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  • Industrial Organization and Macroeconomics: Industrial Structure and Structural Change; Industrial Price Indices x
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International Monetary Fund. African Dept.
This Selected Issues paper discusses the assessment of economic activity in Togo in absence of quarterly GDP series. Togo collects about 40 macroeconomic indicators monthly that span a wide range of sectors of the economy. The selection of the variables for the economic activity index is conducted by finding the combination of variables. The indicators are aggregated into an index using a methodology used by the Conference Board. Then an economic activity index is constructed that effectively replicates the historical growth rates of real GDP in Togo. The selected index minimizes the deviations between the growth rates of the indicator and actual real GDP growth over 2002–13.
International Monetary Fund. European Dept.
This Selected Issues paper employs a suite of models to determine the main drivers of inflation in Poland. Inflation in Poland has stayed below the lower bound of the target band for about two years with external shocks adding to downward pressure during 2014. The paper provides a range of inflation forecasts to assess the likelihood of protracted low inflation. The paper considers the main factors underlying recent inflation developments and assesses the importance of first-round indirect and second-round effects of external shocks for headline inflation. Using a variety of models, the paper also provides possible forecast paths for inflation in Poland.
Khalid ElFayoumi, Anta Ndoye, Miss Sanaa Nadeem, and Gregory Auclair
Institutional and market frictions impose costs on the reallocation of labor from low to high productivity sectors, leading to suboptimal allocations and a loss in aggregate labor productivity. Using cross-country sector-level data, we use a dynamic panel error correction model to compute the speed of sectoral labor adjustment, as well as the contribution of structural reforms in governance, labor and product markets, trade and openness, and the financial sector to lowering the costs of labor reallocation. We find that, on average, sectoral employment shares converge towards equilibrium allocations, closing about 13.7 percent of labor productivity gaps each year; this speed of labor adjustment varies across sectors and income groups. On structural reforms, we find a significant association between more efficient labor reallocation and financial market liberalization, less bureaucracy, strong judicial and regulatory environment, trade liberalization, better education and more flexible labor and product markets.
Manoj Atolia, Mr. Prakash Loungani, Milton Marquis, and Mr. Chris Papageorgiou
This paper takes a fresh look at the current theories of structural transformation and the role of private and public fundamentals in the process. It summarizes some representative past and current experiences of various countries vis-a-vis structural transformation with a focus on the roles of manufacturing, policy, and the international environment in shaping the trajectory of structural transformation. The salient aspects of the current debate on premature deindustrialization and its relation to a middle-income trap are described as they relate to the path of structural transformation. Conclusions are drawn regarding prospective future paths for structural transformation and development policies.
Mr. Nikoloz Gigineishvili, Mr. Paolo Mauro, and Ke Wang
Is rapid economic growth experienced by the East African Community during the past decade built on solid foundations? To gain some clues, we use a variety of newly-collected and existing data sources to analyze the structural transformation of output and exports, as well as indicators of their quality and sophistication. The move from agriculture to a wide range of other sectors—bodes well for continued growth, as do gradual improvements in quality. Yet, no clear winners on the production side seem to have emerged, to embed a durable comparative advantage in international markets. These observations may instill a note of caution against projecting rapid growth into the distant future.
Mr. Benjamin L Hunt
In this paper, the IMF's new Global Economy Model (GEM) is used to estimate the contribution of unbalanced growth to the decline in the share of goods production in Australia and New Zealand. The simulation results suggest that faster productivity growth in the tradable goods sector in Australia, New Zealand, and their major trading partners accounts for a significant portion of the relative decline in the importance of goods production. Over the 1995 to 2004 period, unbalanced growth explains more than 80 percent of the decline in goods production in both countries.