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Business and Economics > Banks and Banking

You are looking at 1 - 10 of 183 items for :

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  • Demand and Supply of Labor: General x
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Cover IMF Staff Country Reports
Czech Republic: 2024 Article IV Consultation-Press Release; and Staff Report
International Monetary Fund. European Dept.
The Czech Republic is evolving from a heavily manufacturing-based, export-oriented hub to a more mature and diversified economy. Non-auto manufacturing, energy, and construction, once important Czech engines of growth, have run out of steam, hampered by decelerating productivity growth, higher energy costs, and sluggish demand. The auto industry has shown resilience so far, but the required transition to electric vehicles and exposure to foreign competition are set to exert significant pressures in the coming years. Higher value-added sectors, including ICT services, are constrained by lack of skilled labor and limited access to capital, undermining their ability to compete in global markets.
Keywords:
currency of the Czech Republic; FSAP update; FSAP participation; services inflation; managing inflation risk; Inflation; Productivity; Labor markets; Central bank policy rate; Global
Cover IMF Staff Country Reports
Republic of Kosovo: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper highlights recent trends in the Kosovo labor market and emigration. Like other Western Balkan countries, Kosovo experienced a sharp decline in population over the previous decade, as emigration increased. Using a structural model of the labor market and migration, the paper examines the potential impact of further EU integration. While lower migration costs hurt the economy, productivity convergence brought on by EU integration has an offsetting impact by increasing wages, lowering unemployment, and increase immigration. Policy simulations show that policymakers have a diverse set of tools—including structural reforms, active labor market policies, business support, and labor participation support—to boost potential and support the labor market. A key result from the policy simulations is that, while the policies target various stages of the labor market, they have similar macroeconomic impacts. In this regard, it is important for policymakers to focus on policies with the largest potential impact relative to the cost of implementation. Additionally, policies should be combined with careful monitoring and updating to ensure that they remain effective and efficient.
Keywords:
gender wage gap; ECB monetary policy PASSTHROUGH; EU integration; women wage; ECB policy rate Passthrough; wage gender gap; Pensions; Pension spending; Labor markets; Digitalization; Public employment; Europe; Global; Western Europe
Cover IMF Working Papers
Monetary Policy and Inflation Scares
Christopher J. Erceg
,
Jesper Lindé
, and
Mathias Trabandt
A salient feature of the post-COVID inflation surge is that economic activity has remained resilient despite unfavorable supply-side developments. We develop a macroeconomic model with nonlinear price and wage Phillips curves, endogenous intrinsic indexation and an unobserved components representation of a cost-push shock that is consistent with these observations. In our model, a persistent large adverse supply shock can lead to a persistent inflation surge while output expands if the central bank follows an inflation forecast-based policy rule and thus abstains from hiking policy rates for some time as it (erroneously) expects inflationary pressures to dissipate quickly. A standard linearized formulation of our model cannot account for these observations under identical assumptions. Our nonlinear framework implies that the standard prescription of "looking through" supply shocks is a good policy for small shocks when inflation is near the central bank's target, but that such a policy may be quite risky when economic activity is strong and large shocks drive inflation well above target. Moreover, our model implies that the economic costs of "going the last mile" – i.e. a tight stance aimed at returning inflation quickly to target – can be substantial.
Keywords:
Inflation Dynamics; New Keynesian Model; Inflation Risk; Monetary Policy; Linearized Model; Nonlinear Model; State-Dependent Pricing; cost-push shock; policy rule; COVID inflation surge; Inflation; Inflation targeting; Supply shocks; Central bank policy rate; Labor markets
Cover IMF Staff Country Reports
Norway: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Norway
International Monetary Fund. European Dept.
The 2024 Article IV Consultation discusses that boosting labor supply, containing public expenditure pressures, and raising productivity will be required for Norway to be able to continue its strong economic performance and preserve its welfare model. A recent White Paper by the Ministry of Finance rightly raises these key issues facing Norway’s economy in the longer term. Real gross domestic product growth slowed in 2023 and is expected to gradually rebound in the near term as private domestic demand strengthens supported by higher real incomes. Tight macroprudential policies should remain in place to mitigate systemic vulnerabilities. The financial system appears resilient and banking system buffers are strong. Long-term fiscal challenges should be more forcefully addressed. Norway has the largest proportion of the population on disability-related benefits among the organisation for economic co-operation and development countries, and reforming costly and distortionary social benefit systems is possibly the most important and politically difficult reform pending. Although Norway boasts one of the highest levels of labor productivity among its peers, it has slowed faster than in other countries. To reverse this trend, conditions should be improved to facilitate sectoral reallocation as well as innovation and technology adoption.
Keywords:
inflation expectation; holdings of SDR; monetary policy stance; inflation pressure; consumer price inflation; Inflation; Labor markets; Central bank policy rate; Global
Cover IMF Staff Country Reports
Singapore: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Singapore
International Monetary Fund. Asia and Pacific Dept
The 2024 Article IV Consultation with Singapore highlights that following a slowdown in 2023, growth is projected to recover gradually to 2.1 percent in 2024. After reaching 6.1 percent in 2022, inflation has steadily declined to 2.7 percent in April 2024. The pace of disinflation has nonetheless been gradual, with signs of persistent price pressures including from a tight labor market. With risks to global growth now broadly balanced, downside risks to growth outlook have diminished relative to last year, but Singapore remains vulnerable to a deepening of geo-economic fragmentation. Inflation risks remain tilted to the upside. The broadly neutral fiscal stance relative to 2023 will complement the tight monetary policy stance in achieving price stability, while targeted support to vulnerable households and firms will provide temporary relief from high costs of living and business. Singapore’s financial sector remains resilient with solid capital and liquidity buffers, though vigilance against pockets of vulnerabilities is warranted, including from potential systemic risks arising from the housing market. In this context, the tight macroprudential policy stance remains appropriate.
Keywords:
article IV consultation discussion; FSAP update; Singapore economy; CPI-All Items inflation; disinflation trend; Labor markets; Inflation; Artificial intelligence; Liquidity requirements; Global; Asia and Pacific
Cover IMF Staff Country Reports
Germany: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Germany
International Monetary Fund. European Dept.
The 2024 Article IV Consultation highlights that the German economy has begun to recover from the energy-price shock. Gradual economic recovery is expected to continue this year. With wage growth now exceeding inflation, private consumption is expected to drive recovery during 2024. High interest rates have boosted bank profitability, but part of this increase is likely temporary. High interest rates have exposed vulnerabilities in banks’ financing of commercial real estate activity. Risks to growth are broadly balanced, with both positive and negative surprises to consumer and investor sentiment possible. Inflation is expected to slowly fall to around 2 percent as lower wholesale energy prices continue to pass through supply chains and to end-users. Fiscal policy is tight, putting the debt-to-gross domestic product ratio on a downward path, although public investment is also relatively low. In order to stabilize labor supply, the authorities should make it easier for women to work full time. This means expanding access to reliable child- and eldercare services and exploring ways to reduce the effective marginal tax rate on second earners in married couples.
Keywords:
article IV consultation discussion; supervisory authority; currency of Germany; energy-price shock; state's ability; Inflation; Labor markets; Public investment spending; Commercial banks; Global
Cover IMF Staff Country Reports
Switzerland: Selected Issues
International Monetary Fund. European Dept.
This Selected Issue Paper studies the relationship between monetary policy, financial conditions, and real activity during the current monetary policy-tightening episode in Switzerland. After a review of various channels through which monetary policy changes affect financial conditions, the paper shows that the transmission of policy rates to market rates has been swift and that the exchange rate is an important channel. The response of real activity to tightening financial conditions has remained broadly in line with past tightening episodes. The interest rate increase has influenced cash flows for households due to higher mortgage interest expenses. Higher interest rates also lead to higher rental cost for non-homeowners. Policy rate adjustments affect the average interest rates of mortgages and thus the mortgage reference interest rate, which is a factor for rent adjustments by Swiss regulation. Monetary tightening has contributed to a slowdown of private credit and house-price growth. Growth of mortgage loans, which represent 85 percent of bank lending, moderated to 2.4 percent in 2023 from 3.5 percent in 2022.
Keywords:
mortgage price; market valuation; real estate price development; monetary policy transmission; B. Beveridge Curve dynamics; Real estate prices; Mortgages; Labor markets; Inflation; Central bank policy rate; Global; Europe
Cover IMF Staff Country Reports
Bosnia and Herzegovina: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper provides an overview of interest rate dynamics in Bosnia and Herzegovina (BiH) in relation to global and euro area trends following the recent cycle of monetary tightening. It analyzes the impact of interest rate dynamics on capital allocation both domestically and externally, with a focus on capital outflows. It concludes that the wider spread between domestic interest rates and euro area short-term rates has been associated with capital outflows of around KM 1.7 billion since the European Central Bank started tightening monetary policy in July 2022, mostly in the form of money market placements in the euro area. It also shows that the compression of local interest rates and the few alternative investment opportunities in a limited market appear to have resulted in households and firms placing most of their funds in short-term deposits, making bank funding less stable than under a longer maturity structure. It notes that this lack of investment opportunities may lead to crowding into the real estate sector, with possible implications for financial stability in the long term.
Keywords:
A. labor market market trend; lending interest rate dynamics; interest rate differential; BiH labor market indicator; wage development; capital allocation; Employment; Labor markets; Wage adjustments; Wages; Global; Europe
Cover IMF Staff Country Reports
Georgia: Selected Issues
International Monetary Fund. Middle East and Central Asia Dept.
This Selected Issues paper explores drivers of inflation and monetary policy in Georgia. Inflation spiked in Georgia following the pandemic and Russia’s war in Ukraine. A positive output gap indicates that high demand is generating inflationary pressure in the economy. Estimates suggest tighter monetary policy in 2021 helped significantly lower peak inflation in 2022. One response to uncertainty is for monetary policy makers to act more cautiously – responding less vigorously with monetary policy to shocks. Given the challenges in managing inflation in a highly dollarized, small open-economy prone to large external shocks, it is important to look at the drivers of inflation in Georgia, the monetary policy stance including the natural rate, the transmission mechanism including the impact of dollarization, and the appropriate monetary policy path going forward. Using a range of approaches, IMF establish that monetary policy in Georgia is effective, that it is close to neutral, and that heightened uncertainty supports a gradual policy normalization.
Keywords:
commodity import price index; Georgia population projection; trend inflation; IMF staff calculation; inflation projection; Inflation; Labor markets; Unemployment; Employment; Central Asia; Middle East
Cover IMF Staff Country Reports
Costa Rica: Selected Issues
International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper focuses on the neutral interest rate in Costa Rica. Estimates of Costa Rica’s real natural rate of interest are between 0 and 3 percent, with a suite of semistructural and univariate methods reaffirming this conclusion at close to 1 percent. This toolkit of multiple differing methods accounts for characteristics of the Costa Rican economy and suggests current monetary policy remains restrictive. Univariate estimates for Costa Rica are between those for the United States and largest regional peers. Structural changes to the Costa Rican economy, particularly in recent years, have important implications for the movement in the neutral rate. A suite of univariate methods also reaffirms this conclusion and suggests current monetary policy remains restrictive. Estimates for Costa Rica are between the United States and largest regional peers. Replicating the univariate approach for the United States and other countries in Latin America suggests Costa Rica has a somewhat lower neutral real interest rate than the largest regional peers, Brazil and Mexico, which currently appear to have neutral rates above 2 percent but above the United States.
Keywords:
labor market characteristic; refugees in Costa rica; estimation uncertainty; neutral real interest rate; card payment fee; Real interest rates; Migration; Labor markets; Social assistance spending; Caribbean