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Business and Economics > Production and Operations Management

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Cover IMF Staff Country Reports
Euro Area Policies: 2024 Annual Consultation-Press Release; Staff Report; and Statement by the Executive Director for Member Countries
International Monetary Fund. European Dept.
The 2024 Article IV Consultation explains that the euro area is recovering gradually, with a modest acceleration of growth projected for 2024, gathering further speed in 2025. Increasing real wages together with some drawdown of household savings are contributing to consumption, while the projected easing of financing conditions is supporting a recovery in investment. A modest pickup in growth is projected for 2024, strengthening further in 2025. This primarily reflects expected stronger consumption on the back of rising real wages and higher investment supported by easing financing conditions. Inflation is projected to return to target in the second half of 2025. The economy is confronting important new challenges, layered on existing ones. Beyond returning inflation to target and ensuring credible fiscal consolidation in high-debt countries, the euro area must urgently focus on enhancing innovation and productivity. Higher growth is essential for creating policy space to tackle the fiscal challenges of aging, the green transition, energy security, and defense.
Keywords:
EU institution; EU industrial; headline inflation; EU climate; two-sided inflation risk; Inflation; Labor markets; Fiscal consolidation; Europe; Global
Cover Technical Notes and Manuals
User Manual for the DIGNAD Toolkit
Mr. Zamid Aligishiev
,
Cian Ruane
, and
Azar Sultanov
This note is a user’s manual for the DIGNAD toolkit, an application aimed at facilitating the use of the DIGNAD model (Debt-Investment-Growth and Natural Disasters) by economists with no to little knowledge of MATLAB and Dynare via a user-friendly Excel-based interface. DIGNAD is a dynamic general equilibrium model of a small open economy developed at the International Monetary Fund. The model can help economists and policymakers with quantitative assessments and policy scenario analysis of the macrofiscal effects of natural disasters and adaptation infrastructure investments in low-income developing countries and emerging markets. DIGNAD is tailored to disaster-prone countries, which typically are small countries or low-income countries that are particularly exposed to large climate shocks—countries where shocks that can disrupt the entire economy are frequent. However, DIGNAD can be relevant also for larger countries that may potentially be exposed to extreme climatic disasters in the future.
Keywords:
natural disasters; adaptation; resilient infrastructure; public investment; public investment efficiency; debt sustainability; DIGNAD toolkit; IMF copyright; DIGNAD model; GNU General Public License; third-party software; Infrastructure; Public investment spending; Total factor productivity; Depreciation; Sub-Saharan Africa
Cover IMF Staff Country Reports
Belgium: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper analyzes Belgium’s fiscal stance using a structural stochastic model. This note uses a theoretical model that explicitly accounts for the trade-offs between the short-term cost of fiscal tightening and the long-term gains associated with higher fiscal buffers. This paper shows that once the current crisis is over, rebuilding fiscal buffers is essential to helping Belgium confront the next shock from a stronger fiscal position. Overall, this illustrates a major motivation for a credible medium-term fiscal consolidation strategy. When a government reduces debt, it increases its capacity to react to shocks later. This entails a short-term cost that is, in the case of Belgium, worth the effort as this capacity to smooth future shocks increases future welfare. In addition, a large capacity to react with fiscal policy reduces the risk of long-lasting effects of a large crisis. Historical data show that in the past, the Belgium government’s reaction to the cycle was limited to a single event. By contrast, if Belgium could firmly anchor public debt on a downward path, future governments would be able to offset downturns while keeping debt sustainability concerns under control.
Keywords:
ISCR; CR; debt; interest rate; debt buffer; government; debt objective; government behavior; debt level; debt change; fiscal policy stance; growth rate assumption; business cycle; Fiscal stance; Fiscal space; Output gap; Global
Cover IMF Staff Country Reports
Belgium: 2018 Article IV Consultation - Press Release; Staff Report
International Monetary Fund. European Dept.
This 2018 Article IV Consultation highlights that the economic recovery in Belgium is gaining momentum, with real GDP growth expected to approach 2 percent in 2018 after an estimated 1.7 percent in 2017. It is driven by strong investment and solid consumption growth, and supported by favorable financial conditions as well as a strengthening recovery throughout Europe. Employment growth has picked up, thanks in part to past reform efforts. The fiscal position has improved, reflecting a mix of cyclical, structural, and one-off factors. The medium-term outlook, however, remains subdued in the absence of further structural reforms to raise potential growth, and subject to both external and domestic risks.
Keywords:
ISCR; CR; Belgium; authority; employment growth; productivity development; productivity growth; labor market measure; Belgium's productivity growth; Productivity; Labor markets; Corporate income tax; Employment; Labor taxes; Global; Europe
Cover IMF Staff Country Reports
Belgium: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper analyzes productivity growth in Belgium. It highlights that Belgium’s subdued productivity growth can be explained by a combination of sectoral employment shifts, barriers to competition, the declining quality of infrastructure, and an aging workforce. The shift of employment toward lower productivity service sectors, common to many advanced economies, has been more pronounced in Belgium and explains half of the productivity gap with neighboring countries. Population aging is another secular factor that has contributed to the productivity slowdown. In addition, barriers to competition in some service sectors have lowered productivity growth and raised rents in these sectors.
Keywords:
ISCR; CR; GDP; public Investment; productivity growth; frontloaded investment boost; productivity slowdown; productivity-enhancing reform option; firms total factor productivity; Productivity; Public investment spending; Labor productivity; Total factor productivity; Infrastructure; Global
Cover IMF Working Papers
The Granular Origins of Macroeconomic Fluctuations in Europe
Mr. Christian H Ebeke
and
Kodjovi M. Eklou
This paper investigates the microeconomic origins of aggregate economic fluctuations in Europe. It examines the relevance of idiosyncratic shocks at the top 100 large firms (the granular shocks) in explaining aggregate macroeconomic fluctuations. The paper also assesses the strength of spillovers from large firms onto SMEs. Using firm-level data covering over 14 million firms and eight european countries (Austria, Belgium, Finland, France, Germany, Italy, Portugal and Spain), we find that: (i) 40 percent of the variance in GDP in the sample can be explained by idiosyncratic shocks at large firms; (ii) positive granular shocks at large firms spill over to domestic SMEs’ output, especially if SMEs’ balance sheets are healthy and if SMEs belong to the services and manufacturing sectors.
Keywords:
WP; productivity growth; Idiosyncratic shocks; Aggregate fluctuations; SMEs; Balance Sheets; large firm; firm size distribution; productivity shock; firms sales; Productivity; Small and medium enterprises; Labor productivity; Spillovers; Services sector; Global; Europe
Cover IMF Working Papers
The Right Kind of Help? Tax Incentives for Staying Small
Ms. Dora Benedek
,
Mr. Pragyan Deb
,
Mr. Borja Gracia
,
Mr. Sergejs Saksonovs
,
Ms. Anna Shabunina
, and
Mrs. Nina T Budina
Some countries support smaller firms through tax incentives in an effort to stimulate job creation and startups, or alleviate specific distortions, such as financial constraints or high regulatory or tax compliance costs. In addition to fiscal costs, tax incentives that discriminate by firm size without specifically targeting R&D investment can create disincentives for firms to invest and grow, negatively affecting firm productivity and growth. This paper analyzes the relationship between size-related corporate income tax incentives and firm productivity and growth, controlling for other policy and firm-level factors, including product market regulation, financial constraints and innovation. Using firm level data from four European economies over 2001–13, we find evidence that size-related tax incentives that do not specifically target R&D investment can weigh on firm productivity and growth. These results suggest that when designing size-based tax incentives, it is important to address their potential disincentive effects, including by making them temporary and targeting young and innovative firms, and R&D investment explicitly.
Keywords:
WP; firm; tax incentive; size-based taxation; productivity; growth; structural reforms; firm TFP; innovation activity; leverage ratio; EMTR computation; debt-to-asset ratio; factory productivity growth; firm level; analysis firm; Tax incentives; Total factor productivity; Corporate income tax; Marginal effective tax rate; Global
Cover IMF Staff Country Reports
France: Selected Issues
International Monetary Fund. European Dept.
The paper identifies France’s structural reforms that would yield the largest competitiveness gains based on macro-empirical evidence, and reviews signs of potential gains from a deregulation of the services sector. It is expected that completing deregulation in the services sector would benefit the entire French economy, by boosting productivity and exports. Econometric results have estimated the impact of reducing the labor taxation and labor market rigidities and of increasing innovation to the average level of other advanced countries.
Keywords:
ISCR; CR; bank; France; IMF WEO; merchandise export; IMF staff calculation; services deregulation; fiscal consolidation; Export performance; Services sector; Productivity; Foreign banks; Exports; Global; Europe
Cover IMF Staff Country Reports
Belgium: Staff Report for the 2011 Article IV Consultation
International Monetary Fund
This 2011 Article IV Consultation reports that the vulnerability of Belgium’s sovereign debt to market pressures makes credible medium-term fiscal consolidation a priority. The 2012 budget includes sizable consolidation measures, and the government is committed to take additional measures as needed with the aim of reaching structural balance by 2015. In light of the weak growth prospects, automatic stabilizers should be allowed to operate freely around the consolidation path. There is a need to strengthen banking supervision and to implement the Basel III and Solvency II regulatory frameworks.
Keywords:
ISCR; CR; ing Belgium; article IV consultation staff report; dividend; KBC; real GDP; financial market; budgetary fund; banking sector; Fiscal consolidation; Employment; Financial sector; Europe; Global
Cover IMF Staff Country Reports
Euro Area Policies: 2011 Article IV Consultation—Lessons from the European Financial Stability Framework Exercise; and Selected Issues Paper
International Monetary Fund
The European Union’s (EU) financial stability framework is being markedly strengthened. This is taking place on the heels of a severe financial crisis owing to weaknesses in the banking system interrelated with sovereign difficulties in the euro area periphery. Important progress has been made in designing an institutional framework to secure microeconomic and macroprudential supervision at the EU level, but this new set-up faces a number of challenges. Developments regarding the financial stability may assist in the continuing evolution of the European financial stability architecture.
Keywords:
ISCR; CR; state; TFP growth; EU country; CDS Premia; EU institution; policy toolkit; Total factor productivity; Systemic risk; Macroprudential policy; Financial sector stability; Europe; Global; Western Europe