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Reda Cherif and Fuad Hasanov
We provide an overview of the theories and empricial evidence on the complex relationship among innovation, competition, and inclusive growth. Competition and innovation-led growth are critical to drive productivity gains and support broad-based growth. However, new technologies and trends in market concentration are stifling future innovation while contributing to the marked increase in inequality. Beyond consumer welfare in a narrow market, competition policy should adapt to this new reality by considering the spillover and dynamic effects of market power, especially on firm entry, innovation, and inequality. Innovation policies should tackle not only government failures but also market failures.
International Monetary Fund. Western Hemisphere Dept.
This 2018 Article IV Consultation highlights that after three years of robust expansion, the economy of the Dominican Republic moderated to close to its potential level. Economic activity is estimated to have expanded by 4.6 percent in 2017, following above-potential growth of 7.1 percent on average during 2014–16. The growth moderation was concentrated in the first three quarters of 2017. The economic outlook remains positive. The monetary easing in mid-2017 is expected to support a continued recovery in economic activity in 2018. Lower lending rates and stronger credit growth following the easing, combined with higher real wages and employment, are expected to continue to support domestic demand.
Mr. Luis Catão, Valeriya Dinger, and Daniel Marcel te Kaat
Using a sample of over 700 banks in Latin America, we show that international financial liberalization lowers bank capital ratios and increases the shares of short-term funding. Following liberalization, large banks substitute interbank borrowing for equity and long-term funding, whereas small banks increase the proportions of retail funding in their liabilities, which have been particularly vulnerable to flight-to-quality during periods of financial distress in much of Latin America. We also find evidence that riskier bank funding in the aftermath of financial liberalizations is exacerbated by asymmetric information, which rises on geographical distance and the opacity of balance sheets.
International Monetary Fund
This paper is a report of Nicaragua’s performance under the 2007–11 program. The period was marked by a stern financial crisis, price shocks, and disasters, but the program maintained the macroeconomic stability. Although the program had several hurdles, its achievements were remarkable—approval of tax reforms, improvements in banks' framework, power and electricity framework, dwindled poverty rate, and strong foreign relations. Overall, the Board is in high spirits in the triumph of the program in a critical situation though it had some flaws.
Davide Furceri and Ms. Aleksandra Zdzienicka
The aim of this paper is to assess the short- and medium-term impact of debt crises on GDP. Using an unbalanced panel of 154 countries from 1970 to 2008, the paper shows that debt crises produce significant and long-lasting output losses, reducing output by about 10 percent after eight years. The results also suggest that debt crises tend to be more detrimental than banking and currency crises. The significance of the results is robust to different specifications, identification and endogeneity checks, and datasets.
International Monetary Fund
The following is the provisional agenda for the Twenty-First Meeting of the International Monetary and Financial Committee, which is to be convened at the Fund’s Headquarters in Washington, D.C. on Saturday, April 24, 2010. A joint working dinner of IMFC members and G-20 ministers will be held on Friday, April 23 at 7:30 p.m. in HQ1–Meeting Halls A & B. The IMFC meeting will be followed by the press conference of the IMFC Chairman and the Managing Director at 2:30 p.m.
Mr. Andrew J Swiston
This paper investigates Central America's external linkages over the last fifteen years of increased integration in light of the 2008-09 global recession. Using structural VAR models, it is found that a one percent shock to U.S. growth shifts economic activity in Central America by 0.7 to 1 percent, on average. Spillovers from global shocks and the rest of the region also affect activity in some countries. Spillovers are mostly transmitted through advanced country financial conditions and fluctuations in external demand for Central American exports. Shocks to advanced economies associated with the 2008-09 financial crisis lowered economic activity in the region by 4 to 5 percent, on average, accounting for a majority of the observed slowdown. The impact was almost twice as large as elasticities estimated on pre-crisis data would have predicted. These results underscore the importance of operating credible policy frameworks that enable a countercyclical policy response to external shocks.
Mr. Ari Aisen and Michael Franken
This paper empirically estimates the main determinants of bank credit growth during the 2008 financial crisis. Using a sample covering over 80 countries, this paper finds that larger bank credit booms prior to the crisis and lower GDP growth of trading partners are among the most important determinants of the post-crisis bank credit slowdown. Structural variables such as financial depth and integration were also relevant. Finally, countercyclical monetary policy and liquidity played a critical role in alleviating bank credit contraction after the 2008 financial crisis, suggesting that countries should pursue appropriate institutional and macroeconomic frameworks conducive to countercyclical monetary policies.
International Monetary Fund
In the context of the March 2009 reforms of the General Resources Account (GRA) lending toolkit, the Executive Board asked staff to prepare a paper addressing the problem of blackout periods under GRA arrangements, which interrupt access to accumulated but undrawn purchases. This request arose in the context of the decision to make high-access precautionary arrangements (HAPAs) available to members on a more regular basis (with greater flexibility regarding frontloading of access). Blackout periods have important implications given that the crisis-prevention and confidence-enhancing role of precautionary arrangements (particularly HAPAs) depend on strong assurances that resources will be available if needed. Section II provides background on the issue of blackout periods and the expanded role of precautionary arrangements under the recent reforms. Section III proposes a solution to provide greater assurances to members regarding continuity of access to accumulated rights while maintaining appropriate safeguards.