As the COVID-19 crisis continues to unfold, uncertainty remains exceptionally high. The Fund has provided extraordinary financial support as well as timely analysis and policy advice during the first phase of the crisis, but additional efforts are needed to help members secure a durable exit, minimize long-term scarring, and build a more sustainable and resilient economy. Against this backdrop, and in line with the strategic directions laid out in the Fall 2020 Global Policy Agenda and the International Monetary and Financial Committee (IMFC) Communiqué, this Work Program puts forward a prioritized Board agenda for December 2020 to June 2021, focused on activities of most critical importance to our members.
International Monetary Fund. Communications Department
WITH THE GLOBAL ECONOMY humming along, there would seem little reason to worry about tomorrow. But in many countries, the future has been mortgaged by high public and private debt, which risks choking off growth. In this issue of F&D we ask, “How much is too much debt?”
Financial crises are traditionally analyzed as purely economic phenomena. The political
economy of financial booms and busts remains both under-emphasized and limited to
isolated episodes. This paper examines the political economy of financial policy during
ten of the most infamous financial booms and busts since the 18th century, and presents
consistent evidence of pro-cyclical regulatory policies by governments. Financial booms,
and risk-taking during these episodes, were often amplified by political regulatory stimuli,
credit subsidies, and an increasing light-touch approach to financial supervision. The
regulatory backlash that ensues from financial crises can only be understood in the context
of the deep political ramifications of these crises. Post-crisis regulations do not always
survive the following boom. The interplay between politics and financial policy over these
cycles deserves further attention. History suggests that politics can be the undoing of
Motivated by the recent European debt crisis, this paper investigates the scope for a
bailout guarantee in a sovereign debt crisis. Defaults may arise from negative income
shocks, government impatience or a "sunspot"-coordinated buyers strike. We introduce a
bailout agency, and characterize the minimal actuarially fair intervention that guarantees
the no-buyers-strike fundamental equilibrium, relying on the market for residual
financing. The intervention makes it cheaper for governments to borrow, inducing them
borrow more, leaving default probabilities possibly rather unchanged. The maximal
backstop will be pulled precisely when fundamentals worsen.
International Monetary Fund. External Relations Dept.
This chapter discusses various past and future aspects of the global economy. There has been a huge transformation of the global economy in the last several years. Articles on the future of energy in the global economy by Jeffrey Ball and on measuring inequality by Jonathan Ostry and Andrew Berg are also illustrated. Since the 2008 global crisis, global economists must change the way they look at the world.