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  • Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure x
  • Competition x
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Alan Xiaochen Feng
Bank competition can induce excessive risk taking due to risk shifting. This paper tests this hypothesis using micro-level U.S. mortgage data by exploiting the exogenous variation in local house price volatility. The paper finds that, in response to high expected house price volatility, banks in U.S. counties with a competitive mortgage market lowered lending standards by twice as much as those with concentrated markets between 2000 and 2005. Such risk taking pattern was associated with real economic outcomes during the financial crisis, including higher unemployment rates in local real sectors.
Michael Walton, Anusha Nath, and Mr. Ashoka Mody
Some see India’s corporate sector as the fundamental driver of recent and future prosperity. Others see it as a source of excessive market power, personal enrichment, and influence over the State, with an ultimately distorting influence. To inform this debate, this paper analyses the correlates of profitability of firms listed on the Bombay Stock Exchange, covering a dynamic period-in terms of firm entry and growth-from the early 1990s to the late 2000s. Overall, the results do not provide support for the systematic exercise of market power via the product market. At least for this period, the story is more consistent with a competitive and dynamic business sector, despite the continued dominance of business houses and public sector firms in terms of sales and assets. Those with opposing views can, with justification, argue that our analysis does not cover influences, such as corporate governance and state-corporate relations, which may paint a less flattering picture of the corporate sector’s role. Those broader themes deserve further attention.
International Monetary Fund

This 2008 Article IV Consultation highlights that after 15 years of impressive growth led by a housing boom, the Spanish economy has entered a sharp downturn in the wake of the global liquidity squeeze since mid-2007. Executive Directors have commended the authorities for their timely and substantial fiscal and financial sector responses to help cushion the downturn. They have emphasized that these efforts need to be complemented by reforms to bolster competitiveness and to avoid a prolonged period of slow growth and high unemployment.

International Monetary Fund
This 2008 Article IV Consultation highlights that after 15 years of impressive growth led by a housing boom, the Spanish economy has entered a sharp downturn in the wake of the global liquidity squeeze since mid-2007. Executive Directors have commended the authorities for their timely and substantial fiscal and financial sector responses to help cushion the downturn. They have emphasized that these efforts need to be complemented by reforms to bolster competitiveness and to avoid a prolonged period of slow growth and high unemployment.
International Monetary Fund. External Relations Dept.

The September 2006 World Economic Outlook (WEO) projects strong global growth of 5.1 percent in 2006, slowing slightly to 4.9 percent in 2007, both numbers up from the WEO’s spring forecast. Growth is becoming more balanced, Raghuram Rajan, Director of the IMF’s Research Department, said when presenting the WEO projections at a press conference on September 14 during the Annual Meetings in Singapore. The U.S. economy is beginning to slow; emerging markets and developing markets, led by China at 10.0 percent and India at 8.3 percent, are delivering impressive growth rates; the euro area has gained momentum; and Japan’s expansion continues. However, after four years of strong growth, risks to the outlook are clearly tilted to the downside.

International Monetary Fund. External Relations Dept.

During the 1990s, income per capita in Ireland grew rapidly, converging to the European Union (EU) average as output and employment expanded. But over the medium term, growth rates are projected to be significantly lower, given the limited scope for further increases in labor supply and productivity catch-up. Marialuz Moreno-Badia from the IMF’s European Department outlines the challenges facing the Irish economy.