Narrow Your Choices

Refine By Countries

Refine By Series

Refine By Language

Refine By Date

—

Refine By IMF Taxonomy

Refine By JEL Taxonomy

Refine by LOC Taxonomy

Refine By THEMA Taxonomy

  • Print
  • Save

Business and Economics > Public Finance

You are looking at 1 - 10 of 23 items for :

  • Type: Journal Issue x
  • Macroeconomic Aspects of International Trade and Finance: General x
Clear All Modify Search
Cover IMF Working Papers
Echoes Across Borders: Macroeconomic Spillover Effects of Conflict in Sub-Saharan Africa
Hany Abdel-Latif
,
Antonio David
,
Rasmané Ouedraogo
, and
Markus Specht
This paper quantifies the macroeconomic spillover effects of conflict within sub-Saharan African (SSA) countries using a new Conflict Spillover Index (CSI), which accounts for conflict intensity and distance from conflict-affected countries. Our findings reveal an escalation in conflict spillovers across SSA since 2011, marked by considerable cross-country heterogeneity. Impulse responses show that conflict spillovers shocks significantly and persistently hinder economic growth, while concurrently elevating inflation in the “home” country. Conflict spillover shocks are also associated with increases in (current) government spending and government debt. Furthermore, the international trade transmission channel of spillovers operates mostly through increased imports, while negative effects on FDI winddown over time. Moreover, state-dependent impulse responses underscore the importance of good governance, fiscal space, and foreign aid in attenuating the adverse macroeconomic spillover effects of conflict. The detrimental impact of conflict on output is more severe in environments with weaker governance and limited fiscal space. Government expenditures tend to rise following a spillover shock in contexts of high governmental effectiveness, possibly reflecting the use of policy buffers to respond to shocks. In that context, the papers shed light on important factors to promote resilience in SSA economies.
Keywords:
Macroeconomic Spillovers; Conflict; Sub-Saharan Africa; conflict spillover shock; impulse response; macroeconomic spillover effect; effects of conflict; spillover effect; Spillovers; Fiscal space; Total expenditures; Global
Cover IMF Working Papers
Shared Problem, Shared Solution: Benefits from Fiscal-Monetary Interactions in the Euro Area
Robert C. M. Beyer
,
Rupa Duttagupta
,
Alexandra Fotiou
,
Ms. Keiko Honjo
,
Mr. Mark A Horton
,
Zoltan Jakab
,
Vina Nguyen
,
Mr. Rafael A Portillo
,
Jesper Lindé
,
Mrs. Nujin Suphaphiphat
, and
Mr. Li Zeng
This paper employs two established macroeconomic models to show that fiscal policy in the euro area can help monetary policy in reducing inflation. Specifically, a fiscal consolidation of 1 percent of GDP for two years and 0.5 percent in the third year across the euro area would ease the policy interest rate by 30-50 basis points relative to the baseline scenario, while lowering inflation. It would also put the public debt-to-GDP ratio on a downward path, with the output costs reversing after the second year. Additionally, a stronger fiscal contribution to the policy mix could mitigate financial fragmentation risks. In the current context of elevated inflation in all euro area economies, the findings suggest two key takeaways: first, synchronized fiscal and monetary policies offer gains even when monetary policy is unconstrained and, second, sharing the burden of lowering inflation through fiscal consolidation among euro area members is beneficial for union-wide inflation reduction, improving debt sustainability and inducing a lower policy rate path.
Keywords:
Policy mix; monetary policy; fiscal policy; policy coordination; synchronized fiscal policy; inflation reduction; monetary policy interaction; fiscal policy in the euro area; Annex I. Policy synchronization; Fiscal consolidation; Inflation; Fiscal stance; Global
Cover IMF Working Papers
Debt Mutualization in the Euro Area: A Quantitative Exploration
Mr. Sakai Ando
,
Mr. Giovanni Dell'Ariccia
,
Pierre-Olivier Gourinchas
,
Guido Lorenzoni
,
Adrian Peralta
, and
Mr. Francisco Roch
This paper explores the feasibility of an idea proposed first by the German Council of Economic Experts in 2011 and revisited by Italian and French authorities in 2021: the one-off mutualization of some European legacy debt through the creation of a European Debt Management Agency (EDMA). The paper does not argue in favor or against these proposals or make a proposal of its own. Rather it outlines a conceptual framework that can be used to quantify the contours of mutualization proposals and draws lessons from the debt assumption in the United States in 1790. The framework suggests that by capitalizing the convenience yield on European-wide safe assets, the EDMA could issue up to 15 percent of euro area GDP, helping to put national debts on a sounder trajectory. The analysis suggests that, without mutualization, some euro area countries are likely to experience decreasing debt-to-GDP ratios over the forecast period. This is not the case for Belgium, Finland, France, Italy, and Spain, where further fiscal consolidation would be needed. For these countries, we consider the effects of a debt mutualization equivalent to 26 percent of their GDP. For Italy, this operation alone is enough to ensure a decreasing debt-to-GDP path. For the others, the news is more mixed: while the additional fiscal consolidation is smaller, 1.3 to 2.3 percent of GDP are still required to reduce debt with 95 percent probability.
Keywords:
Sovereign Debt; Debt Mutualization; Debt Assumption; Convenience Yield; Safe Assets.; debt mutualization equivalent; mutualization proposal; EDMA debt; Debt reduction; Fiscal consolidation; Debt sustainability analysis; Fiscal stance; Europe
Cover IMF Working Papers
The Return of Expansionary Austerity: Firms’ Investment Response to Fiscal Adjustments in Emerging Markets
Mr. Nicolas E Magud
and
Samuel Pienknagura
We study the response of corporate investment in Emerging Markets to unexpected fiscal shocks. We find that, although firm-level investment decreases on impact following unexpected public expenditure adjustments (classical Keynesian multiplier effect), it quickly rises above pre-shock levels. The rebound in investment is facilitated by fiscal space, flexible exchange rates, and more predictable fiscal policy. We also show that the composition of fiscal adjustments matters for investment’s response—compared to public investment adjustments, reductions in public consumption lead to larger private investment contractions on impact, but drive private investment to above pre-shock levels. Finally, we exploit firm-level heterogeneity in several dimensions, including to show that corporate investment’s recovery is stronger in firms in the tradable sector and in larger and less indebted firms, and to show that the long-run benefits to economic activity of the fiscal shock appear to outweigh its short-run costs.
Keywords:
Fiscal shocks; adjustment; corporate investment; emerging markets; firms' investment response; rebound in investment; government expenditure Forecast Error; firm level; sales growth; Fiscal consolidation; Corporate investment; Capital adequacy requirements; Middle East and Central Asia; Europe; Africa; Global; Asia and Pacific
Cover IMF Working Papers
Successful Transitions from Public to Private-Sector Led Growth: Lessons for Benin
Aissatou Diallo
Many Sub-Saharan African (SSA) countries, like Benin, have scaled up public investment during the last decade. Such a strategy contributed to the improvement of infrastructure, but also to a build-up of debt vulnerabilities. Looking forward, the planned fiscal consolidation will result in some restraint of public spending, and, in particular, public investment. In this context, maintaining or even raising the region’s economic growth will require an offset by the private sector. The analysis draws lessons from countries that have successfully transitioned from public investment to private investment-led growth using a global sample starting in the mid-1980s. These lessons highlight policies that have been crucial in fostering a rebound of private investment in the wake of a contraction of public investment. The analytical framework proposed by Hausman, Rodrik and Velasco (2005) is used to identify and classify such policies. Finally, the paper analyses how the identified policies could help Benin achieving a smooth transition from public to private sector-led growth.
Keywords:
Private and public investment; growth; transition; fiscal consolidation; lessons; expansionary fiscal consolidation literature; investment-led growth; identified policy; scaling-up program; investment scaling-up; Private investment; Public investment spending; Fiscal consolidation; Infrastructure; Global; Sub-Saharan Africa
Cover IMF Working Papers
Sectoral Shocks and Spillovers: An Application to COVID-19
Miss Sonali Das
,
Giacomo Magistretti
,
Evgenia Pugacheva
, and
Mr. Philippe Wingender
This paper examines the role of sectoral spillovers in propagating sectoral shocks in the broader economy, both in the past and during the COVID-19 pandemic. In particular, we study how shocks that occur within a sector itself and spillovers from shocks to other sectors affect sectoral activity, for a large sample of countries from 1995 to 2014. We find that both supply and demand shocks—measured as changes in, respectively, productivity and government purchases at the sector level—have large spillover effects on sector-level gross value added and on a sector’s share of the economy. We then use these historical estimates, together with the network structure of global production, to quantify the spillovers from the economic shock associated with the pandemic. We find spillover effects to be sizeable, making up a significant fraction of the overall decline in activity in 2020.Our results have implications for the design of policies with a sectoral dimension.
Keywords:
spillover effect; appendix C. Construction; supply and demand demand shock; spillovers from shock; sector recovery; Spillovers; COVID-19; Supply shocks; Total factor productivity; Global
Cover IMF Working Papers
China’s Impacts on SSA through the Lens of Growth and Exports
Mr. Yibin Mu
,
Chu Wang
, and
Dong Frank Wu
The analysis of China’s impacts on the 44 SSA countries reveals that: (i) after joining the WTO in 2001, China has started to impact significantly on SSA growth: one-percent increase in China’s GDP per capita leads to 0.02 percent increase on the SSA’s GDP per capita; (ii) oil and investment-goods exporters benefit more from China’s growth; (iii) compared to China’s consumption, its investment growth acts as a more important channel in influencing SSA; (iv) exports to China, highly linked to China’s growth, is an important indicator for SSA’s exports. Our results call for SSA countries to be well prepared for China’s rebalancing given its growing economic influence and to proactively search a sustainable way to continuously enhance productivity.
Keywords:
WP; SSA country; exports to China; China's growth; SSA export; Exports; Growth; Development; China Economy; SSA; fixed assets investment; investment growth; China's impact; spillover effect; consumption growth; peer SSA's GDP; consumption trend; SSA resource-intensive exporter; growth in China; Public expenditure review; Consumption; Inflation; Export performance; Global
Cover Staff Discussion Notes
Global Implications of Lower Oil Prices
Mr. Aasim M. Husain
,
Mr. Rabah Arezki
,
Mr. Peter Breuer
,
Mr. V. Haksar
,
Mr. Thomas Helbling
,
Mr. Paulo A Medas
, and
Mr. Martin Sommer
The sharp drop in oil prices is one of the most important global economic developments over the past year. The SDN finds that (i) supply factors have played a somewhat larger role than demand factors in driving the oil price drop, (ii) a substantial part of the price decline is expected to persist into the medium term, although there is large uncertainty, (iii) lower oil prices will support global growth, (iv) the sharp oil price drop could still trigger financial strains, and (v) policy responses should depend on the terms-of-trade impact, fiscal and external vulnerabilities, and domestic cyclical position.
Keywords:
SDN; price decline; windfall gain; oil exporter; price drop; price pass-through; Oil price; fuel taxes and subsidies; fiscal vulnerabilities; external vulnerabilities; exchange rate regime; economic activity; monetary policy; Oil prices; Oil; Fuel prices; Energy prices; Energy subsidies; Global
Cover IMF Working Papers
Pressing the Indian Growth Accelerator: Policy Imperatives
Rakesh Mohan
and
Muneesh Kapur
India’s real GDP growth slipped substantially after the North Atlantic financial crisis. Return to a sustained high growth trajectory is feasible but it will need much more focused attention to the revival of manufacturing and to the acceleration of investment in transport and infrastructure. The immediate priority is to achieve the kind of fiscal quality and low inflation levels exhibited during 2003-08, with focused attention to increasing efficiency and compliance in tax revenue collection. Higher tax revenues can facilitate increases in public investment, which then crowd in private investment. The task ahead will be more difficult in view of the protracted slowdown in global growth and trade.
Keywords:
WP; monetary policy; personal income; exchange rate; economic growth; foreign exchange; Fiscal Policy; Growth; Infratsructure; India; Savings; Taxation; Capital Account; infrastructure investment; GDP ratio; investment rate; base GDP series; per capita income; private sector investment; Infrastructure; Transportation; Public sector; Public investment and public-private partnerships (PPP); Manufacturing; Global; East Asia
Cover IMF Working Papers
India’s Recent Macroeconomic Performance: An Assessment and Way Forward
Muneesh Kapur
and
Rakesh Mohan
The macroeconomic policy response in India after the North Atlantic financial crisis (NAFC) was rapid. The overshooting of the stimulus and its gradual withdrawal sowed seeds for inflationary and BoP pressures and growth slowdown, then exacerbated by domestic policy bottlenecks and volatility in international financial markets during mid-2013. Appropriate domestic oil prices and fiscal consolidation will contribute to the recovery of private sector investment. Fiscal consolidation would also facilitate a reduction in inflation, which would moderate gold imports and favorably impact real exchange rate and current account deficit.
Keywords:
WP; exchange rate; current account; central bank; inflation expectation; WPI inflation; Capital Flows; Exports; Fiscal Policy; Gold; Growth; India; Monetary Policy; Oil Demand; Savings; wholesale price index; consumer inflation; balance of payments; short-term debt; headline WPI inflation; private sector investment; Inflation; Imports; Deposit rates; Government debt management; Global