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Western Hemisphere > Argentina

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Cover IMF Working Papers
Extreme Weather Events, Agricultural Output, and Insurance: Evidence from South America
Juliette Caucheteux
,
Jonas Nauerz
, and
Svetlana Vtyurina
Extreme weather has profoundly affected countries across South America (SA), given the importance of the agricultural sector for the economies. However, these effects have not yet been properly measured. In our study, we construct a unique dataset of high-frequency satellite data on temperature, precipitation, and a Normalized Difference Vegetation Index (NDVI) that proxies the agricultural yield in selected countries. In particular, we then examine the effect of droughts on agricultural yields (soy output) and find that they have a significant negative impact and that there is heterogeneity in the response across countries. While insurance could help protect farmers against severe losses, coverage in the region is low, and barriers remain high. Building on existing literature and using a calibrated structural model, we highlight the benefits of insurance for Total Factor Productivity (TFP) and offer some recommendations for its expansion.
Keywords:
Agriculture; Productivity; NDVI; SPEI; Weather; Drought; Insurance; South America; weather event; soy output; loss from drought; benefits of insurance; NDVI in Brazil; Natural disasters; Agricultural sector; Agricultural production; Insurance companies; Caribbean
Cover IMF Working Papers
Spillovers from Large Emerging Economies: How Dominant Is China?
Hany Abdel-Latif
and
Adina Popescu
This paper investigates the global economic spillovers emanating from G20 emerging markets (G20-EMs), with a particular emphasis on the comparative influence of China. Employing a Bayesian Global Vector Autoregression (GVAR) model, we assess the impacts of both demand-side and supply-side shocks across 63 countries, capturing the nuanced dynamics of global economic interactions. Our findings reveal that China's contribution to global economic spillovers significantly overshadows that of other G20-EMs. Specifically, China's domestic shocks have significantly larger and more pervasive spillover effects on global GDP, inflation and commodity prices compared to shocks from other G20-EMs. In contrast, spillovers from other G20-EMs are more regionally contained with modest global impacts. The study underscores China's outsized role in shaping global economic dynamics and the limited capacity of other G20-EMs to mitigate any potential negative implications from China's economic slowdown in the near term.
Keywords:
Emerging Economies; Growth Spillover; Global transmission; GVAR model; outsized role; China's contribution; IMF working paper No. 25/27; domestic shock; Spillovers; Supply shocks; Emerging and frontier financial markets; Oil prices; Global value chains; Global
Cover IMF Working Papers
Uncertainty Premia, Sovereign Default Risk, and State-Contingent Debt
Mr. Francisco Roch
and
Francisco Roldán
We analyze how concerns for model misspecification on the part of international lenders affect the desirability of issuing state-contingent debt instruments in a standard sovereign default model à la Eaton and Gersovitz (1981). We show that for the commonly used threshold state-contingent bond structure (e.g., the GDP-linked bond issued by Argentina in 2005), the model with robustness generates ambiguity premia in bond spreads that can explain most of what the literature has labeled as novelty premium. While the government would be better off with this bond when facing rational expectations lenders, this additional source of premia leads to welfare losses when facing robust lenders. Finally, we characterize the optimal design of the state-contingent bond and show how it varies with the level of robustness. Our findings rationalize the little use of these instruments in practice and shed light on their optimal design.
Keywords:
Sovereign debt; default; state-contingent debt instruments; robust control; ambiguity premia; probability distortion; robust lender; State-contingent debt; ambiguity aversion; debt structure; threshold bond; Bonds; Debt default; Rational expectations; Asset prices
Cover IMF Working Papers
Dissecting Economic Growth in Uruguay
Ms. Natasha X Che
Uruguay experienced one of its biggest economic booms in history during 2004-2014. Since then, growth has come down significantly. The paper investigates the various causes of the boom and discusses the sustainability of these causes. It then compares Uruguay against high-growth countries that were once at a similar income level, across a broad set of structural indicators, to identify priority reform areas that could improve long-term growth prospect.
Keywords:
economic growth; Uruguay; commodity price boom; sustainable growth; economy of Uruguay; WP; convergence record; income convergence; soybean export; terms of trade; Uruguay economy
Cover Policy Papers
Review Of The Fund’s Income Position For FY 2019 And FY 2020
International Monetary Fund. Finance Dept.
This paper reviews the Fund’s income position for FY 2019 and FY 2020. The paper updates projections provided in April 2018 and proposes decisions for the current year. The paper includes a comprehensive review of the Fund’s income position as required under Rule I-6(4). No change is proposed in the margin for the rate of charge that was established under this rule in April 2018 for the period FY 2019–20.
Keywords:
PP; fy; position; SDR; income position; FY 2018; income discussion; SDR exchange rate; meeting FY; income of the arrangement; sensitivity analysis; intermediation cost; lower-than-expected surcharge income; income of the Endowment Subaccount; SDR billion; Personal income; SDR interest rate; Reserves accumulation; Arrears; Credit; Global
Cover Policy Papers
A Strategy for IMF Engagement on Social Spending: Background Papers
International Monetary Fund. Fiscal Affairs Dept.
,
International Monetary Fund. Strategy, Policy, &amp
, and
Review Department
This Supplement presents an account of the extensive consultations and the results of various analyses that supported the development of “A Strategy for IMF Engagement on Social Spending.”
Keywords:
PP; spending; staff report; staff; IMF staff calculation; spending issue; social spending; IMF program; Health care spending; Education spending; Personal income; Total expenditures; Global; Sub-Saharan Africa; Asia and Pacific; Europe
Cover IMF Working Papers
Assessing the Impact of Structural Reforms Through a Supply-side Framework: The Case of Argentina
Ms. Lusine Lusinyan
The paper uses a supply-side framework based on a production function approach to assess the role of structural reforms in boosting long-term GDP growth in Argentina. The impact of product, labor, trade, and tax reforms on each supply-side channel—capital accumulation, labor utilization, and total factor productivity, proxied with an efficiency estimate—is assessed separately and then combined to derive the total impact on growth. The largest effect of structural reforms, involving regulatory changes that promote competition and facilitate flexible forms of employment, comes through the productivity/efficiency channel. Pro-competition regulation also improves labor utilization, while lower entry barriers and trade tariffs are important for capital accumulation. Structural reforms could have substantial effects on Argentina’s long-term GDP growth; for example, an ambitious reform effort to improve business regulatory environment would add 1–1½ percent to average annual growth of GDP.
Keywords:
WP; product market; Argentina; employment; product market reform; Economic growth; structural reforms; productivity; product market competition; labor market reforms; trade openness; employment rate; technical efficiency; labor market indicator; trade tariff; Total factor productivity; Commodity markets; Capital productivity; Australia and New Zealand
Cover IMF Working Papers
The Distribution of Gains from Globalization
Valentin F. Lang
and
Ms. Marina Mendes Tavares
We study economic globalization as a multidimensional process and investigate its effect on incomes. In a panel of 147 countries during 1970-2014, we apply a new instrumental variable, exploiting globalization’s geographically diffusive character, and find differential gains from globalization both across and within countries: Income gains are substantial for countries at early and medium stages of the globalization process, but the marginal returns diminish as globalization rises, eventually becoming insignificant. Within countries, these gains are concentrated at the top of national income distributions, resulting in rising inequality. We find that domestic policies can mitigate the adverse distributional effects of globalization.
Keywords:
WP; economic globalization; globalization score; national income; Globalization; Growth; Inequality; globalization process; globalization index; income level; globalization's effect; income growth; globalization indicator; effect of globalization; globalization scores; Personal income; Income inequality; Income distribution; Global
Cover IMF Working Papers
How Well Do Economists Forecast Recessions?
Zidong An
,
João Tovar Jalles
, and
Mr. Prakash Loungani
We describe the evolution of forecasts in the run-up to recessions. The GDP forecasts cover 63 countries for the years 1992 to 2014. The main finding is that, while forecasters are generally aware that recession years will be different from other years, they miss the magnitude of the recession by a wide margin until the year is almost over. Forecasts during non-recession years are revised slowly; in recession years, the pace of revision picks up but not sufficiently to avoid large forecast errors. Our second finding is that forecasts of the private sector and the official sector are virtually identical; thus, both are equally good at missing recessions. Strong booms are also missed, providing suggestive evidence for Nordhaus’ (1987) view that behavioral factors—the reluctance to absorb either good or bad news—play a role in the evolution of forecasts.
Keywords:
WP; recession; recession year; bias; efficiency; information rigidity; forecast comparison; forecasted recession; IMF World Economic Outlook; comparing recession; recession episode; Production growth; Rational expectations; Global
Cover IMF Working Papers
How Financial Conditions Matter Differently across Latin America
Mr. Luis Brandao Marques
and
Mrs. Esther Perez Ruiz
This paper develops comparable financial conditions indices (FCIs) for the six large and most financially-integrated Latin American economies (LA6) by following Korobilis (2013) and Koop and Korobilis (2014). The main findings are as follows. First, the estimated FCIs are influenced by a commodity cycle, a global financial cycle, as well as country-specific episodes of financial distress. Second, by early 2017, financial conditions remained favorable in most LA6 economies relative to historical standards. Third, the impact of financial shocks on economic activity widely varies across LA6 and is otherwise found to be stronger in periods of financial stress. Fourth, exposure to regional financial spillovers also differs across LA6.
Keywords:
WP; financial condition; financial conditions indices; FAVAR; Financial conditions indexes; TVP-FAVAR; financial spillovers; purges FCI variable; FCI shock; unpurged FCIs; TVP-VAR FCI; world commodity price; FCI variability; la República Argentina; Credit; Loans; Spillovers; Global