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Mr. Wayne W. Camard

For three days in August, Rutgers University Professor Michael Bordo and a group of noted academics provided senior officials from 30 countries and a number of IMF staff with a historical context for the often contentious issue of globalization. Sponsored by the IMF Institute, “Globalization in Historical Perspective” reprised an earlier National Bureau of Economic Research conference. The seminar focused, in particular, on the forces unleashed in the nineteenth century and the ensuing backlash and looked for insights into today’s policy debates.

International Monetary Fund
This Selected Issues paper analyzes the effect of international migration on unemployment in New Zealand. The empirical results in this paper suggest that net migration inflows give rise to a fall in the unemployment rate. The paper estimates a system of equations including the unemployment rate, real wage, net migration rate, and labor force participation rate, taking into account the interdependence of the variables. It also examines the impact of exchange rate volatility on export firms’ decisions to hedge foreign exchange exposure.
International Monetary Fund
This Selected Issues paper examines the role of information and communication technology (ICT) in the recent acceleration of labor productivity growth in the United States. The analysis reveals that the increase of total factor productivity (TFP) growth is a broad phenomenon that encompasses non-ICT producing sectors, consistent with the view that ICT is a “general purpose technology.” The paper investigates whether the productivity boom may have dampened employment in recent years. It also assesses the contribution of immigrants to the United State economy.
International Monetary Fund
This 2001 Article IV Consultation highlights that since early 2001, domestic demand growth has recovered in New Zealand and contributed to sustain GDP growth in the wake of weaker net exports, owing to the economic slowdown in the rest of the world. The sharp rise in economic activity pushed the economy to a high level of resource use, as capacity utilization rates rose markedly in 2001. An improvement in business and consumer confidence in the first months of 2002 suggests that domestic demand is likely to maintain its momentum in the first half of 2002.
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper discusses interactions between external risks and the New Zealand economy. The current set of external risks has the potential to be extremely damaging to New Zealand, but two factors would likely mitigate the economic impact. First, the flexible exchange rate regime is a reliable shock absorber and automatic stabilizer from the perspective of GDP, although it leads to a rebalancing between the domestic and external sectors in the economy. Second, net migration flows can reduce the negative impact of lower external demand under some circumstances, such as a growth slowdown in Australia. Fiscal policy could also offset some of the short-term costs of adjustment. Fiscal policy can provide stimulus at relatively small and manageable cost to the already-low government debt to GDP ratio. Moreover, at the current juncture, fiscal policy might need to provide the bulk of policy support against negative shocks, as monetary policy might be ineffective if has become constrained by an effective lower bound on the monetary policy interest rate.
Dominique M. Gross
This paper investigates the effects of the flows of immigrant workers on the French labor market between the mid-1970s and mid-1990s. Using a system of equations for unemployment, labor-force participation, the real wage, and the immigration rate, it is shown that, in the long run, legal and amnestied immigrant workers, and their families, lower the unemployment rate permanently. In the short run, the arrival of immigrants increases unemployment slightly with an impact similar to that of an increase in domestic labor-force participation. The composition of immigration flows matters, and the proportion of skilled and less-skilled workers should remain balanced.
Zefeng Chen, Miss Sanaa Nadeem, and Mr. Shanaka J Peiris
In emerging Asia, banks constitute the dominant source of financing consumption and investment, and bank balance sheets comprise large gross FX assets and liabilities. This paper extends the DSGE model of Gertler and Karadi (2011) to incorporate these key features and estimates a panel vector autoregression on ten Asian economies to understand the role of the banking sector in transmitting spillovers from the global financial cycle to small open economies. It also evaluates the effectiveness of foreign exchange intervention (FXI) and other macroeconomic policies in responding to external financing shocks. External financial shocks affect net external liabilities of banks and the exchange rate, leading to changes in credit supply by banks and investment. For example, a capital outflow shock leads to a deprecation that reduces the net worth and intermediation capacity of banks exposed to foreign currency liabilities. In such cases, the exchange rate acts as shock amplifier and sterilized FXI, often deployed by Asian economies, can help cushion the economy. By contrast, with real shocks, the exchange rate serves as a shock absorber, and any FXI that weakens that function can be costly. We also explore the effectiveness of the monetary policy interest rate, macroprudential policies (MPMs) and capital flow management measures (CFMs).
PAUL CASHIN and RATNA SAHAY

While per capita incomes in the states of India are quite diverse, they have been slowly converging in recent decades. Convergence has been aided by grants from the central government to the states; however, the contribution of internal migration to this process appears minimal.

Mr. Benedict J. Clements, Mr. Kamil Dybczak, Vitor Gaspar, Mr. Sanjeev Gupta, and Mauricio Soto
This Staff Discussion Note looks at the stark fiscal challenges posed by the decline and aging of populations between now and 2100. It finds that without reforms, pensions and health spending would rise to 25 percent of GDP by end-century in more developed countries (and 16 percent of GDP in less developed countries), with potentially dire fiscal consequences. Given the uncertainty underlying the population projections and associated large fiscal risks, a multi-pronged approach will be required. This could include entitlement reform—starting now but at a gradual pace; policies that affect demographics and labor markets; and better tax systems and more efficient public expenditure.