This Selected Issues paper analyzes Spain’s sustainable growth rate. It sheds some light on Spain’s medium-term growth prospects by looking into the key factors driving potential growth, both in the past and likely in the future, and international experience of countries in the aftermath of financial crisis. The paper suggests Spain is likely to face a long period of moderate growth (about 1½–2 percent) and high unemployment, but policy action—especially that directed toward reducing structural unemployment and raising productivity—could lead to much better outcomes.
Mr. Hamid R Tabarraei, Hamed Ghiaie, and Asghar Shahmoradi
The structural model in this paper proposes a micro-founded framework that incorporates an
active banking sector with an oil-producing sector. The primary goal of adding a banking
sector is to examine the role of an interbank market on shocks, introduce a national
development fund and study its link to the banking sector and the government. The
government and the national development fund directly play key roles in the propagation of
the oil shock. In contrast, the banking sector and the labor market, through perfect
substitution between the oil and non-oil sectors, have major indirect impacts in spreading
This Selected Issues paper takes stock of the progress made in meeting the objectives under Indonesia’s Extended Arrangements (1998–2003) program. The paper addresses progress in achieving the programs’ core macroeconomic objectives, with an emphasis on how Indonesia’s economic recovery compares with those of the other major Asian “crisis” countries. A major conclusion of the paper is that, while significant progress has been made against many of the key objectives of the arrangements, Indonesia’s overall economic performance has lagged behind others in the region.
This Selected Issues paper on the United States analyzes the measures of potential output, natural rate of unemployment, and capacity utilization. Traditionally, measures of resource utilization have been used as indicators for the potential build-up of inflation pressures, and hence as guides for the formulation of macroeconomic policy. The paper highlights that the most commonly used indicators of resource utilization in the United States are the output gap, the employment gap, and capacity utilization in industry. The paper also analyzes the wage and price determination and productivity trends in the United States.