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International Monetary Fund. Monetary and Capital Markets Department

stress event occurs, how does the size and composition of the IIP relate to the impact on output, the current account, and the exchange rate? How do external stress events impact creditor economies? To address these questions, the analysis focuses on a sample of 73 advanced and emerging market and developing economies during 1991–2018. The chapter seeks to disentangle the role of certain IIP components in explaining external stress episodes, including (1) gross and net external assets and liabilities, (2) equity and debt instruments, (3) the currency denomination

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. European Dept.

External Rebalancing in the Euro Area: Developments and Policies 1 Since the crisis, the euro area current account has moved from rough balance into a clear surplus. The rebalancing underlying this shift has been highly asymmetric, with some debtor economies (Cyprus, Greece, Ireland, Italy, Latvia, Portugal, and Spain) seeing large improvements in their current accounts (sometimes into surplus), while many creditor economies (Austria, Belgium, Finland, Germany, Luxembourg, and the Netherlands) have largely maintained their surpluses. In this context, the

International Monetary Fund. European Dept.

the Current Account in Creditor Economies 4. The Sectoral Composition of the Current Account in Debtor Economies 5. The Sectoral Composition of the Current Account in Other Debtor Economies 6. The Composition of Net Capital Inflows by Euro Area Economy Group 7. The Composition of Net Foreign Assets by Euro Area Economy Group 8. Model-Implied Investment and Saving Residuals and the EBA Assessment of Current Account Imblances TABLES 1. Net Foreign Assets and Current Accounts in the Euro Area Economies 2. Average Real Return Difference between

International Monetary Fund. Monetary and Capital Markets Department

stress event occurs, how does the size and composition of the IIP relate to the impact on output, the current account, and the exchange rate? How do external stress events impact creditor economies? To address these questions, the analysis focuses on a sample of 73 advanced and emerging market and developing economies during 1991–2018. The chapter seeks to disentangle the role of certain IIP components in explaining external stress episodes, including (1) gross and net external assets and liabilities, (2) equity and debt instruments, (3) the currency denomination

International Monetary Fund. Fiscal Affairs Dept.

developing economies. Within the euro area, these include active labor market policies and better-targeted training programs. Higher public investment in some creditor economies, complemented by policies to encourage private investment, could boost demand in the short term while raising potential output over the medium term. More forceful structural reforms in Japan are also needed to increase labor supply and raise productivity in some sectors through deregulation. Other advanced economies could also raise potential growth with measures to augment human and physical

International Monetary Fund. European Dept.

consolidated. SME Real Corporate Lending Rates Gross Fixed Capital Formation: 2014Q1 6. For the euro area as a whole, the external position is assessed to be broadly in line with medium-term fundamentals and desired policies ( Figure 5 ). But this masks the asymmetry of past adjustments and some continued imbalances, viz . an undervaluation in some creditor economies and overvaluation in most debtor economies (see 2014 External Sector Report). In debtor countries, relative price adjustments have been proceeding gradually. While these efforts have

Mário Mesquita

program—still in place—to increase external reserves from $48 billion to $300 billion. This was combined with the gradual retirement of domestic foreign exchange-linked debt. Such a policy entails costs—namely, the difference between interest on government debt and the financial returns on the reserves. But it also yields important and widespread benefits. First, by increasing reserves and becoming a net creditor economy, Brazil was finally able to reach investment-grade status, which should help lower the costs of funding for both the public and private sector

International Monetary Fund. European Dept.
This 2014 Article IV Consultation highlights that the euro area recovery is taking hold. Real output has expanded for four consecutive quarters, and financial market sentiment has improved markedly. Complementary policy actions have supported demand, boosted investor confidence, and eased financial conditions. At the national level, governments have made further progress repairing sovereign and bank balance sheets and implementing structure reforms to restore competitiveness. At the area-wide level, the ECB has taken a wider range of measures to support demand and address fragmentation. Over the medium term, there is a risk of stagnation, which could result from persistently depressed domestic demand owing to deleveraging, insufficient policy action, and stalled structural reforms.
Ms. Hali J Edison and Mr. Francis Vitek

to assume that government consumption is biased toward nontradables, implying a positive association between the real effective exchange rate and the ratio of government consumption to output, expressed as a deviation from a trade-weighted average across trading partners. In medium-run equilibrium, intertemporal budget balance implies that net creditor economies will tend to run trade deficits, while net debtor economies will tend to run trade surpluses. To induce the necessary expenditure switching, economies running trade deficits will tend to have relatively