, revenue, pcs
    Date: 2015–11–09
  30. By: Itai Agur; Maria Demertzis
    Abstract: How does monetary policy impact upon macroprudential regulation? This paper models monetary policy's transmission to bank risk taking, and its interaction with a regulator's optimization problem. The regulator uses its macroprudential tool, a leverage ratio, to maintain financial stability, while taking account of the impact on credit provision. A change in the monetary policy rate tilts the regulator's entire trade-off. We show that the regulator allows interest rate changes to partly "pass through" to bank soundness by not neutralizing the risk-taking channel of monetary policy. Thus, monetary policy affects financial stability, even in the presence of macroprudential regulation.
    Keywords: Financial crises;Macroprudential, Supervision, Transmission, bank, risk, banks, financial stability, interest, Monetary Policy (Targets, Instruments, and Effects), Government Policy and Regulation, All Countries, Leverage,
    Date: 2015–12–29
  31. By: Dilem Yıldırım (Department of Economics, METU); Ethem Erdem Orman (Republic of Turkey Prime Ministry Undersecretariat of Treasury)
    Abstract: This study explores the empirical validity of the Feldstein-Horioka puzzle for China in the presence of structural breaks. To this end, we employ the recently proposed multiple-break cointegration test of Maki (2012), along with the one-break Gregory and Hansen (1996) cointegration test. Once the existence of the cointegration between domestic savings and investment is ensured by allowing for endogenous structural breaks, Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) estimation procedures are implemented to obtain reliable inferences from the cointegrating regression. Empirical results reveal that the relationship between Chinese domestic savings and investment has changed with the regime shift towards flexible exchange rates and the 2008-2009 global financial crises. More specifically, with the introduction of managed floating exchange rate regime, a substantial reduction is observed in the almost unitary saving retention coefficient of the fixed exchange rate period. Furthermore, the correlation has experienced a slight increase since 2009, which coincides with the worldwide protectionist policies adopted in the depth of the global financial crisis.
    Keywords: Feldstein-Horioka puzzle, saving-investment association, capital mobility, exchange rate regimes, 2008-2009 global financial crises, cointegration, structural breaks, China
    JEL: E21 E22 F21 C22 C51 G01
    Date: 2016–01
  32. By: Ma, Guonan (BOFIT); Yao, Wang (BOFIT)
    Abstract: A global renminbi needs to be backed by a large, deep and liquid renminbi bond market with a world-class Chinese government bond (CGB) market as its core. China’s CGB market is the seventh largest in the world while sitting alongside a huge but non-tradable and captive central bank liability in the form of required reserves. By transforming the non-tradable central bank liabilities into homogeneous and tradable CGBs through halving the high Chinese reserve requirements, the size of the CGB market can easily double. This would help over-come some market impediments and elevate the CGBs to a top three government bond market globally, boosting market liquidity while trimming distortions to the banking system. With a foreign ownership similar to that of the JGBs, CGBs held by foreign investors may increase ten-fold by 2020, approaching 5 percent of the 2014 global foreign reserves and facilitating a potential global renminbi, especially in the wake of the renminbi’s inclusion into the basket of the IMF Special Drawing Rights.
    Keywords: bond market; government bond market; renminbi internationalization
    JEL: E42 E44 E58 F02 G10 H63
    Date: 2016–02–06
  33. By: International Monetary Fund
    Abstract: Growth has moderated as tailwinds have waned: dairy prices have fallen sharply from historic highs and investment activity related to the Canterbury rebuild has reached a plateau. The short-term outlook is challenging with both external and domestic risks, the latter arising from rapid house price inflation in Auckland. However, New Zealand’s flexible economy is resilient, and medium-term prospects remain positive. Monetary policy has been eased since June and the Reserve Bank stands ready to reduce rates further if warranted. Given the below-potential growth, measures of core inflation around the lower end of the target band, and a still strong exchange rate, the monetary policy stance is appropriate.
    Keywords: Article IV consultation reports;Fiscal policy;Fiscal consolidation;Housing prices;Monetary policy;Exchange rate assessments;Economic indicators;Balance of payments statistics;Debt sustainability analysis;Staff Reports;Press releases;New Zealand;
    Date: 2016–02–08
  34. By: Roger Alejandro Banegas-Rivero (Instituto de Investigaciones Económicas y Sociales 'José Ortiz Mercado' (IIES-JOM), Universidad Autónoma Gabriel René Moreno.)
    Abstract: En este documento se evalúan tres reglas fiscales para Bolivia con el fin de mejorar el crecimiento económico y el nivel de empleo como medidas de bienestar social. Los resultados señalaron que la estrategia de regla fiscal correspondiente a la postura neoclásica de la economía, que favorece el ahorro de los ingresos hidrocarburíferos, en realidad deteriora el bienestar social. Mientras que la estrategia de reacción fiscal de corto plazo (postura Keynesiana) basada en canalizar la mayor parte de los ingresos hidrocarburíferos netos hacia la inversión pública, promueve mayor bienestar social con sostenibilidad fiscal. De igual forma, se evidenció que a mayores niveles de inversión pública se incrementan los ingresos fiscales no hidrocarburíferos (efecto de diversificación tributaria) durante 10 años mediante un modelo macroeconométrico estructural estimado de 1980 al 2012.
    Keywords: reglas fiscales, bienestar social.
    JEL: E62 O11 O47 I31
    Date: 2016–01
  35. By: Kamiar Mohaddes; Mehdi Raissi
    Abstract: This paper investigates the global macroeconomic consequences of falling oil prices due to the oil revolution in the United States, using a Global VAR model estimated for 38 countries/regions over the period 1979Q2 to 2011Q2. Set-identification of the U.S. oil supply shock is achieved through imposing dynamic sign restrictions on the impulse responses of the model. The results show that there are considerable heterogeneities in the responses of different countries to a U.S. supply-driven oil price shock, with real GDP increasing in both advanced and emerging market oil-importing economies, output declining in commodity exporters, inflation falling in most countries, and equity prices rising worldwide. Overall, our results suggest that following the U.S. oil revolution, with oil prices falling by 51 percent in the first year, global growth increases by 0.16 to 0.37 percentage points. This is mainly due to an increase in spending by oil importing countries, which exceeds the decline in expenditure by oil exporters.
    Keywords: Western Hemisphere;United States;Tight oil, shale oil, fracking revolution, oil price decline, oil supply, global macroeconometric modeling, international business cycle, oil, prices, oil prices, price, oil production, Time-Series Models, International Business Cycles, Forecasting and Simulation, Forecasting and Simulation, Energy and the Macroeconomy, and international business cycle.,
    Date: 2015–12–10
  36. By: Nicolas R. Blancher; Srobona Mitra
    Abstract: The world was taken by surprise by the global financial crisis that started in 2007. In response, there has been a proliferation of international initiatives to improve the quantitative toolkit for systemic risk monitoring. The IMF has played a key role in supporting these efforts, given its surveillance mandate and increasing role as a global risk advisor. Indeed, well before this crisis, the Fund started to strengthen the analytical underpinnings of its risk assessments and has strived to remain at the frontier of macro-financial analysis, including in areas such as macroprudential policy, stress testing, and interconnectedness and spillovers. The Fund's Systemic Risk Monitoring (SysMo) project aims to take stock of these efforts and to make this knowledge widely available. It responds in particular to demand from policymakers and practitioners for practical guidance on using tools for systemic risk monitoring. For this purpose, it proposes an innovative approach to monitor systemic risk, based on combinations of existing individual tools. In providing direction on using a wide array of tools, SysMo also reflects the full range of country circumstances across the Fund’s membership, and helps policymakers to customize systemic risk monitoring accordingly.
    Keywords: Financial sector surveillance;Financial sector;Systemic Risk; Macroprudential Policy; Early Warning; Stress Testing; Financial Crisis
  37. By: Hernando Vargas-Herrera (Banco de la República de Colombia)
    Abstract: Inflation expectations in Colombia are characterized. Empirical evidence following conventional tests suggests that they might not be rational, although the period of disinflation included in the sample makes it difficult to ascertain this conclusion. Inflation expectations display close ties with observed past and present headline inflation and are affected by exogenous shocks in a possibly non-linear way. A model-based core inflation measure is computed that addresses the shortcomings of traditional exclusion measures when temporary supply shocks have widespread effects and are persistent. Classification JEL:E31, E37, E52
    Keywords: Inflation expectations, core inflation, supply shocks, monetary policy
    Date: 2016–02
  38. By: G. Cette; R. Lecat; A. Ould Ahmed Jiddou
    Abstract: Using three datasets of French manufacturing firms, this paper studies the role of trade openness, in relation with the cycle, as a determinant of company margin rate. Margin rates increase as capacity utilization tightens (and vice versa), reflecting the procyclicality of margin rates. However, high import rates are limiting this procyclicality: when capacities are tight, domestic producers may not be able to serve demand, but foreign producers may substitute for them if they are already present on the market as reflected by the level of import rates.
    Keywords: margin rates, capacity utilization, cycle, trade openness.
    JEL: D24 D43 E32
    Date: 2016
  39. By: Gaballo, Gaetano; Marimon, Ramon
    Abstract: We show that credit crises can be Self-Confirming Equilibria (SCE), which provides a new rationale for policy interventions like, for example, the FRB's TALF credit-easing program in 2009. We introduce SCE in competitive credit markets with directed search. These markets are efficient when lenders have correct beliefs about borrowers' reactions to their offers. Nevertheless, credit crises - where high interest rates self-confirm high credit risk - can arise when lenders have correct beliefs only locally around equilibrium outcomes. Policy is needed because competition deters the socially optimal degree of information acquisition via individual experiments at low interest rates. A policy maker with the same beliefs as lenders will find it optimal to implement a targeted subsidy to induce low interest rates and, as a by-product, generate new information for the market. We provide evidence that the 2009 TALF was an example of such Credit Easing policy. We collect new micro-data on the ABS auto loans in the US before and after the policy intervention, and we test, successfully, our theory in this case.
    Keywords: credit crisis; directed search; learning; self-confirming equilibrium; social experimentation; unconventional policies
    JEL: D53 D83 D84 D92 E44 E61 G01 G20 J64
    Date: 2016–02
  40. By: Pavlina R. Tcherneva
    Abstract: Money, in this paper, is defined as a power relationship of a specific kind, a stratified social debt relationship, measured in a unit of account determined by some authority. A brief historical examination reveals its evolving nature in the process of social provisioning. Money not only predates markets and real exchange as understood in mainstream economics but also emerges as a social mechanism of redistribution, usually by some authority of power (be it an ancient religious authority, a king, a colonial power, a modern nation state, or a monetary union). Money, it can be said, is a "creature of the state" that has played a key role in the transfer of real resources between parties and the redistribution of economic surplus. In modern capitalist economies, the currency is also a simple public monopoly. As long as money has existed, someone has tried to tamper with its value. A history of counterfeiting, as well as that of independence from colonial and economic rule, is another way of telling the history of "money as a creature of the state." This historical understanding of the origins and nature of money illuminates the economic possibilities under different institutional monetary arrangements in the modern world. We consider the so-called modern "sovereign" and "nonsovereign" monetary regimes (including freely floating currencies, currency pegs, currency boards, dollarized nations, and monetary unions) to examine the available policy space in each case for pursuing domestic policy objectives.
    Keywords: History of Money; Monetary Sovereignty; Chartalism; Counterfeiting; Public Monopoly; Currency Issuers vs. Currency Users; Exchange Rate Systems
    JEL: B5 E6 E42 E63 N1 Z1
    Date: 2016–02
  41. By: Robert Unger
    Abstract: The euro area crisis is often linked to the emergence of current account imbalances. As most of the deficit countries experienced pronounced credit booms at the same time that these imbalances were building up, this paper investigates the link between domestic credit developments and the current account balance. Using a panel error correction specification, the estimation results show that flows of bank loans to the non-financial private sector are a significant determinant of the current account and that they – together with changes in competitiveness – constituted the most important factor driving the build-up of current account imbalances in the deficit countries. Accordingly, impeding an increase in private sector indebtedness seems to be a promising way to dampen the formation of unsustainable current account imbalances.
    Keywords: banks, credit growth, current account imbalances, euro area
    JEL: E50 F32 G21
    Date: 2016–02
  42. By: PESTIEAU, P. (Université de Liège, CORE, PSE and CEPR); PONTHIERE, G. (Universite Paris East and PSE)
    Abstract: In the so-called Rapport Sauvy (1962), the French demographer Alfred Sauvy argued that Wallonia’s fertility rate was socially suboptimal, and recommended a 20 % rise of fertility, on the grounds that a society with too low a fertility leads to a low-productive economy composed of old workers having old ideas. This paper examines how Sauvy’s intuition can be incorporated in the seminal Samuelsonian optimal fertility model (Samuelson 1975). For that purpose, we build a 4-period OLG model with physical capital and with two generations of workers (young and old), the skills of the latter being subject to some form of decay. We characterize the optimal fertility rate, and show that this equalizes, at the margin, the sum of the capital dilution effect (Solow effect) and the labor age-composition effect (Sauvy effect) with the intergenerational redistribution effect (Samuelson effect). Finally, we develop a numerical example, and examine how Sauvy’s recommendation can be reconcilied with facts.
    Keywords: optimal fertility, age structure, overlapping generations, social optimum
    JEL: E13 E21 J24
    Date: 2015–10–19
  43. By: Sohrab Rafiq
    Abstract: This paper explores how monetary policy affects the real economy and its efficacy in promoting financial stability in a large low income country. This paper shows that monetary policy modestly impacts real economic activity and inflation via the bank lending and financial accelerator channels. Second, money market and treasury rates signal changes in the policy stance, while altering banks’ intermediation cost curves due to shifting risk premia. At the same time, evidence points to monetary policy inducing an overshooting in asset prices. These findings suggest that financial stability could be undermined if the calibration of monetary policy is based solely on output and inflation without accounting for the stage of the financial cycle. Finally, the paper discusses policy measures that would enhance the transmission of monetary policy and promote financial stability in Bangladesh.
    Keywords: Liquidity;Credit;Development;Asia and Pacific;Bangladesh;Monetary policy;Prices;inflation, financial stability, reserve, Monetary Policy (Targets, Instruments, and Effects), Open Economy Macroeconomics,
    Date: 2015–11–09
  44. By: Peter Toth (National Bank of Slovakia, Research Department); Katarina Valkova (WU Wirtschaftsuniversität Wien)
    Abstract: The aim of this paper is to test the determinants of labour cost adjustments by Slovak firms during the recent recovery period from 2010 to 2013. We use a new dataset from a firm-level survey, which was conducted in cooperation with the Wage Dynamics Network of the European Central Bank. The main findings are broadly in line with macroeconomic data, such as the uneven recovery of demand across sectors, stagnation of employment and increase in wages. Our estimates highlight the importance of demand shocks in explaining labour cost adjustments. Further, the role of collective agreements and wage rigidities seems crucial, which forces firms to downsize their labour inputs rather than to cut wages. Finally, we find evidence that large and foreign owned firms face fewer barriers to adjusting their labour costs. The mentioned factors seem to be the main explanation for the recent jobless recovery in Slovakia during 2010 to 2013.
    Keywords: labour cost adjustment, firm-level survey, collective bargaining, wage rigidities, adjustment costs
    JEL: E24 J30 J50 C81
    Date: 2015–12
  45. By: Fernando J. Pérez Forero (Central Reserve Bank of Peru); Marco Vega (Central Reserve Bank of Peru)
    Abstract: We study the response of headline inflation to exchange rate innovations in a nonlinear context, where we distinguish between positive (depreciation) and negative (appreciation) exchange rate shocks. For that purpose, we specify a nonlinear Structural Vector Autoregressive (SVAR) model and we compute asymmetric impulse response functions for headline inflation after exchange rate innovations. We introduce a bootstrap Monte Carlo routine that allows to compute the error bands for these nonlinear impulse responses. Results for the Peruvian economy exhibit a remarkable statistically significant asymmetry in the response of headline inflation, both on impact and on propagation. In absolute values, the effect of a depreciation shock after one year is about twice the size of that corresponding to an appreciation shock. Roughly speaking, the one-year exchange rate pass-through to prices is 20 percent under a depreciation and only 10 percent under an appreciation.
    Keywords: Exchange rate pass-through, asymmetric impulse responses, non-linear SVARs, Bootstrap, Monte Carlo
    JEL: C32 E31 F31
    Date: 2016–02
  46. By: International Monetary Fund
    Abstract: This paper discusses Bangladesh’s Fifth and Sixth Reviews Under the Extended Credit Facility Arrangement. The current ECF arrangement, approved in April 2012, is drawing to a close. Over its three years, macroeconomic stability has been buttressed: growth is strong, inflation has eased, the public debt-to-GDP ratio has remained stable, and foreign reserves remain adequate. Progress on revenue mobilization, however, has been weak. Political uncertainty remains a key risk to the outlook. All performance criteria for the combined reviews have been met, all prior actions have been completed, and macroeconomic stability has been maintained. The IMF staff recommends completion of the combined reviews.
    Keywords: Bangladesh;Asia and Pacific;revenue, debt, monetary fund, macroeconomic stability, tax
    Date: 2015–11–10
  47. By: Jörg Decressin; Raphael A. Espinoza; Ioannis Halikias; Michael Kumhof; Daniel Leigh; Prakash Loungani; Paulo A. Medas; Susanna Mursula; Antonio Spilimbergo; TengTeng Xu
    Abstract: The paper studies the impacts of wage moderation in the euro area. Simulation results show that if a single euro area crisis-hit economy undertakes wage moderation, the impact on output is positive for that economy and for the entire euro area. If all crisis-hit economies undertake wage moderation together, their output still expands, albeit to a lesser degree. If the wage moderation is accompanied by cuts in policy interest rates by the central bank—and by quantitative easing once interest rates hit the zero lower bound—then output for the entire euro area expands as well.
    Keywords: Wage bargaining;Euro Area;Wage adjustments;Negative spillovers;Monetary policy;Euro area, Crisis, Current account, Internal devaluation, Unemployment, Wage moderation, economies, devaluation, monetary policy, economy, General, Open Economy Macroeconomics, International Policy Coordination and Transmission, International Business Cycles, All Countries,
    Date: 2015–11–17
  48. By: International Monetary Fund
    Abstract: This 2015 Article IV Consultation highlights that the Democratic Republic of the Congo’s macroeconomic performance remained strong through the first half of 2015 despite a difficult external and domestic environment. Real GDP growth in 2014 is estimated at 9.2 percent, driven by copper production and the service sector. The medium-term outlook is favorable but subject to downside risks. Real GDP growth is projected to remain strong at 9.2 percent in 2015—among the highest rates in the world—and average 8.4 percent in 2016–17 before stabilizing at about 6 percent in 2018–20.
    Keywords: Sub-Saharan Africa;Congo, Democratic Republic of the;budget, central bank, reserves, monetary fund, exchange
    Date: 2015–10–13
  49. By: Bernardo Leyva-Uribe; Jose E. Gomez-Gonzalez; Oscar M. Valencia-Arana; Mauricio Villamizar-Villegas
    Abstract: Este trabajo estudia los efectos de la política monetaria de la Reserva Federal de Estados Unidos durante la reciente crisis financiera (2008-2009) sobre los retornos accionarios de mercados emergentes. Mediante el análisis de un estudio de eventos se encuentra evidencia significativa de que los índices accionarios de un conjunto de países emergentes reaccionaron ante los comunicados del comité de la Reserva Federal (FOMC) sobre el futuro del programa de compras de activos financieros a gran escala (LSAP). Sin embrago, dichas respuestas muestran un importante grado de heterogeneidad. En particular, los retornos accionarios de los países emergentes aumentaron en un 7.3% y 2.3% durante la primera y tercera etapa del programa de Quantitative Easing, respectivamente. Por otra parte, los retornos accionarios disminuyeron en un 2.9% durante la segunda etapa. Estas diferencias se pueden atribuir al diseño de cada una de las etapas del programa de estímulo monetario llevado a cabo por la Reserva Federal.
    Keywords: Quantitative Easing, Large Scale Asset Purcheses, estudio de eventos, retorno accionario, mercados emergentes
    JEL: E52 E58 G15
    Date: 2016–02–29
  50. By: International Monetary Fund
    Abstract: Context. For several years, Lesotho achieved solid economic growth with only moderate inflation; however, this growth lacked inclusiveness and poverty has remained widespread. Most recently, growth has begun to slow, partly reflecting spillovers from South Africa, as well as uncertainty at home. Lesotho relies heavily on revenues from the Southern African Customs Union (SACU) to finance large government expenditures, but these revenues are highly volatile. Need for Fiscal Adjustment. SACU revenues will fall sharply in fiscal year 2016/17 (April-March), with much of this fall expected to be long-lasting. Although Lesotho has built substantial international reserves and fiscal buffers, a major fiscal adjustment over the next 2–3 years will be needed to maintain macroeconomic stability. Containing the government wage bill—which at 23 percent of GDP is the largest in sub-Saharan Africa—will be central to a successful adjustment. Progress on reforms to public service administration and public financial management is also critical. Better targeting of government transfers is necessary for social protection.
    Keywords: Article IV consultation reports;Fiscal policy;Private sector;Banking sector;Financial risk;Reserves adequacy;Economic indicators;Balance of payments statistics;Debt sustainability analysis;Staff Reports;Press releases;Lesotho;
    Date: 2016–02–03
  51. By: International Monetary Fund
    Abstract: This Selected Issues paper discusses some options to strengthen Iran’s fiscal framework, and highlights the need for a medium-term framework. Fiscal policy design in Iran faces numerous challenges. Some are current, such as managing volatile oil revenue while addressing development needs. Other challenges are related to demographic pressures from new entrants to the labor market, as the country needs to prepare from aging pressures in the decades to come. With medium-term planning, macroeconomic stability, and adequate spending, fiscal policy could play a critical role in fostering growth. Ultimately, addressing these issues would help Iran achieve its objective of becoming one of the fastest-growing emerging economies.
    Keywords: Payments arrears;Oil revenues;Labor productivity;Fiscal policy;Government expenditures;Aging;Budgets;Iran, Islamic Republic of;Iran, Islamic Republic of;Selected Issues Papers;revenue, budget, investment, arrears
    Date: 2015–12–21
  52. By: Garnero, Andrea (OECD); Hijzen, Alexander (OECD); Martin, Sébastien (OECD)
    Abstract: This paper provides comprehensive cross-country evidence on the relationship between earnings inequality and intra-generational mobility by simulating individual earnings and employment trajectories in the long-term using short panel data for 24 OECD countries. On average across countries, about 25% of earnings inequality in a given year evens out over the life cycle as a result of mobility. Moreover, mobility is not systematically higher in countries with more earnings inequality in general. However, a positive and statistically significant relationship is found only in the bottom of the distribution. This reflects the role of mobility between employment and unemployment and not that of mobility up and down the earnings ladder.
    Keywords: intra-generational mobility, life-time inequality, earnings-experience profiles, simulation
    JEL: E24 J30 J62 O57
    Date: 2016–02
  53. By: Olivier J. Blanchard; Eugenio Cerutti; Lawrence Summers
    Abstract: We explore two issues triggered by the crisis. First, in most advanced countries, output remains far below the pre-recession trend, suggesting hysteresis. Second, while inflation has decreased, it has decreased less than anticipated, suggesting a breakdown of the relation between inflation and activity. To examine the first, we look at 122 recessions over the past 50 years in 23 countries. We find that a high proportion of them have been followed by lower output or even lower growth. To examine the second, we estimate a Phillips curve relation over the past 50 years for 20 countries. We find that the effect of unemployment on inflation, for given expected inflation, decreased until the early 1990s, but has remained roughly stable since then. We draw implications of our findings for monetary policy.
    Date: 2015–11–06
  54. By: Damiano Sandri
    Abstract: The paper presents a tractable model to understand how international financial institutions (IFIs) should deal with the sovereign debt crisis of a systemic country, in which case private creditors' bail-ins entail international spillovers. Besides lending to the country up to its borrowing capacity, IFIs face the difficult issue of how to address the remaining financing needs with a combination of fiscal consolidation, bail-ins and possibly official transfers. To maximize social welfare, IFIs should differentiate the policy mix depending on the strength of spillovers. In particular, stronger spillovers call for smaller bail-ins and greater fiscal consolidation. Furthermore, to avoid requiring excessive fiscal consolidation, IFIs should provide highly systemic countries with official transfers. To limit the moral hazard consequences of transfers, it is important that IFIs operate under a predetermined crisis-resolution framework that ensures commitment.
    Keywords: Moral hazard;Fiscal consolidation;Debt restructuring;Sovereign default, bail-ins, transfers, debt, creditors, sovereign debt, International Monetary Arrangements and Institutions, International Lending and Debt Problems, General, All Countries,
    Date: 2015–10–16
  55. By: International Monetary Fund
    Abstract: This 2015 Article IV Consultation highlights that the economy of Mexico has continued to grow at a moderate pace, and capital outflow pressures have been limited. The flexible exchange rate has helped the economy adjust to external shocks, while inflation has remained low and stable. Mexico is implementing a broad range of structural reforms, which should help lift potential growth over the medium term. The economy is projected to grow by 2.25 percent in 2015. Construction activity has moderated after a strong rebound in the second half of 2014. Manufacturing and services remain the main driver of growth, although weaker-than-expected U.S. demand affected manufacturing exports in early 2015.
    Keywords: Western Hemisphere;Mexico;inflation, exchange, monetary fund, market, exchange rate
    Date: 2015–11–17
  56. By: Dobridge, Christine L. (Board of Governors of the Federal Reserve System (U.S.))
    Abstract: In this paper, I examine the effects of a countercyclical fiscal policy that gave firms additional tax refunds--additional liquidity--at the end of the past two recessions. I take advantage of a discontinuity in the slope of the tax refund formula to estimate the policy's impact. I find that after passage of the policy in 2002, firms allocated $0.40 of every tax refund dollar to investment. After passage of the policy in 2009, in contrast, firms used the refunds to increase cash holdings ($0.96 of every refund dollar) before paying down debt in the following year. I provide evidence that differences in macroeconomic conditions across the two periods drove these differences in firm responses, illustrating how the effects of stimulus vary across recessionary states of the world. I also show that while the policy had no discernable effect on investment in the most recent recessionary period, it did reduce firms’ bankruptcy risk and the probability of a future credit- rating downgrade.
    Keywords: Financing policy; fiscal policy; fixed investment; taxation
    Date: 2016–02–22
  57. By: International Monetary Fund
    Abstract: This 2015 Article IV Consultation highlights that Malta’s economy is growing strongly. Real GDP growth has been one of the highest in the euro area since the beginning of the crisis, supported by vibrant domestic demand, large infrastructure projects, and a stable banking sector. Unemployment is at historical lows, and labor participation is increasing. The current account remains in surplus, and the external position is broadly in line with fundamentals. Growth is expected to remain solid in 2016–17, driven initially by domestic demand and later by a gradual recovery of external demand. Inflation is projected to pick up gradually owing to the positive output gap and higher imported inflation on account of the weaker exchange rate.
    Keywords: Malta;Europe;oil prices, monetary fund, market, labor market, goods
    Date: 2016–01–20
  58. By: Villa,Edgar; Misas,Martha A.; Loayza,Norman V.
    Abstract: This paper contributes to the economic analysis of illicit activities and money laundering. First, it presents a theoretical model of long-run growth that explicitly considers illicit workers, activities, and income, alongside a licit private sector and a functioning government. Second, it generates estimates of the size of illicit income and provides simulated and econometric estimates of the volume of laundered assets in the Colombian economy. In the model, the licit sector operates in a perfectly competitive environment and produces a licit good through a standard neoclassical production function. The illicit sector operates in an imperfectly competitive environment and is composed of two different activities: The first activity produces an illicit good that nonetheless is valuable in the market (for example illicit drugs); the second does not add value to the economy but only redistributes wealth (for example robbery, kidnapping, and fraud). The paper provides a series of comparative statics exercises to assess the effects of changes in government efficiency, licit sector productivity, and illicit drug prices. From the model, the analysis derives a set of estimable macroeconometric equations to measure the size of laundered assets in the Colombian economy in the period 1985 to 2013. The paper assembles a data set whose key components are estimates of illicit income from drug trafficking and common crime. Illicit incomes increased drastically until 2001, reaching a peak of nearly 12 percent of gross domestic product and then decreasing to less than 2 percent by 2013. The decline overlaps not only in a period of high economic growth, but also after the implementation of Plan Colombia. The data set is used to estimate the volume of laundered assets in the economy by applying the Kalman filter for the estimation of unobserved dynamic variables onto the derived macroeconometric equations from the model. The findings show that the volume of laundered assets increased from about 8 percent of gross domestic product in the mid-1980s to a peak of 14 percent by 2002, and declined to 8 percent in 2013.
    Keywords: Currencies and Exchange Rates,Economic Theory&Research,Emerging Markets,Environmental Economics&Policies,Investment and Investment Climate
    Date: 2016–02–25
  59. By: International Monetary Fund
    Abstract: A moderate economic recovery is taking hold in St. Lucia. Favorable international conditions have contributed to improved demand for tourism, St. Lucia’s main economic sector, and the external current account deficit has narrowed significantly. The authorities have made some progress in addressing a weak fiscal position. However, the financial sector continues to be impaired by nonperforming loans, public debt keeps rising, and unemployment remains very high, while external sector competitiveness continues to be weakened by an overvalued exchange rate, economies of scale disadvantages, and structural bottlenecks.
    Date: 2016–02–18
  60. By: International Monetary Fund
    Abstract: This paper discusses Côte d'Ivoire’s Eighth Review Under the Extended Credit Facility (ECF) Arrangement. The macroeconomic outlook remains strong with high projected growth rates supported by sustained improvements in the business climate and rising private investment, including in large private-public infrastructure projects. Risks to the near-term growth outlook are moderately tilted to the downside. Adverse weather owing to El Niño could lower output, and the failure to contain fiscal risks could weaken the fiscal accounts. The IMF staff supports the authorities’ request for completion of the eighth ECF review.
    Keywords: Extended Credit Facility;Economic growth;Fiscal policy;Debt management;Fiscal reforms;Economic indicators;Balance of payments statistics;Data quality assessment framework;Debt sustainability analysis;Letters of Intent;Staff Reports;Press releases;Performance criteria modifications;Côte d'Ivoire;
    Date: 2015–12–17
  61. By: Lars E. O. Svensson
    Abstract: “Leaning against the wind†(LAW) with a higher monetary policy interest rate may have benefits in terms of lower real debt growth and associated lower probability of a financial crisis but has costs in terms of higher unemployment and lower inflation, importantly including a higher cost of a crisis when the economy is weaker. For existing empirical estimates, costs exceed benefits by a substantial margin, even if monetary policy is nonneutral and permanently affects real debt. Somewhat surprisingly, less effective macroprudential policy and generally a credit boom, with resulting higher probability, severity, or duration of a crisis, increases costs of LAW more than benefits, thus further strengthening the strong case against LAW.
    Keywords: Financial stability;Monetary policy;Central banks and their policies;macroprudential policy, unemployment, unemployment rate, debt, marginal cost, benchmark, Monetary Policy (Targets, Instruments, and Effects), All Countries, macroprudential policy.,
    Date: 2016–01–11
  62. By: Dilyana Dimova; Piyabha Kongsamut; Jérôme Vandenbussche
    Abstract: This paper presents a detailed account of the rich set of macroprudential measures taken in four Southeastern European countries—Bulgaria, Croatia, Romania, and Serbia—during their synchronized boom and bust cycles in 2003–12, and assesses their effectiveness. We find that only strong measures helped contain domestic credit growth, the share of foreigncurrency- denominated loans provided by the domestic banking sector, or the domestic banking sector’s reliance on foreign borrowing during the boom years. We also find that circumvention via direct external borrowing often fully offset the effectiveness of these strict measures, and thatmeasures taken during the bust had no discernible impact. We conclude that (i) proper calibration of macroprudential measures is of the essence; (ii) only strong, broad-based macroprudential measures can contain credit booms; (iii) econometric studies of macroprudential policy effectiveness should focus on measures rather than on instruments (i.e. classes of measures) and in so doing allow for possible non-linear and state-contingent effects.
    Date: 2016–02–15
  63. By: Bas B. Bakker
    Abstract: This paper argues that the sharp increase in unemployment in a number of advanced countries during the Great Recession was not just cyclical (the result of a lack of aggregate demand); the degree of adjustment of real wages and the impact this had on labor productivity also played a role. In many countries, post-2007 employment losses were modest, as real wages adjusted when the economy slowed down. But in some countries real wage growth stayed too high for too long. The result was large-scale labor shedding, which boosted labor productivity but also contributed to a sharp rise in unemployment. In this context, the paper discusses the different experiences of the UK (where employment increased) and Spain (where it fell sharply), and finds that almost two thirds of the employment losses in Spain resulted from the failure of real wages to adjust adequately.
    Keywords: Europe;Employment;Unemployment;United Kingdom;Spain;Real wages;Great Recession, Okun’s law, employment rate, labor, General, General,
    Date: 2015–10–28
  64. By: Ali Alichi; Olivier Bizimana; Silvia Domit; Emilio Fernández Corugedo; Douglas Laxton; Kadir Tanyeri; Hou Wang; Fan Zhang
    Abstract: The estimates of potential output and the output gap presented in this paper are not official IMF estimates. The programs and potential output estimates in this paper can be downloaded from views expressed in this paper are those of the authors and do not necessarily represent those of the IMF or IMF policy. The authors would like to thank the European Department of the IMF for helpful comments. All errors and omissions are our own.
    Keywords: Economic theory;Parameter estimation;Potential output;Econometric models;United States;United States;Euro Area;Macroeconomic Modeling, inflation, unemployment, gdp, productivity, Model Construction and Estimation, Monetary Policy (Targets, Instruments, and Effects),
    Date: 2015–12–01
  65. By: International Monetary Fund
    Abstract: Context. Commitment to macroeconomic stability has characterized government policies. Over the last three years, real GDP growth has averaged 4.8 percent, one of the highest in the region, while inflation has remained anchored by the exchange rate regime. The external current account deficit has declined, reflecting a smaller oil bill due to both lower oil prices and increased reliance on renewable energy sources. Outlook and Risks. A moderate deceleration in real growth is projected in 2015 followed by a small pickup in 2016, owing to the projected recovery in foreign demand and an increase in election-related spending. Poverty has fallen sharply but unemployment has edged up due in part to a decline in manufacturing activity. The fiscal stance has become modestly more expansionary and, as a result, public debt ratios are expected to stabilize in contrast with the reduction envisaged in previous consultations. Risks are, however, tilted to the downside. A deterioration in the financial terms or levels of the Venezuela oil cooperation could increase pressures to absorb quasi-fiscal spending into the budget. Structurally weak growth in key advanced and emerging economies and a persistent decline in prices of major export products would also negatively impact Nicaragua.
    Keywords: Article IV consultation reports;Fiscal policy;Fiscal transparency;Tax reforms;Monetary policy;Reserves;Bank supervision;Exchange rate assessments;Economic indicators;Balance of payments statistics;Debt sustainability analysis;Staff Reports;Press releases;Nicaragua;
    Date: 2016–02–04
  66. By: Ofentse Mokwena (North West University)
    Abstract: The South African Minibus Taxi industry has had to various degrees been affected by government intervention, in micro, and macroeconomic forms. Transporting on average 11.9% and 15% of education trips and 26.88% and 26.18% of working trips between 2003 and 2013 respectively, the minibus sector dominates the market second to walking (Statistics South Africa, 2014; 2003). Recent transport policies seem to discourage the dominance of private cars and minibus vehicles. Meanwhile, the Department of Trade and Industry has developed an incentive package for the production of minibus vehicles. In the microeconomy, transportation policy makers tend to focus on the travel market, whilst manufacturers focus on the demand for minibus vehicles. This study proposes and tests a framework to explore the extent to which travel and production microeconomic indicators relate to dynamic macroeconomic activity over time. This paper is an experimental exploration of statistical relationships between selected macroeconomic indicators (SMIs) and the national minibus economy measured in vehicle sales and prices. Sales data is sourced from the National Association of Automobile Manufacturers of South Africa (NAAMSA) and price data from a manufacture dominating the market. Firstly, are there statistically significant macroeconomic forces at play in the minibus economy? Secondly, do these SMIs relate to minibus sales data including sales price per seat, registered vehicle population, vehicle sales, market ejections per year and cumulative forms of this data? We investigate this through correlation (a) analysis of price data, (b) sales data, (c) vehicle population in the travel market and (d) SMI data between 2002 and 2011. This is a mesoeconomic study, bridging the policy gap between macroeconomics (i.e. CPI) and microeconomics (i.e. vehicle population in the travel market). Statistically significant relationships and path dependencies are revealed within the framework developed. Therefore mesoeconomic research in the transport economic sphere is significantly viable. One shortfall of the paper is that the microeconomic analysis is narrow because travel data and vehicle utilisation data is not included. Further quantitative research is required to inform a policy agenda that enables an understanding of macroeconomic forces (national and regional level) that filter through transport economic policy. This study lays a unique avenue to equip transit and automotive decision makers, industries and planners to better forge through changes in the macroeconomy in microeconomic contexts.
    Keywords: paratransit, mesoeconomics, public transport production, industrial policy, minibus taxi
    JEL: E20 L50 L62
  67. By: Carlos Daniel Rojas Martínez
    Abstract: El presente documento evalúa la Hipótesis de Inestabilidad Financiera en Colombia entre los años 1990 y 2013, utilizando, como marco de referencia, el modelo de Foley (2003) para economías en desarrollo. Se agregan modificaciones a éste y se proponen medidas para evidenciar la profundidad de cada estructura de financiamiento. La evaluación hecha para Colombia sugiere una predominancia de una estructura financiera tipo Ponzi durante todo el período con una mayor profundidad en los años anteriores a la crisis de 1998.
    Keywords: Minsky, Hipótesis de Inestabilidad Financiera, Estructuras de financiamiento
    JEL: E12 E32 G01
    Date: 2016–02–15
  68. By: Yevgeniya Korniyenko; Elena Loukoianova
    Abstract: The paper examines the impact of unconventional monetary policy measures (UMPMs) implemented since 2008 in the United States, the United Kingdom, Euro area and Japan— the Systemic Four—on global monetary and liquidity conditions. Overall, the results show positive significant relationships. However, there are differences in the impact of the UMPMs of individual S4 countries on these conditions in other countries. UMPMs of the Bank of Japan have positive association with global liquidity but negative association with securities issuance. The quantitative easing (QE) of the Bank of England has the opposite association. Results for the quantitative easing measures of the United States Federal Reserve System (U.S. Fed) and the ECB UMPMs are more mixed.
    Keywords: Asia and Pacific;United Kingdom;Western Hemisphere;Global liquidity;Euro Area;Europe;Japan;Monetary aggregates;Spillovers;unconventional monetary policy, capital flows, liquidity, monetary policy, securities, balance sheets, issuance, International Policy Coordination and Transmission, Government Policy and Regulation, capital flows.,
    Date: 2015–12–30
  69. By: Elsiddig Rahma (Northumbria University at Newcastle upon Tyne); Noel Perera (Northumbria University); Kian Tan (Northumbria University)
    Abstract: Since the advent of oil production and export in late 1999, Sudan economy became more reliant on oil exports proceeds. This situation has exposed the economy to the negative effect of oil price fluctuations. In general, oil exporting countries exhibit positive impact on their economy to oil price increase, while oil importing economies suffer. Unlike developing economies, there is paucity of research in developing countries with regards to the relationship between macro-economy and oil price shocks. In this regard, Sudan has been neglected from serious studies related to oil price shocks. This research attempts to contribute towards filling this gap. In doing so, Vector Auto-Regression model is employed to investigate the impact of oil price shocks on the real GDP growth and unemployment rates over the period 2000 - 2014. The Granger causality test suggests that unemployment has statistically and significantly influenced real GDP growth. Results from the Impulse Response Functions and Forecast Error Variance Decomposition analysis suggest that decrease in oil price has a greater influence on GDP growth. Interestingly, oil price decrease has a significant positive impact on unemployment rate.
    Keywords: VAR model, GDP growth, Unemployment rate, Sudan.
    JEL: C32 E00 F43
  70. By: International Monetary Fund
    Abstract: This 2015 Article IV Consultation highlights that Moldova’s economic growth, at 3.6 percent, came in surprisingly strong in the first half of 2015 and was largely driven by net exports. Reserves fell by about a third between October 2014 and February 2015, but have been stable since. Net outflows in the financial account surged at end-2014, owing to election uncertainty and the banking crisis, but the outflow in currency and deposits tapered off in the second quarter of 2015. The near-term outlook is difficult. The economy is projected to contract by 1.75 percent in 2015, followed by a marginal recovery of about 1.5 percent in 2016. Deep reform is needed in the financial sector.
    Keywords: Europe;Moldova;monetary fund, exchange, budget, debt, exchange rate
    Date: 2016–01–20
  71. By: Kim, Jinyoung (Korea University); Lee, Jong-Wha (Asiatic Research Institute, Korea University); Shin, Kwanho (Department of Economics, Korea University)
    Abstract: This paper introduces a model of gender inequality and economic growth that focuses on the determination of women’s time allocation among market production, home production, child rearing, and child education. The theoretical model is based on Agénor (2012), but differs in several important dimensions. The model is calibrated using microlevel data of Asian economies, and numerous policy experiments are conducted to investigate how various aspects of gender inequality are related to the growth performance of the economy. The analysis shows that improving gender equality can contribute significantly to economic growth by changing females’ time allocation and promoting accumulation of human capital. We find that if gender inequality is completely removed, aggregate income will be about 6.6% and 14.5% higher than the benchmark economy after one and two generations, respectively, while corresponding per capita income will be higher by 30.6% and 71.1% in the hypothetical gender-equality economy. This is because fertility and population decrease as women participate more in the labor market.
    Keywords: economic growth; gender inequality; human capital accumulation; labor market; overlapping generations model
    JEL: E24 E60 J13 J71
    Date: 2016–02–19
  72. By: Andrea Garnero; Alexander Hijzen; Sébastien Martin
    Abstract: This paper provides comprehensive cross-country evidence on the relationship between earnings inequality and intra-generational mobility by simulating individual earnings and employment trajectories in the long-term using short panel data for 24 OECD countries. On average across countries, about 25% of earnings inequality in a given year evens out over the life cycle as a result of mobility. Moreover, mobility is not systematically higher in countries with more earnings inequality in general. However, a positive and statistically significant relationship is found only in the bottom of the distribution. This reflects the role of mobility between employment and unemployment and not that of mobility up and down the earnings ladder. Ce document fournit une analyse approfondie de la relation entre l’inégalité des revenus d’activité et la mobilité intra-générationnelle en simulant les trajectoires professionnelles à l’aide de données de panel sur une courte période pour 24 pays de l’OCDE. En moyenne et pour l’ensemble des pays, environ 25% de l'inégalité des revenus observée une année donnée s’égalise au cours du cycle de vie du fait de la mobilité. De plus, la mobilité n’est pas systématiquement plus élevée dans les pays généralement plus inégalitaires en termes de revenus. Toutefois, on observe une relation positive et statistiquement significative entre inégalité et mobilité dans la partie inférieure de la distribution. Cela reflète le rôle de la mobilité entre emploi et chômage, et non celui de la mobilité ascendante et descendante sur l'échelle des salaires.
    Keywords: simulation, intra-generational mobility, earnings-experience profiles, life-time inequality
    JEL: E24 J30 J62 O57
    Date: 2016–02–26
  73. By: International Monetary Fund
    Abstract: This Selected Issues paper discusses the assessment of economic activity in Togo in absence of quarterly GDP series. Togo collects about 40 macroeconomic indicators monthly that span a wide range of sectors of the economy. The selection of the variables for the economic activity index is conducted by finding the combination of variables. The indicators are aggregated into an index using a methodology used by the Conference Board. Then an economic activity index is constructed that effectively replicates the historical growth rates of real GDP in Togo. The selected index minimizes the deviations between the growth rates of the indicator and actual real GDP growth over 2002–13.
    Keywords: Togo;Sub-Saharan Africa;economic activity, gdp, variables, growth, consumption
    Date: 2015–11–13
  74. By: International Monetary Fund
    Abstract: This 2015 Article IV Consultation highlights that Cameroon’s economy has shown resilience in the face of the twin shocks of the oil price slump and heightened security threats, with the robust growth of 2014 continuing into 2015. Growth is broad-based and projected to reach 5.9 percent in 2015, buoyed by increased oil production and the performance of sectors benefiting from the ongoing public investment boom. Total revenue is projected to increase in 2015, owing to a strong performance in non-oil revenue. Growth is projected to moderate to 5.2 percent in 2016, as oil production stabilizes.
    Keywords: Article IV consultation reports;Economic growth;Private sector;Government expenditures;Fiscal policy;Budgets;Fiscal reforms;Financial intermediation;Bank supervision;Economic indicators;Balance of payments statistics;Debt sustainability analysis;Staff Reports;Press releases;Cameroon;
    Date: 2015–12–03
  75. By: Rahul Anand; Naresh Kumar; Volodymyr Tulin
    Abstract: Over the past decade, India has seen a prolonged period of high inflation, to a large extent driven by persistently-high food inflation. This paper investigates the demand and supply factors behind the contribution of relative food inflation to headline CPI inflation. It concludes that in the absence of a stronger food supply growth response, food inflation may exceed non-food inflation by 2½–3 percentage points per year. The sustainability of a long-term inflation target of 4 percent under India’s recently-adopted flexible inflation targeting framework will depend on enhancing food supply, agricultural market-based pricing, and reducing price distortions. A well-designed cereal buffer stock liquidation policy could also help mitigate food inflation volatility.
    Keywords: Asia and Pacific;India;Monetary policy;Central banks and their policies;food inflation, cereal buffer stocks, food, cereals, rice, wheat, food supply, Forecasting and Simulation, Monetary Policy (Targets, Instruments, and Effects), Fiscal and Monetary Policy in Development,
    Date: 2016–01–05
  76. By: International Monetary Fund
    Abstract: This Selected Issues paper examines the macroeconomic and fiscal implications of natural gas project for Mozambique. Results, which are based on the IMF Fiscal Analysis of Resource Industries model, suggest that, by the mid-2020s, half of the country’s output will be generated by natural gas. However, the fiscal revenues from the projects will remain moderate until the mid-2020s because of large depreciation costs for gas liquefaction facilities. Although the economic potential emerging from the projects is tremendous, macroeconomic and fiscal implications are quite sensitive to international commodity price developments and other risk factors, highlighting that the government’s authorities would be well-advised in taking a cautious approach.
    Keywords: Mozambique;Sub-Saharan Africa;gas, lng, gas projects, gas prices, gas production
    Date: 2016–01–08
  77. By: International Monetary Fund
    Abstract: Since the 2007 FSAP Update, Morocco’s financial system has grown in size and complexity, with increased links between the banking and insurance sectors and a significant expansion into Sub-Saharan Africa (SSA). A new banking law introduced in December 2014 aims to strengthen consolidated supervision and improve bank resolution. The forthcoming central bank law further enhances central bank independence and expands its role to include, inter alia, contributions to financial stability and the oversight of financial market infrastructures.
    Keywords: Financial system stability assessment;Financial sector;Stress testing;Banks;Bank supervision;Bank resolution;Securities regulations;Insurance;Pension funds;Payment systems;Economic indicators;Financial soundness indicators;Morocco;
    Date: 2016–02–08
  78. By: Dudley, William (Federal Reserve Bank of New York)
    Abstract: Remarks at the People’s Bank of China-Federal Reserve Bank of New York Joint Symposium, Hangzhou, Zhejiang, China.
    Keywords: taper tantrum; emerging market economies (EME); overnight reverse repurchase (ON RRP); standardized over-the-counter (OTC) derivatives contracts; invisible hand; FOMC; economic growth
    Date: 2016–02–29
  79. By: Mohd Haniff, NorAzza; Masih, Mansur
    Abstract: The purpose of this paper is to determine the nature of relationship between consumer sentiment and consumer spending in the Malaysian context. The autoregressive distributed lag (ARDL) methodology is employed to test this relationship, controlling for information in other financial and economic indicators. The stability of the functions is tested by CUSUM and CUSUMQ and no structural break was found. Overall, the results show that the Consumer Sentiment Index does not have any predictive value on consumer spending either in the shortrun or in the long-run, although a cointegrating relationship exists between the variables.
    Keywords: consumer sentiment, consumer spending, ARDL, Malaysia
    JEL: C22 C58 E2
    Date: 2016–01–20
  80. By: International Monetary Fund
    Abstract: This paper discusses Jamaica’s Tenth Review Under the Arrangement Under the Extended Fund Facility and Request for Modification of Performance Criteria (PCs). Macroeconomic stability continues to strengthen. Inflation and the current account deficit have fallen to historical lows, a product of the low oil prices as well as the ongoing economic adjustment. The program remains on track. All PCs for end-September 2015 and structural benchmarks for the review period were met. Based on the authorities’ continued strong program implementation and their forward-looking policy commitments, the IMF staff recommends completion of the tenth review.
    Keywords: Extended Fund Facility;Economic growth;Fiscal policy;Government expenditures;Budgets;Monetary policy;Foreign exchange purchases;Economic indicators;Balance of payments statistics;Letters of Intent;Staff Reports;Press releases;Jamaica;
    Date: 2015–12–17
  81. By: International Monetary Fund
    Abstract: This 2015 Article IV Consultation highlights that Estonia’s economic growth has slowed following the rebound from the deep recession in 2009. Although Estonia’s economic and institutional fundamentals are among the strongest in the region, the economy is expected to expand by only a modest 1.6 percent in 2015. Growth is primarily driven by private consumption, which benefits from strong wage growth as labor market slack diminishes for demographic reasons. The economy should gather speed going forward. Growth is projected at 2.5 percent for 2016 and should average about 3 percent over the next few years.
    Keywords: Article IV consultation reports;Economic growth;Fiscal policy;Public finance;Labor markets;Banking sector;Financial soundness indicators;Economic indicators;Staff Reports;Press releases;Estonia;
    Date: 2015–12–14
  82. By: International Monetary Fund
    Abstract: Tajikistan’s economy is entering a downturn and the banking sector is showing substantial weaknesses. In particular, the economy and the financial sector are facing the downside risks and negative spillovers from: (i) a protracted period of negative growth in Russia, coupled with a possible slowdown of growth in China; (ii) commodity (especially cotton and aluminum) price shocks; and (iii) delays in structural reforms, particularly in banks and state-owned enterprises. System-wide nonperforming loans grew substantially in 2014 and capital buffers are likely to be overstated due to misclassification and underprovisioning of bad loans. Credit quality is poor, owing to inadequate credit assessment methodologies and insufficient credit information, but also to directed and related-party lending in the past, which have heightened moral hazard.
    Keywords: Financial system stability assessment;Financial sector;Banks;Stress testing;Bank supervision;Bank regulations;Bank resolution;Deposit insurance;Macroprudential Policy;Crisis prevention;Tajikistan;
    Date: 2016–02–09
  83. By: International Monetary Fund
    Abstract: This Selected Issues paper compares the growth performance of Central African Economic and Monetary Community (CEMAC) countries with that of comparative countries. During the last two decades, the average growth of CEMAC countries has been slower than the sub-Saharan African average. The results of the analysis show that convergence of CEMAC countries toward emerging market levels has stalled, while some lower-income, faster-growing economies have been catching up. Decomposing growth by contributing factors reveals that the total factor productivity has had a negative impact on CEMAC’s growth.
    Date: 2015–11–12
  84. By: Wenyi Shen; Susan S. Yang; Luis-Felipe Zanna
    Abstract: Despite the voluminous literature on fiscal policy, very few papers focus on low-income countries (LICs). This paper develops a new-Keynesian small open economy model to show, analytically and through simulations, that some of the prevalent features of LICs—different types of financing including aid, the marginal efficiency of public investment, and the degree of home bias—play a key role in determining the effects of fiscal policy and related multipliers in these countries. External financing like aid increases the resource envelope of the economy, mitigating the private sector crowding out effects of government spending and pushing up the output multiplier. The same external financing, however, tends to appreciate the real exchange rate and as a result, traded output can respond quite negatively, reducing the overall output multiplier. Although capital scarcity implies high returns to public capital in LICs, declines in public investment efficiency can substantially dampen the output multiplier. Since LICs often import substantial amounts of goods, public investment may not be as effective in stimulating domestic production in the short run.
    Keywords: Africa;Fiscal Policy, Low-income Countries, Public Investment, Fiscal Multipliers, Small Open DSGE Models, Aid, investment, government spending, exchange rate, exchange, Fiscal and Monetary Policy in Development, Open Economy Macroeconomics, All Countries,
    Date: 2015–12–30
  85. By: International Monetary Fund
    Abstract: This 2015 Article IV Consultation highlights that Papua New Guinea (PNG) is facing strong headwinds from lower global commodity prices. Although the commencement of liquefied natural gas (LNG) production has boosted overall GDP growth in 2014–15, the slow growth of the nonresource sector calls for a renewed policy focus on inclusive growth in the post-LNG construction period. Risks to the outlook are increasingly skewed to the downside. Fiscal consolidation necessitated by weaker-than-anticipated revenue performance will dampen nonresource growth over the short run, and a weak global economy could further dampen external demand and commodity prices.
    Keywords: Monetary policy;Balance of payments statistics;Government expenditures;Commodity price fluctuations;Debt sustainability analysis;Economic growth;Economic indicators;Excess liquidity;Fiscal consolidation;Fiscal policy;Fiscal reforms;Article IV consultation reports;Staff Reports;Papua New Guinea;Papua New Guinea;Press releases;commodity prices, monetary fund, liquidity, exchange, market
    Date: 2015–11–18
  86. By: Michael C. Burda; ; ;
    Abstract: This paper reviews the dramatic and widely noted developments in the German labor market in the past decade and surveys the most plausible reasons for these changes. Alternative hypotheses are compared and contrasted. I argue that the labor market reforms associated with the Agenda 2010 – the Hartz reforms – played a role at least as great as that of increasing flexibility of wage determination and the allocation of hours across workers. Until 2010, the German economic miracle could be accounted for by an expansion of part-time work, which has since been supplanted by a sustained expansion of full-time employment. Supported by wage flexibility in this segment, part-time employment represents an important new margin of flexibility in the German labor market.
    Keywords: German labor market miracle, Hartz reforms, part-time work, wage inequality
    JEL: E24 J21
    Date: 2016–02
  87. By: International Monetary Fund
    Abstract: This paper focuses on Sri Lanka’s Third Post-Program Monitoring Discussion. Sri Lanka’s recent macroeconomic performance has generally been strong but risks appear to be on the rise. Real GDP growth registered 7.4 percent in 2014. Growth was broad-based, with the exception of agriculture, which suffered from drought early in the year and heavy rains and flooding in the fourth quarter. Price pressures have been contained, with headline and core inflation declining to 2.1 and 1.2 percent, respectively, by end-year. The outlook is broadly stable but set against heightened downside risks.
    Keywords: Post-program monitoring;Fiscal policy;Balance of payments;Tax reforms;Governance;Monetary policy;Bank supervision;Economic indicators;Staff Reports;Press releases;Sri Lanka;
    Date: 2015–12–10
  88. By: International Monetary Fund
    Abstract: This 2015 Article IV Consultation highlights that Sweden’s economy is performing well, with real GDP growth of 3.4 percent per year in the first three quarters of 2015, up from 2.3 percent in 2014. Job creation was robust in the first three quarters of 2015, helping bring the unemployment rate down to 7.2 percent in the third quarter. Core inflation rose to 1.4 percent per year on average in recent months, but remains below the 2 percent target. Solid growth of about 3 percent is expected to continue into 2016.
    Keywords: Article IV consultation reports;Economic growth;Fiscal policy;Housing;Migration;Labor markets;Labor market policy;Monetary policy;Macroprudential Policy;Economic indicators;Financial soundness indicators;Staff Reports;Press releases;Sweden;
    Date: 2015–12–02
  89. By: Martine Guerguil; Pierre Mandon; Rene Tapsoba
    Abstract: This paper assesses the impact of different types of flexible fiscal rules on the procyclicality of fiscal policy with propensity scores-matching techniques, thus mitigating traditional self-selection problems. It finds that not all fiscal rules have the same impact: the design matters. Specifically, investment-friendly rules reduce the procyclicality of both overall and investment spending. The effect appears stronger in bad times and when the rule is enacted at the national level. The introduction of escape clauses in fiscal rules does not seem to affect the cyclical stance of public spending. The inclusion of cyclical adjustment features in spending rules yields broadly similar results. The results are mixed for cyclically-adjusted budget balance rules: enacting the latter is associated with countercyclical movements in overall spending, but with procyclical changes in investment spending. Structural factors, such as past debt, the level of development, the volatility of terms of trade, natural resources endowment, government stability, and the legal enforcement and monitoring arrangements backing the rule also influence the link between fiscal rules and countercyclicality. The results are robust to a wide set of alternative specifications.
    Date: 2016–01–22
  90. By: Younger, Stephen D.
    Abstract: Ghana is in the midst of a severe but not unprecedented macroeconomic crisis. This paper helps to evaluate the government’s policy options by (1) explaining the crisis’ causes, and (2) comparing it to previous macroeconomic crises and the policies that corrected them. Two large shocks are to blame for the crisis: an increase in the fiscal deficit of about 6 percent of GDP and a reduction in hydroelectric production that has not been replaced with thermal generation. This latter is more difficult to quantify, but may be as large as 4 percent of GDP. While large, Ghana has recovered from similar shocks in the past, and with luck, should be able to do so now. But this will require reversal of the large increases in the public sector wage bill that drove much of the fiscal shock.
    Keywords: macroeconomics, economic policies, economic stabilization,
    Date: 2016
  91. By: International Monetary Fund
    Abstract: This paper discusses Grenada’s Third Review Under the Extended Credit Facility (ECF), Request for Modification of Performance Criteria (PCs), and Financing Assurances Review. Overall program implementation remains strong. All quantitative PCs for the third review were met. All structural benchmarks for the third review were implemented. The authorities advanced reforms to ensure the transparent and sustainable management of the Citizenship-By-Investment revenues, strengthen the fiscal policy framework, and improve public finance management. The IMF staff supports the completion of the third review under the ECF-arrangement, the modification of quantitative PCs, and completion of the financing assurances review.
    Keywords: Extended Credit Facility;Economic growth;Fiscal policy;Fiscal consolidation;Fiscal reforms;Banking sector;Economic indicators;Balance of payments statistics;Letters of Intent;Debt sustainability analysis;Staff Reports;Press releases;Grenada;
    Date: 2015–12–03
  92. By: Miles Parker (Reserve Bank of New Zealand)
    Abstract: This paper uses a survey of 1281 New Zealand exporters to investigate the role of firm characteristics in setting export prices. Larger, and more pro-ductive firms, are more likely to differentiate prices across markets. Primary sector firms are more likely to price to market than firms in other sectors, even taking into account other firm characteristics. This contrasts sharply with the commonly-held view that the price of these products is determined on the international market. In a further contribution to the literature, we find that service sector firms can also price to market, at similar rates to manufacturers.
    Date: 2016–02
  93. By: Davide Furceri; Prakash Loungani
    Abstract: This paper examines the distributional impact of capital account liberalization. Using panel data for 149 countries from 1970 to 2010, we find that, on average, capital account liberalization reforms increase inequality and reduce the labor share of income in the short and medium term. We also find that the level of financial development and the occurrence of crises play a key role in shaping the response of inequality to capital account liberalization reforms.
    Keywords: Globalization;Inequality, Capital Account Openness, Crises, Institutions, capital account, liberalization, capital account liberalization, standard deviations, Macroeconomic Analyses of Economic Development, All Countries, Institutions.,
    Date: 2015–11–24
  94. By: Claudia Olivetti; Barbara Petrongolo
    Abstract: Women in developed economies have made major inroads in labor markets throughout the past century, but remaining gender differences in pay and employment seem remarkably persistent. This paper documents long-run trends in female employment, working hours and relative wages for a wide cross-section of developed economies. It reviews existing work on the factors driving gender convergence, and novel perspectives on remaining gender gaps. The paper finally emphasizes the interplay between gender trends and the evolution of the industry structure. Based on a shift-share decomposition, it shows that the growth in the service share can explain at least half of the overall variation in female hours, both over time and across countries.
    Keywords: Female employment, gender gaps, industry structure
    JEL: E24 J16 J31
    Date: 2016–02
  95. By: Timothy Irwin
    Abstract: Although the budget deficit and the public debt feature prominently in political debate and economic research, there is no agreement about how they should be measured. They can be defined for different sets of public institutions, including the nested sets corresponding to central government, general government, and the public sector, and, for any definition of government, there are many measures of the debt and deficit, including those generated by four kinds of accounts (cash, financial, full accrual, and comprehensive), which can be derived from four nested sets of assets and liabilities. Each debt and deficit measure says something about public finances, but none tells the whole story. Each is also vulnerable to manipulation, and is likely to be manipulated if it is subject to a binding fiscal rule or target. Narrow definitions of government encourage the shifting of spending to entities outside the defined perimeter of government. Narrow definitions of debt and deficit encourage operations involving off-balance-sheets assets and liabilities, while broad measures are susceptible to the mismeasurement of on-balance-sheet assets and liabilities. Reviewing the literature on these issues, the paper concludes that governments should publish several measures of the debt and deficit in a form that clearly reveals their interrelationships.
    Date: 2015–11–20
  96. By: International Monetary Fund
    Abstract: This Selected Issues paper assesses macroeconomic fiscal risks and the benefits of improved fiscal risk management in Angola. Angola faces fiscal risks coming from multiple sources, such as volatility in oil prices and production, macroeconomic shocks, weak macroeconomic forecasting; weaknesses in public fiscal management, energy subsidies, potential delays of oil revenue transfers from the state-owned oil company Sonangol to the Treasury, and contingent liabilities from state-owned banks and enterprises. Addressing these risks requires action in various fronts, including more transparent fiscal reporting, improved forecasting of fiscal aggregates and other macroeconomic variables, developing a fiscal stabilization fund with more flexible deposit and withdrawal rules, strengthened public expenditure controls, and more timely oil revenue transfers from Sonangol to the Treasury.
    Keywords: Angola;Sub-Saharan Africa;revenue, monetary fund, budget, oil price, oil prices
    Date: 2015–11–03
  97. By: International Monetary Fund
    Abstract: Overall macroeconomic conditions have continued to improve, but challenges remain. Economic activity rebounded in 2015, helped by a very good agricultural year. Fiscal and external imbalances have declined and reserve buffers are building up. While poverty, unemployment rates, and inequality have decreased in recent years, much remains to be done, including to reduce unemployment among the youth and to increase female labor participation. The outlook remains subject to domestic and external risks, related in particular to reform implementation, weak growth in key trading partners, and a potentially volatile international environment.
    Keywords: Precautionary and Liquidity Line;Fiscal policy;Budgets;Fiscal reforms;Pension funds;Economic indicators;Balance of payments statistics;Letters of Intent;Staff Reports;Press releases;Morocco;
    Date: 2016–02–08
  98. By: International Monetary Fund
    Abstract: Uruguay has achieved more than a decade of high and inclusive economic growth, supported by social stability and reduced regional linkages. The country has weathered the recent global and regional headwinds relatively well so far. Yet the economy is slowing down, while inflation remains above target, and deposit dollarization has risen. While the baseline projection foresees a temporary and moderate slowdown, the country is exposed to further shocks, especially from the immediate region.
    Date: 2016–02–24
  99. By: Angelika Welte
    Abstract: Merchants who accept credit cards face payment processing fees. In most countries, the no-surcharge rule prohibits them from using surcharges to pass these fees on to customers. However, merchants are allowed to steer consumers toward less costly payment methods by offering discounts or using non-pecuniary incentives such as convenience and speed. Drawing upon micro data from a survey of Canadian households, I estimate a discrete choice model of consumers’ payment methods to establish merchant costs for both of these strategies. I find that, while discounts are unprofitable because they subsidize a large portion of consumers who are already using cash and debit cards, non-pecuniary steering can be an effective strategy for transactions above $25.
    Keywords: Bank notes, Market structure and pricing, Payment clearing and settlement systems
    JEL: D12 E58 G28
    Date: 2016
  100. By: Antonello D'Agostino (European Stability Mechanism); Jacopo Cimadomo (European Central Bank)
    Abstract: In this paper, we propose a time-varying parameter vector autoregression (VAR) model with stochastic volatility which allows for estimation on data sampled at different frequencies. Our contribution is two-fold. First, we extend the methodology developed by Cogley and Sargent (2005), and Primiceri (2005), to a mixed-frequency setting. In particular, our approach allows for the inclusion of two different categories of variables (high-frequency and low-frequency) into the same time-varying model. Second, we use this model to study the macroeconomic effects of government spending shocks in Italy over the 1988Q4-2013Q3 period. Italy - as well as most other euro area economies - is characterised by short quarterly time series for fiscal variables, whereas annual data are generally available for a longer sample before 1999. Our results show that the proposed time-varying mixed-frequency model improves on the performance of a simple linear interpolation model in generating the true path of the missing observations. Third, our empirical analysis suggests that government spending shocks tend to have positive effects on output in Italy. The fiscal multiplier, which is maximized at the one year horizon, follows a U-shape over the sample considered: it peaks at around 1.5 at the beginning of the sample, it then stabilizes between 0.8 and 0.9 from the mid-1990s to the late 2000s, before rising again to above unity during the recent crisis.
    Keywords: Time variation, mixed-frequency data, government spending multiplier
    JEL: C32 E62 H30 H50
    Date: 2013–12
  101. By: International Monetary Fund
    Abstract: This Selected Issues paper analyzes fiscal multipliers in Mexico. Estimates of fiscal multipliers––obtained from state-level spending––fall within 0.6–0.7 after accounting for dynamic effects. However, the size of multipliers varies with the output gap. The planned fiscal consolidation—under the estimated multipliers—is projected to subtract on average 0.5 percentage points from growth over 2015–20. However, there are offsetting effects. The positive growth impulse of lower costs on manufactured goods production is estimated to reach 0.5 percentage point in 2015 and 2016, largely offsetting the impact of fiscal consolidation on growth in the near term.
    Keywords: Mexico;Western Hemisphere;fiscal, output, fiscal consolidation, output gap, fiscal multipliers
    Date: 2015–11–17
  102. By: Francesca G Caselli; Agustin Roitman
    Abstract: This paper estimates exchange rate pass-through to consumer prices in emerging markets focusing on non-linearities and asymmetries. We document non-linearities and asymmetries in the transmission of exchange rate fluctuations to prices using local projection techniques to obtain state dependent impulse responses in a panel of 28 emerging markets. We find significant evidence of non-linearities during episodes of depreciation greater than 10 and 20 percent. More specifically, we find that, after one month, the exchange rate pass-through coefficient is equal to 18 and 25 percent respectively, compared to a coefficient of 6 percent in the linear case. We also investigate the role of temporary vs. permanent shocks and the adoption of an inflation targeting regime in the transmission from exchange rate movements to prices. We perform a set of robustness checks, addressing the presence of outliers and potential endogeneity concerns.
    Keywords: Exchange rate pass-through;Foreign exchange;Inflation;Emerging markets;Non-Linearities, exchange rate, depreciation, inflation targeting, exchange rate movements, Models with Panel Data, General, All Countries,
    Date: 2016–01–05
  103. By: Marika Santoro
    Abstract: In this paper, I study the potential economic impact of the 2015-18 structural reform agenda in Chile, using the IMF dynamic general equilibrium model (GIMF). I find that the agenda has the potential to significantly increase Chile’s long-run GDP, although it may have some negative effects in the short term. Ensuring a smooth transition to a higher productive potential depends on three key dimensions: the credibility of the reforms, their effectiveness in closing structural gaps, and their speed of implementation. Badly designed reforms that remove only a very small fraction of the existing structural gaps, at a slow speed, and with little credibility, can greatly reduce the positive impact of the reform agenda on GDP.
    Keywords: Human capital;Infrastructure;Chile;Western Hemisphere;structural reforms, macroeconomic analysis, capital, income, gdp, consumption, Infrastructures, macroeconomic analysis.,
    Date: 2015–12–29
  104. By: Swarnali Ahmed
    Abstract: After more than six years of ultra-low interest rates, a Fed liftoff (rate hike) is just a matter of time. This paper goes back to history to understand the spillover effect – or what is termed in the paper as the ‘liftoff’ effect – of the previous five Fed liftoffs on capital flows. Using a dynamic panel framework covering 48 countries (27 advanced economies, 21 emerging markets) over the period 1982-2006, the paper shows that the liftoff effect on capital flows (total private, portfolio) is significantly higher for emerging market economies (EM) than advanced market economies (AM). EM capital flows are hit indiscriminately one quarter before liftoff, suggesting that markets usually price in the liftoff before the actual event. Over time, there is a bit more variation among EM as policy responses/framework can to some extent dampen market reactions. The findings are similar to the unfolding of events during the taper tantrum episode indicating that, even though current circumstances are very different, history could still provide a good guidance.
    Keywords: Capital flows;Western Hemisphere;Fed liftoffs, policy responses, policy framework, emerging market economies, interest, market, portfolio, interest rate, Monetary Policy (Targets, Instruments, and Effects), All Countries, emerging market economies.,
    Date: 2015–12–09
  105. By: International Monetary Fund
    Abstract: Fiji is enjoying a strong growth momentum due to accommodative policies, robust tourism and strong remittances, and an improvement in the terms of trade. The smooth and peaceful elections in September 2014 marked the return to democracy—leading to a normalization in relations with development partners, further boosting investor and consumer confidence. While addressing infrastructure gaps and further improving the business climate will be critical to ensure strong, sustainable and more inclusive growth, this must be balanced against the need to consolidate fiscal policy. Risks are tilted to the downside, related to external developments and prolonged accommodative policy settings.
    Date: 2016–02–22
  106. By: International Monetary Fund
    Abstract: This paper discusses Honduras’ First Reviews Under the Stand-by Arrangement (SBA) and Standby Credit Facility (SCF). Program implementation for the first reviews has been strong. All 2014 performance criteria and indicative targets were met, most with significant margins. The authorities have also created fiscal space within the program to increase social spending and support efforts to reduce poverty. On the structural side, December 2014 and March 2015 benchmarks were also generally observed. The revised program proposed for 2015 envisages further strengthening fiscal and net international reserves targets. The IMF staff supports the completion of the first reviews under the SBA and the SCF Arrangements.
    Keywords: Western Hemisphere;Honduras;inflation, oil prices, central bank, deficit, monetary fund
    Date: 2015–10–14
  107. By: Tigran Poghosyan
    Abstract: We employ a duration model to study determinants of public debt cycles in 57 advanced and emerging economies over the 1960–2014 period, with a particular focus on the impact of financial cycles. The results suggest that the association between financial and debt cycles is asymmetric. Debt expansions preceded by overheating in credit and financial markets tend to last longer than other expansions, but there is no significant association between financial cycles and debt contractions. There is strong evidence of duration dependence in both phases of the cycle, with the likelihood of expansions and contractions to end increasing with the length of their respective spells. Higher initial level of debt increases the spell of contractions (persistence of adjustment effort hypothesis) and reduces the spell of expansions (debt sustainability hypothesis). This result is robust to the inclusion of global factors, openness, political stability, and debt crisis indicators as additional controls.
    Date: 2015–11–25
  108. By: International Monetary Fund
    Abstract: This 2015 Article IV Consultation highlights that Slovakia remains among Europe’s stronger economies, with growth continuing to pick up in 2015, driven by strong domestic demand. A push to spend expiring European Union funds has underpinned rising investment while job creation and real wage growth have supported private consumption. Unemployment has fallen significantly since 2013, but is still about 11 percent overall, and is much higher for the long-term unemployed, youth, and women. The outlook is favorable with growth of 3–3.5 percent expected through the medium-term, reflecting sustained domestic demand as well as further contributions from the important export sector as substantial additional foreign auto sector investment is planned.
    Keywords: Slovak Republic;Europe;debt, inflation, market, investment, monetary fund
    Date: 2016–01–14
  109. By: Robert E. T. Ward
    Abstract: The results cited by Lomborg (2015) are almost entirely due to the assumptions he makes about the post-2030 annual emissions from the United States, European Union and China. In each of these cases, annual emissions are assumed not to reduce any further, and in most cases, to rise.
    JEL: E61 H70
    Date: 2016–02–26
  110. By: Adrian Alter; Matteo Ghilardi; Dalia Hakura
    Abstract: This paper analyzes the tradeoffs between savings, debt and public investment in the Republic of Congo, a developing country with looming oil exhaustibility concerns. Our results highlight the risks to fiscal and capital sustainability of oil exporting countries from large scaling-up in public investment and oil price volatility in view of a projected decline in the oil revenue to GDP ratio. However, structural reforms that improve the efficiency of public investment can allow for a relatively faster buildup of sustainable public capital and sustain higher non-oil growth without adversely affecting the debt ratio or savings. Moreover, we show that even if a government pursues prudent fiscal policy that preserves resource wealth and debt sustainability in the face of exhaustible and volatile resource revenues, low public investment quality in the form of a misallocation of resources can hinder attainment of sustainable public capital and positive non-oil growth.
    Keywords: Debt sustainability;Public Capital, Investment Efficiency, Project Selection, investment, public investment, debt, revenues, revenue, International Lending and Debt Problems, Exhaustible Resources and Economic Development, Government Policy, All Countries,
    Date: 2015–11–10
  111. By: Zied Ftiti; Walid Hichri
    Date: 2016–02–18
  112. By: Quentin Perrier (CIRED, Engie); Philippe Quirion (CIRED, CNRS)
    Abstract: Dans le débat public sur la transition énergétique en France, l’emploi occupe une place prépondérante. Nous calculons, pour l’économie française en 2010, le contenu en emploi et en gaz à effet de serre des différentes branches, c’est-à-dire le nombre d’emplois et de tonnes-équivalent-CO2 par million d’euros de demande finale. Nous utilisons pour cela le tableau entrées-sorties au niveau le plus désagrégé disponible (64 branches). Nous développons et appliquons ensuite une méthodologie originale pour décomposer les écarts de contenu en emploi entre branches en cinq facteurs : le taux d’importations de produits finaux, le taux d’importations de consommations intermédiaires, les taux de taxes et subventions, les niveaux de salaire et la part de la rémunération du travail dans la valeur ajoutée. Enfin, nous étudions certaines substitutions interbranches qui découleraient d’une transition énergétique visant à réduire les émissions de gaz à effet de serre. Les résultats sont les suivants. Premièrement, un contenu en emploi plus élevé d’une branche s’explique, en moyenne et par ordre d’importance, par des salaires plus faibles, des importations plus faibles de produits finaux, une part plus importante du travail dans la valeur ajoutée, des importations plus faibles de consommations intermédiaires, et en dernier lieu par des taxes plus faibles. Deuxièmement, parmi les branches dont le contenu en gaz à effet de serre est élevé, celles qui présentent en même temps un faible contenu en emploi (électricité et industrie lourde) sont couvertes par le système européen de quotas de gaz à effet de serre. A l’inverse, celles qui présentent en même temps un fort contenu en emploi (agriculture, agroalimentaire et transport terrestre) ne sont pas couvertes par une politique climatique – la crainte d’un impact négatif sur l’emploi constituant une explication possible. Troisièmement, la transition énergétique implique des déplacements interbranches de demande finale que nous identifions. Ces substitutions favorisent des branches présentant un contenu en emploi plus élevé. Ces augmentations de contenu en emploi s’expliquent, mais en partie seulement, par des salaires plus élevés dans les branches amenées à réduire leur activité.
    Keywords: Emploi, Transition énergétique, Emissions de gaz à effet de serre, Substitutions intersectorielles, Input-output
    JEL: E2 Q5 O13
    Date: 2016–02
  113. By: Elva Bova; Paulo A. Medas; Tigran Poghosyan
    Abstract: Resource-rich countries face large and persistent shocks, especially coming from volatile commodity prices. Given the severity of the shocks, it would be expected that these countries adopt countercyclical fiscal policies to help shield the domestic economy. Taking advantage of a new dataset covering 48 non-renewable commodity exporters for the period 1970-2014, we investigate whether fiscal policy does indeed play a stabilizing role. Our analysis shows that fiscal policy tends to have a procyclical bias (mainly via expenditures) and, contrary to others, we do not find evidence that this bias has declined in recent years. Adoption of fiscal rules does not seem to reduce procyclicality in a significant way, but the quality of political institutions does matter. Finally, non-commodity revenues tend to respond only to persistent changes in commodity prices.
    Date: 2016–02–23
  114. By: Diego Anzoategui; Mali Chivakul; Wojciech Maliszewski
    Abstract: Widespread implicit guarantees and interest ceilings were major distortions in China’s financial system, contributing to a misallocation of resources. We analyze the impact of removing such frictions in a general equilibrium setting. The results show that comprehensive reforms generate better outcomes than partial ones: removing the deposit rate ceiling alone increases output, but the efficiency of capital allocation does not improve. Removing implicit guarantees improves output through lower cost of capital for private companies and better resource allocation.
    Keywords: Asia and Pacific;China;China, People's Republic of;Financial distortions, interest rate liberalization, implicit government guarantees, interest, guarantees, deposit, implicit guarantees, deposits, General, Asia including Middle East, Government Policy and Regulation,
    Date: 2015–12–24
  115. By: Powell, Jerome H. (Board of Governors of the Federal Reserve System (U.S.))
    Date: 2016–02–26
  116. By: International Monetary Fund
    Abstract: This 2015 Article IV Consultation highlights that the economic growth in Bosnia and Herzegovina is expected to rebound to more than 2 percent in 2015, as economic activity is picking up in Europe. Industrial activity and exports have been gathering momentum. Domestic political risks weigh heavily on the outlook. The risk of policy slippages and delays in implementation of the Reform Agenda is significant given the complex political set up and the strong opposition to reforms from vested interests. On the external side, risks are more balanced, as stagnation in Europe, possible financial market strains, or geopolitical tensions could dampen growth, while a faster recovery in Europe or the resolution of trade issues with the European Union could spur exports.
    Keywords: Europe;Bosnia and Herzegovina;investment, debt, monetary fund, public debt, market
    Date: 2015–10–28
  117. By: Nuno C. Araújo (IET/CICS.NOVA, Universidade Nova de Lisboa, Faculdade de Ciências e Tecnologia)
    Abstract: This working paper aimed to understand the importance and the role of Industry for the Portuguese' economic recovery, integrated in a context of progressive deindustrialisation over the last few years, and simultaneously an impressive growth and domain over some production sectors by emergent countries, associated with the 2008 crisis. We intended to analyse this problematic in both national and European levels, bringing into context the national industry, identifying the causes for the progressive abandon of the industry and its consequences. To identify the main stakeholders and their role on the reindustrialization process. To identify policies and instruments contributing to the promotion of this reindustrialisation and main conclusions.
    Keywords: re-industrialisation, industry, economic growth, Portugal
    JEL: D81 E61
    Date: 2015–03
  118. By: Davide Porcellacchia
    Abstract: Structural reforms in the liquidity trap need not be deflationary. This paper develops a simple framework to study the role that key characteristics of Japan’s labor and product markets—labor-market duality and weak corporate governance—play in generating unfavorable wage-price dynamics. The model allows a discussion of whether and in what form structural reforms may contribute to Japan’s short-run goal of reflating the economy. It finds that boosting inflation with structural reforms implies an unusual trade-off with employment, that is an inverted Phillips curve. Simultaneous implementation of labor-market and product-market reforms is most effective in terms of reflating the economy.
    Keywords: Fiscal reforms;Japan;Wages;Prices;Labor markets;Corporate governance;Labor market friction;Liquidity;Monetary policy;Fiscal policy;Econometric models;Abenomics, corporate governance, inflation, Japan, labor-market duality, liquidity trap, structural reforms, wage-price dynamics, single open-ended contract.
    Date: 2016–02–10
  119. By: Aleksandra Zdzienicka; Sally Chen; Federico Diaz Kalan; Stefan Laseen; Katsiaryna Svirydzenka
    Abstract: The Global Financial Crisis has reopened discussions on the role of the monetary policy in preserving financial stability. Determining whether monetary policy affects financial variables domestically—especially compared to the effects of macroprudential policies— and across borders, is crucial in this context. This paper looks into these issues using U.S. exogenous monetary policy shocks and macroprudential policy measures. Estimates indicate that monetary policy shocks have significant and persistent effects on financial conditions and can attenuate long-term financial instability. In contrast, the impact of macroprudential policy measures is generally more immediate but shorter-lasting. Also, while an exogenous increase in U.S. monetary policy rates tends to reduce credit and house prices in other countries—with the effects varying with country-specific characteristics—an increase driven by improved U.S. economic conditions tends to have the opposite effect. Finally, we do not find evidence of cross-border spillover effects associated with U.S. macroprudential policies.
    Keywords: Financial stability;Monetary policy;Central banks and their policies;Financial crises;United States;Western Hemisphere;spillovers, international monetary fund, exchange rate, transmission mechanism, Monetary Policy (Targets, Instruments, and Effects), spillovers.,
    Date: 2015–12–31
  120. By: Álvaro Hurtado Rendón
    Abstract: Abstract: The main contribution of this work is the discussion about the widespread of the data from the economic experiments. Particularly, in regards with those that research about the discounting rate of the agents, where we suggest using the Dynamic Stochastic General Equilibrium models (DSGE) under a Bayesian approach. Besides, the inclusion of the entrepreneurs in the economic experiments in order to establish which are the long and short discounting rate is also mentioned. In this way, in order to reach what was said before, both a Neoclassic and a Neo Keynesian standard model were used to contrast the parameters robustness. Finally, it is showed that both the short and long term discounting rates after using Bayesian estimation are more consistent with the experiments carried out with entrepreneurs than those with students.
    Keywords: Models and applications, Intertemporal Consumer Choice, Bayesian econometrics.
    JEL: E37 D91 E32
    Date: 2016–02–02
  121. By: International Monetary Fund
    Abstract: This paper discusses Serbia’s Third Review Under the Stand-By Arrangement and Request for Modification of Performance Criteria (PCs). The program is delivering good results. Significant fiscal tightening and efforts to address structural weaknesses and improve the business climate have helped restore growth and boost confidence and foreign direct investment. All end-September PCs were met with significant margins. However, there was a minor deviation in the indicative criterion on domestic arrears, and implementation of structural benchmarks has faced delays. Modifications of the end-December fiscal performance criteria are proposed to allow recognition of past liabilities.
    Keywords: Stand-by arrangement reviews;Fiscal policy;Fiscal reforms;Public sector;Public enterprises;Monetary policy;Economic indicators;Balance of payments statistics;Letters of Intent;Staff Reports;Press releases;Performance criteria modifications;Serbia;
    Date: 2015–12–18
  122. By: International Monetary Fund
    Abstract: This paper focuses on Ireland’s 2015 Fourth Post-Program Monitoring Discussions. Ireland’s economy continues to improve at a robust pace. Real GDP expanded by 7 percent year-over-year over the first three quarters of 2015, with investment providing the largest contribution to growth followed by private consumption. High frequency indicators suggest that the strong economic momentum continued into the last months of 2015. Exchequer data for December indicate that 2015 revenues significantly exceeded the initial budget profile, whereas spending recorded a modest increase, leading to a likely outperformance of IMF staff’s estimate of the 2015 general government deficit.
    Keywords: Post-program monitoring;Economic recovery;Economic growth;Housing;Fiscal policy;Banking sector;Bank supervision;Economic indicators;Balance of payments statistics;Staff Reports;Press releases;Ireland;
    Date: 2016–01–19
  123. By: Marie Bessec (LEDa - Laboratoire d'Economie de Dauphine - Université Paris IX - Paris Dauphine)
    Abstract: This paper introduces a Markov-Switching model where transition probabilities depend on higher frequency indicators and their lags, through polynomial weighting schemes. The MSV-MIDAS model is estimated via maximum likel ihood methods. The estimation relies on a slightly modified version of Hamilton’s recursive filter. We use Monte Carlo simulations to assess the robustness of the estimation procedure and related test-statistics. The results show that ML provides accurate estimates, but they suggest some caution in the tests on the parameters involved in the transition probabilities. We apply this new model to the detection and forecast of business cycle turning points. We properly detect recessions in United States and United Kingdom by exploiting the link between GDP growth and higher frequency variables from financial and energy markets. Spread term is a particularly useful indicator to predict recessions in the United States, while stock returns have the strongest explanatory power around British turning points.
    Keywords: Markov-Switching,mixed frequency data,business cycles
    Date: 2015–06–22
  124. By: Leif Anders Thorsrud
    Abstract: In this paper I construct a daily business cycle index based on quarterly GDP and textual information contained in a daily business newspaper. The newspaper data is decomposed into time series representing newspaper topics using a Latent Dirichlet Allocation model. The business cycle index is estimated using the newspaper topics and a time-varying Dynamic Factor Model where dynamic sparsity is enforced upon the factor loadings using a latent threshold mechanism. I show that both contributions, the usage of newspaper data and the latent threshold mechanism, contribute towards the qualities of the derived index: It is more timely and accurate than commonly used alternative business cycle indicators and indexes, and, it provides the index user with broad based high frequent information about the type of news that drive or reflect economic fluctuations.
    Keywords: Business cycles, Dynamic Factor Model, Latent Dirichlet Allocation (LDA)
    Date: 2016–02
  125. By: Aymen Belgacem; Anna Creti; Khaled Guesmi; Amine Lahiani
    Date: 2016–02–18
  126. By: Knarik Ayvazyan; Teresa Daban Sanchez
    Abstract: Using a structural vector auto-regression (SVAR) model, this paper examines the size, geographical sources, and transmission channels of global and regional shocks to the Armenian economy. Results show that Armenian economic activity is strongly influenced by global demand shocks and changes in oil prices, yet relatively immune to financial volatility. Transmission takes place through the Russian and EU economies, remittances, and external borrowing. The role of exports and tourism is low. Russia is key in transforming the potentially negative impact of an increase in oil prices into a positive event, through stronger remittances and exports. Services and construction, which depend significantly on remittances and external borrowing, are the most affected by global and regional shocks.
    Keywords: Armenia;Middle East;Remittances;Spillovers, Trade, Business cycles, Transmission channels, SVAR, economy, trading partners, regional shocks, oil prices, General, Open Economy Macroeconomics, Forecasting and Simulation, Economic Growth of Open Economies,
    Date: 2015–11–23
  127. By: Sanjay Kalra; Bui Thi Trang Dzung
    Abstract: The paper develops robust measures of core inflation for Vietnam that can be used in policy making. These core inflation measures (CIMs) are based on an analytical evaluation of the inflation process in Vietnam, and use a filtering approach to narrow down potential measures that satisfy certain empirically desirable criteria. The paper finds that commonly used exclusion-based measures (EBMs) do not perform well against these empirical criteria; trimmed mean measures (TMMs) do better. Among TMMs, “one trim does not fit all periods†; periods of high and variable inflation require larger trims, and conversely. EVIEWS and MATLAB programs which accompany the paper allow quick, timely replication of CIMs as new data become available, making them valuable tools for the State Bank of Vietnam on an ongoing basis.
    Keywords: Inflation;Vietnam;Inflation measurement;Monetary policy;Interest rate increases;Central bank policy;Core inflation, Monetary Policy; Vietnam
    Date: 2016–02–10
  128. By: Milenkovic, Marko
    Abstract: Serbia's EU integration has gained momentum after political change in 2000. From that point, numerous EU initiatives have been employed to facilitate the country's legal, economic and political change in order to prepare it for (potential) EU membership. The cornerstone of the relations between the country and the EU is the Stabilisation and Association Agreement, which mandates the full alignment of state aid measures to EU standards. Since 2006, subsequent governments have been working on aligning the substantive rules for the granting of state aid to the (ever-changing) EU framework, with a growing number of state aid measures and schemes being notified to and approved by the Commission for State Aid Control. However, this period was also characterised by a severe economic crisis that created the challenge for the Serbian government of aligning with the EU state aid regime, on the one hand, and facing pressure to save failing banks and companies, and prevent job losses, on the other. By examining the institutional structure of the regime's control body and the overall experiences of the first phase of the implementation of the Law on State aid, this paper draws conclusions on the major challenges and obstacles to introducing a new regulatory regime in the context of a deep economic crisis, ongoing enlargement fatigue and conflicting political legacies.
    Keywords: Serbia,state aid,legislative transformation,institutional independence,integration challenges,conditionality,enlargement fatigue
    Date: 2016
  129. By: International Monetary Fund
    Abstract: Afghanistan’s 2006 and 2011 Fund-supported programs were part of a broad reconstruction effort aimed at establishing macroeconomic stability and laying foundations for structural reforms. Decades of conflict eroded societal order and trust in government, and limited public institutions’ implementation capacity. Both arrangements faced the challenges of dealing with unprecedented inflows of international aid and scaling up of public investment against the background of increasing nonsecurity. There were notable successes during the two programs, even though both fell short of their initial goals. On the one hand, supported by aid inflows, the economy grew fast, inflation declined, and international reserves increased. Afghanistan successfully completed the debt relief process under the Heavily Indebted Poor Countries Initiative. Selected structural reforms also advanced, particularly during the Poverty Reduction and Growth Facility arrangement, especially in the area of public financial management. Afghanistan made impressive strides toward meeting the Millennium Development Goals. On the other hand, fiscal sustainability remained elusive as the tax-to-GDP ratio declined and expenditures increased sharply owing to rising security and maintenance costs. Fiscal reforms, such as the VAT, remained incomplete. Despite progress in financial system oversight and governance, some financial sector reforms are still pending. The legislative framework and its enforcement remain to be completed.
    Keywords: Ex post assessments;Conditionality;Fiscal reforms;Bank supervision;Longer-term program engagement;Afghanistan;
    Date: 2016–02–11
  130. By: Beetsma, Roel; de Jong, Frank; Giuliodori, Massimo; Hanson, Jesper
    Abstract: This paper provides evidence of spillovers from foreign primary public debt issues into domestic secondary market auction cycles in the euro area. It also confirms the presence of such auction cycles in response to domestic debt issues. These results are consistent with the theory of primary dealers' limited risk-bearing capacity. Consistent with the theory, domestic auction cycles in response to new debt issues are stronger during the crisis period, while the cross-border effects tend to be stronger in the pre-crisis period, possibly as a result of reduced integration of euro area sovereign bond markets during the crisis.
    Keywords: auction cycles; auctions; crisis; cross-border effects; limited risk-bearing capacity; primary dealers; primary markets; public debt; secondary markets
    JEL: G12 G18
    Date: 2016–02
  131. By: Konstantin Egorov (Department of Economics, Pennsylvania State University); Michal Fabinger (Faculty of Economics, The University of Tokyo)
    Abstract: We present a tractable, quantitative model of sovereign borrowing that delivers empirically relevant regularities, such as graduation from default, sovereign debt spreads that may be high for an extended period of time, high debt-to-GDP ratios, and high default rates. The model is an asymmetric-information extension of otherwise standard models of endogenous default on sovereign debt, with borrowing levels determined in equilibrium. Governments could be of different types based on their level of responsibility (cost of default as perceived by the politicians). Only the governments observe their level of responsibility. International investors try to infer the unobserved types based on the history of all observable actions, which gives irresponsible politicians an incentive to choose the same actions as responsible ones would. Governments could tolerate periods of high interest rates without defaulting to signal that they are of better type and to gain good reputation. This leads to lower interest rates during future recessions. For the same reason, even responsible governments should pay at first high interest rates in order to signal their type and thus “graduate from default†afterwards. A calibrated version of the model features these regularities, matches standard business cycle moments, and leads to a more realistic default rate in equilibrium, with parameter values same as in the existing literature.
  132. By: International Monetary Fund
    Abstract: This 2015 Article IV Consultation highlights that growth in Lithuania has remained resilient, despite challenges in the external environment. Strong domestic demand growth on the back of improving labor market conditions underpinned real GDP growth of 2.9 percent in 2014. Exports held up reasonably well despite Russian import bans. Growth should remain largely unchanged at 2.8 percent from last year in 2015, as positive external factors counterbalance negative ones and domestic demand remains robust. The main policy challenge will be to secure reasonably rapid convergence with living standards in western Europe going forward.
    Keywords: Lithuania;inflation, monetary fund, debt, investment, market
    Date: 2015–06–01
  133. By: Zied Ftiti; Aviral Tiwari; Ibrahim Fatnassi
    Date: 2016–02–18
  134. By: International Monetary Fund
    Abstract: This paper assesses Peru’s fiscal transparency practices in comparison with the IMF’s Fiscal Transparency Code, including the new draft pillar on resource revenue management. Peru’s practices meet most of the principles of the IMF’s Fiscal Transparency Code at good or advanced level. The country provides an extensive set of fiscal information with financial statements covering the entire public sector. There is a comprehensive budget supported by a solid fiscal framework with clear policy objectives embedded in numerical fiscal rules. The country also has a clear and comprehensive legal and fiscal regime for the management of resource revenue.
    Keywords: Peru;Western Hemisphere;transparency, revenue, budget, monetary fund
    Date: 2015–10–26
  135. By: Marc Dobler; Simon Gray; Diarmuid Murphy; Bozena Radzewicz-Bak
    Abstract: The global financial crisis (GFC) has renewed interest in emergency liquidity support (sometimes referred to as “Lender of Last Resort†) provided by central banks to financial institutions and challenged the traditional way of conducting these operations. Despite a vast literature on the topic, central bank approaches and practices vary considerably. In this paper we focus on, for the most part, the provision of idiosyncratic support, approaching it from an operational perspective; highlighting different approaches adopted by central banks; and also identifying some of the issues that arose during the GFC.
    Keywords: Lender of last resort;Central banks and their policies;collateral, risk control measures, market, lender, liquidity, central bank, Government Policy and Regulation, All Countries,
    Date: 2016–01–22
  136. By: International Monetary Fund
    Abstract: This Selected Issues paper assesses the importance of oil and interest rate spillovers for Saudi Arabia. Oil prices have fallen by more than 40 percent since mid-2014 while the Federal Reserve is expected in the coming months to begin raising its policy rate at the beginning of a gradual tightening cycle. Given the importance of oil to the economy and the peg of the riyal to the U.S. dollar, these are two key developments for Saudi Arabia. Although a temporary drop in oil prices would likely have little effect on the economy and banks given the financial cushions that have been built-up, a longer-lasting period of low oil prices would have a more significant impact.
    Keywords: Middle East;Saudi Arabia;oil prices, interest, revenues, interest rates, oil price
    Date: 2015–10–15
  137. By: International Monetary Fund
    Abstract: This 2015 Article IV Consultation highlights that Finland’s exports have suffered owing to the declines of Nokia and the paper industry, compounded by weak external demand, especially from the euro area and Russia. The current account and fiscal balances have deteriorated, with the 2014 fiscal deficit breaching the Stability and Growth Pact’s 3 percent of GDP criterion. A modest recovery is projected to begin in 2015 and gradually strengthen in 2016. However, in absence of further reforms, growth is likely to remain much lower than pre-crisis. Weaker-than-expected growth in key trade partners would be a drag on exports, and spillovers from an external financial shock would create tighter financial conditions, with negative effects on output.
    Keywords: Europe;Finland;investment, goods, monetary fund, balance of payments, economic developments
    Date: 2015–11–17
  138. By: International Monetary Fund
    Abstract: Bangladesh: Selected Issues
    Keywords: Bangladesh;Asia and Pacific;banks, bank, lending, interest, inflation
    Date: 2016–02–01
  139. By: International Monetary Fund
    Abstract: This paper discusses Uganda’s Fifth Review Under the Policy Support Instrument (PSI) and Request for Waiver of an Assessment Criterion and Modification of Assessment Criteria. The economy of Uganda has fared well in a difficult environment. Program performance under the PSI was generally positive. All end-June and continuous quantitative assessment criteria were observed, with one exception, and so were most indicative targets. Inflation remained within the bands of the consultation clause. An unprecedented increase in tax revenue was a key achievement. However, further progress on structural reforms is needed. The authorities are rightly adjusting the policy mix. The IMF staff recommends completing the fifth review under the PSI.
    Keywords: Sub-Saharan Africa;Uganda;inflation, exchange, market, exchange rate, monetary fund
    Date: 2015–11–20
  140. By: International Monetary Fund
    Abstract: Kyrgyz Republic: Selected Issues
    Date: 2016–02–22
  141. By: International Monetary Fund
    Abstract: Reform of the SOE sector is a high priority for the government. The recently published “National Strategy 2020†promises “state property management reform,†and related reforms in areas such as the organization of government agencies, public procurement, competition policy, and corporate regulation. Reform of the SOE sector also features prominently in the government’s 2014 Coalition Agreement. High levels of direct and indirect state support is adding to the significant fiscal risks emanating from SOE sector, a problem that is being exacerbated by the severe economic situation. In addition, weaknesses in the management of the state’s investment portfolio need to be addressed to help to significantly increase the value of the government’s portfolio of state assets. This will only be possible through improved oversight and governance of the SOE sector.
    Keywords: Europe;Ukraine;monetary fund, budget, transparency, portfolio, market
    Date: 2016–02–08
  142. By: International Monetary Fund
    Abstract: United Kingdom: Selected Issues
    Date: 2016–02–24
  143. By: Emmanouil Kitsios; Manasa Patnam
    Abstract: We estimate the average fiscal multiplier, allowing multipliers to be heterogeneous across countries or over time and correlated with the size of government spending. We demonstrate that this form of nonseparable unobserved heterogeneity is empirically relevant and address it by estimating a correlated random coefficient model. Using a panel dataset of 127 countries over the period 1994-2011, we show that not accounting for omitted heterogeneity produces a significant downward bias in conventional multiplier estimates. We rely on both crosssectional and time-series variation in spending shocks, exploiting the differential effects of oil price shocks on fuel subsidies, to identify the average government spending multiplier. Our estimates of the average multiplier range between 1.4 and 1.6.
    Keywords: Government expenditures;Economic growth;Fiscal policy;Panel analysis;Economic theory;Fiscal Multipliers, Nonseparable Unobserved Heterogeneity, Oil Price
    Date: 2016–02–04
  144. By: International Monetary Fund
    Abstract: This Selected Issues paper develops a framework to study the macroeconomic and distributional implications of alternative Farm Input Subsidy Program (FISP) reforms in Malawi. The FISP is one of the largest social expenditure items in Malawi, aimed at improving food security and reducing poverty. The FISP program targets poor rural households and provides them with a coupon for a predetermined amount of fertilizer at a heavily subsidized rate. The results of the study discussed in this paper show how policies that seek to improve the efficiency of expenditure can be consistent with higher and more equitable growth. It also focuses on the macroeconomic and distributional impacts of reducing the subsidy rate for the FISP.
    Keywords: Financial system stability assessment;Financial sector;Banks;Financial institutions;Microfinance;Insurance;Pension funds;Agricultural sector;Agricultural subsidies;Selected Issues Papers;Malawi;
    Date: 2015–12–18
  145. By: International Monetary Fund
    Abstract: Austria: Selected Issues
    Keywords: Fiscal consolidation;Government expenditures;Tax reforms;Pension reforms;Fiscal sustainability;Migration;Labor markets;Health care;Selected Issues Papers;Austria;
    Date: 2016–02–12
  146. By: OECD
    Abstract: This paper presents the first empirical analysis of the macroeconomic relationship between environmentally related taxes and inequality in income sources. The analysis also investigates whether this relationship differs between countries which have implemented environmental tax reforms (ETRs) and ones which have not. Following earlier empirical literature, income inequality is measured by the disposable-income-based Gini coefficient. The analysis is based on a panel of all 34 OECD countries spanning the period from 1995 to 2011. Information about the implementation of ETRS in the examined period is collected through a review of relevant academic and policy literature. Empirical results from econometric models reveal that, on average, there is no statistically significant relationship between the overall share of environmentally related tax revenues in GDP and inequality in income sources. However, the relationship varies with the taxed activity under consideration and the existence of an explicit mechanism to redistribute environmentally related tax revenues. In countries where such mechanisms are absent, energy tax revenues (% of GDP) are shown to have a positive, although modest, relationship with income inequality. In contrast, in countries where energy tax revenues are, at least partially, used to reduce tax burden on income and labour, there is a negative relationship between energy taxes and inequality in income sources. On the contrary, no significant relationship is identified between motor vehicle and other transport tax revenues and income inequality, while revenues from other environmentally related taxes, such as waste and air pollution taxes, are negatively associated with income inequality, regardless of the existence of an explicit revenue recycling mechanism. Ce rapport présente la première analyse empirique des effets macroéconomiques des taxes liées à l’environnement sur les inégalités de revenus, ainsi que du rôle que des réformes spécifiques de la fiscalité environnementale peuvent jouer dans l’atténuation de ces effets. Les inégalités de revenus sont ici mesurées par le coefficient de Gini fondé sur le revenu disponible. Cette analyse empirique utilise un nouvel indicateur des réformes fiscales environnementales (RFEs) élaboré sur la base de l’information qualitative recueillie par une étude de la littérature. Contrairement aux études empiriques antérieures, ce document explore l’effet des taxes liées à l’environnement et des RFEs sur les sources de revenus des ménages, plutôt que sur les utilisations de ce revenu. Cette analyse repose sur un panel composé des 34 pays de l’OCDE et couvre la période comprise entre 1995 et 2011. Elle montre que la part générale des recettes tirées des taxes liées à l’environnement dans le produit intérieur brut (PIB) présente une corrélation positive avec les inégalités de revenus. Cependant, cet effet varie selon l’activité assujettie. Alors que l’on a démontré que les recettes issues des taxes sur l’énergie affichent une relation positive avec les inégalités de revenus, aucun effet tranché ne se dessine pour les recettes produites par les taxes sur les véhicules à moteur et les transports. En revanche, les recettes générées par les autres taxes liées à l’environnement, comme celles perçues sur les déchets et sur la pollution atmosphérique, affichent une relation négative avec les inégalités de revenus. Les RFEs examinées jouent un rôle important dans l’atténuation des impacts négatifs des taxes liées à l’environnement (principalement celles sur l’énergie). On constate en particulier qu’elles annulent complètement ces impacts. Ce constat vient étayer l’argument selon lequel les effets distributifs des taxes liées à l’environnement ne devraient pas être considérés comme des obstacles insurmontables au recours à ces taxes dans ce champ de l’action publique, car des RFE conçues avec soin et bien ciblées peuvent atténuer les effets éventuels de ces taxes sur les inégalités de revenus.
    Keywords: income inequality, environmental tax reform, Gini coefficient, Energy tax, coefficient de Gini, Réformes fiscales environnementales, Taxe sur l’énergie, inégalités de revenu
    JEL: E62 H23 Q48 Q52
    Date: 2016–03–01

This nep-mac issue is ©2016 by Soumitra K Mallick. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.