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International Monetary Fund. Research Dept.

Abstract

The authors of this special feature are Christian Bogmans, Lama Kiyasseh, Akito Matsumoto, Andrea Pescatori (team leader), and Julia Xueliang Wang, with research assistance from Lama Kiyasseh and Claire Mengyi Li.

International Monetary Fund. Research Dept.

Abstract

The authors of this chapter are Michal Andrle, Philip Barrett, John Bluedorn (co-lead), Francesca Caselli, and Wenjie Chen (co-lead), with support from Christopher Johns, Adrian Robles Villamil, and Shan Wang. The chapter also benefited from discussions with Yuriy Gorodnichenko, Jay Shambaugh, and from comments by January 2020 internal seminar participants and reviewers.

International Monetary Fund. Research Dept.

Abstract

The authors of this chapter are Katharina Bergant, Francesco Grigoli, Niels-Jakob Hansen, and Damiano Sandri (lead), with support from Jungjin Lee and Xiaohui Sun. The chapter benefited from insightful comments by Sebnem Kalemli-Özcan and internal seminar participants.

International Monetary Fund. Research Dept.

Abstract

The share of immigrants in advanced economies has risen significantly in recent years, while escalating conflicts have caused large refugee flows that have primarily affected emerging market and developing economies. This chapter examines the drivers of migration, its recent evolution, its possible developments going forward, and its economic impact on recipient countries. Four main findings emerge. First, the costs of migration are high and significantly constrain the ability of individuals to move across borders. Second, the pressures from migration on advanced economies will continue to rise, as the population in emerging market and developing economies is expected to continue to grow over the next 30 years. However, higher incomes in emerging market and developing economies would dampen overall emigration pressures. Third, conflicts are an important driver of migration, especially into emerging market and developing economies. In the future, climate-related disasters could possibly intensify emigration, but the evidence of such pressures is limited to date. Fourth, immigration into advanced economies increases output and productivity both in the short and medium term, but these positive effects are not clearly detected for refugee flows in emerging market and developing economies. The findings of this chapter lend support for two main policy conclusions. First, appropriate labor market and integration policies could magnify the positive macroeconomic effects of immigration. That said, distributional dimensions also need to be considered because immigration may affect, at least temporarily, some groups of people native to the country where the immigrants arrive. Second, international cooperation is needed to address large waves of refugee migration, especially into emerging market and developing economies.

International Monetary Fund. European Dept.

This Selected Issues paper assesses the youth unemployment problem in advanced European economies, especially the euro area. Youth unemployment rates increased sharply in the euro area after the crisis. Much of these increases can be explained by output dynamics and the greater sensitivity of youth unemployment to economic activity compared with adult unemployment. Labor market institutions also play an important role, especially the tax wedge, minimum wages, and spending on active labor market policies. The paper highlights that policies to address youth unemployment should be comprehensive and country specific, focusing on reviving growth and implementing structural reforms.

International Monetary Fund

The EU crisis was caused by unsustainable policies in some member countries, and has put the spotlight on the deficiency of area-wide mechanisms in disciplining fiscal and structural policies. Despite a strong and far-reaching policy response, market confidence will take time to restore. Fiscal sustainability needs to be established. Growth needs to be boosted through swift implementation of structural reforms. The resilience of the banking system must be improved and its stability assured. Progress in building the EU’s financial stability architecture should be pursued.

RÜŞDÜ SARACOGLU

The relationship between nominal interest rates and expectations of inflation has received widespread attention over the years.1 Although the theoretical issue is not a new one, the relatively high rates of inflation and nominal interest rates experienced in recent years have brought the question into sharp focus. The concern of policymakers has been directed not only at the large fluctuations in nominal and real interest rates but also at real interest rates that are very high relative to historical levels and have risen rapidly to those levels.

International Monetary Fund

These Technical Notes on France explain integration of global financial markets. The stress tests for the France Financial Sector Assessment Program (FSAP) were designed to yield as comprehensive and detailed a picture as possible within the constraints of the approach. Retail activity by foreign banks in France is small, but significant. The financial landscape in France remains characterized by a large number of idiosyncrasies that affect monetary transmission. Macroeconometric models point to a smaller reaction to monetary policy in France than in other large euro-area economies.

International Monetary Fund

This Selected Issues paper on France underlies public intervention in financial markets. Econometric analysis indicates that in the long term, consumption tracks disposable income closely but is also affected by wealth effects. A counterfactual exercise suggests that a lower return to experience could be responsible for lower early wage growth in France. Increased training could enhance the employment experience of the low-skilled young worker in France provided that its cost is shared between the employer and the employee.