- Paolo Mauro, Torbjorn Becker, Jonathan Ostry, Romain Ranciere, and Olivier Jeanne
- Published Date:
- April 2007
Country Insurance The Role of Domestic Policies
Törbjörn Becker, Olivier Jeanne, Paolo Mauro, Jonathan D. Ostry, and Romain Rancière
INTERNATIONAL MONETARY FUND
© 2007 International Monetary Fund
Production: IMF Multimedia Services Division
Typesetting: Elaine Wilson and Choon Lee
Figures: Bob Lunsford
Country insurance : the role of domestic policies / Törbjörn Becker … [et al.] —
Washington, D.C. : International Monetary Fund, 2007.
p. cm. — (Occasional paper ; 254)
Includes bibliographical references.
1. Economic policy. 2. Debts, Public. 3. Government liability. I. Becker, Törbjörn. II. International Monetary Fund. III. Series: Occasional paper (International Monetary Fund) ; no. 254
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The following conventions are used in this publication:
In tables, a blank cell indicates “not applicable,” ellipsis points (…) indicate “not available,” and 0 or 0.0 indicates “zero” or “negligible.” Minor discrepancies between sums of constituent figures and totals are due to rounding.
An en dash (–) between years or months (for example, 2005–06 or January–June) indicates the years or months covered, including the beginning and ending years or months; a slash or virgule (/) between years or months (for example, 2005/06) indicates a fiscal or financial year, as does the abbreviation FY (for example, FY2006).
“Billion” means a thousand million; “trillion” means a thousand billion.
“Basis points” refer to hundredths of 1 percentage point (for example, 25 basis points are equivalent to ¼ of 1 percentage point).
As used in this publication, the term “country” does not in all cases refer to a territorial entity that is a state as understood by international law and practice. As used here, the term also covers some territorial entities that are not states but for which statistical data are maintained on a separate and independent basis.
Countries face a range of shocks that can contribute to higher volatility in aggregate output and, in extreme cases, to economic crises. The presence of such risks underlies a potential demand for mechanisms to soften the blow from adverse economic shocks. Such a protective infrastructure is referred to in this paper as “country insurance.” Protective measures that countries can take themselves (“self-insurance”) include sound economic policies, robust financial structures, and adequate reserve coverage. Beyond self-insurance, countries have also established regional arrangements that pool risks while, at the multilateral level, the IMF plays a central role through the temporary provision of its resources when shocks create balance of payments difficulties for a member, and through the policy advice it provides under surveillance. This Occasional Paper focuses on what countries can do on their own—that is, on the role of domestic policies—with respect to country insurance.
The paper was prepared under the direction of Jonathan D. Ostry (Deputy Director, Research Department) by a staff team led by Paolo Mauro (Chief of the Strategic Issues Division in the Research Department). The other authors were Törbjörn Becker, Olivier Jeanne, and Romain Rancière. Other contributors were Andrei Levchenko (Appendix II) and Marcos Chamon and Cheng-Hoon Lim (Box 3.2). The authors are grateful to Raghuram Rajan (Director, Research Department) for suggesting the topic and for his support and helpful suggestions throughout the project; to Martín Minnoni and Aleksandar Zaklan for excellent research assistance; and to Usha David for editorial assistance. Paul Gleason of the External Relations Department copyedited the paper and coordinated its production and publication.
The opinions expressed are solely those of the authors and do not necessarily reflect the views of the International Monetary Fund or its Executive Directors.