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Business and Economics > Production and Operations Management

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

  • Type: Journal Issue x
  • Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy x
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Cover IMF Working Papers
High Inflation in the Baltics: Disentangling Inflation Dynamics and Its Impact on Competitiveness
Alice Fan
,
Bingjie Hu
,
Sadhna Naik
,
Neree C.G.M. Noumon
, and
Keyra Primus
This paper identifies and quantifies the drivers of inflation dynamics in the three Baltic economies and assesses the effectiveness of fiscal policy in fighting inflation. It also analyzes the macroeconomic impact of inflation on competitiveness by focusing on the relationship between wages and productivity in the tradeable sector. The results reveal that inflation in the Baltics is largely driven by global factors, but domestic demand matters as well, suggesting that fiscal policy can play a role in containing inflation. Also, there is robust evidence of a long-run (cointegration) relationship between (real) wages in the tradeable (manufacturing) sector and productivity in the Baltics with short-term deviations self-correcting in Estonia and Lithuania only.
Keywords:
Inflation Dynamics; Competitiveness; Baltics; labor productivity Wage-Productivity nexus; food inflation; inflation in the Baltic; energy inflation; Wage-Productivity growth nexus; Inflation; Wages; Productivity; Labor markets; Fiscal stance; Global
Cover IMF Working Papers
Measuring the Stances of Monetary and Fiscal Policy
Mr. Francis Vitek
We derive measures of the stances of monetary and fiscal policy within the framework of an empirically plausible extension of the basic New Keynesian model, and jointly estimate them for the United States using a closed form multivariate linear filter. Our theoretical analysis reveals that the neutral stance of monetary policy — as measured by the real natural rate of interest — depends on the stance of fiscal policy, which in turn depends on the composition and expected timing of structural changes in the fiscal instruments. Our empirical application finds that accounting for fiscal policy significantly alters the estimated stance of monetary policy, and that the so-called fiscal impulse is a poor proxy for the stance of fiscal policy.
Keywords:
stance of monetary policy; stance of fiscal policy; new keynesian model; multivariate linear filter; fiscal policy stance; stances of monetary and fiscal policy; monetary policy stance; filter estimation result; Fiscal stance; Monetary stance; Real interest rates; Output gap; Global
Cover Staff Discussion Notes
A Central Fiscal Stabilization Capacity for the Euro Area
Mr. Nathaniel G Arnold
,
Ms. Bergljot B Barkbu
,
H. Elif Ture
,
Hou Wang
, and
Jiaxiong Yao
This note outlines a concrete proposal for a euro area central fiscal capacity (CFC) that could help smooth both country-specific and common shocks. Specifically, it proposes a macroeconomic stabilization fund financed by annual contributions from countries that are used to build up assets in good times and make transfers to countries in bad times, as well as a borrowing capacity in case an exceptionally large shock exhausts the fund’s assets. To address moral hazard risks, transfers from the CFC—beyond a country’s own net contributions—would be conditional on compliance with the EU fiscal rules. The note also discusses several features aimed at avoiding permanent transfers between countries and making the CFC function as automatically as possible—to limit the scope for disputes over its operation—both of which are important points to make it politically acceptable.
Keywords:
SDN; moving average; Euro Area; Fiscal Integration; Macroeconomic Stabilization; CFC transfer; debt group; asset target; CFC assets; shock scenario; trend unemployment rate; aggregate CFC contribution target; CFC asset; deviation trigger; stabilization power; Unemployment rate; Fiscal rules; Return on investment; Output gap; Fiscal stabilization; Global; CFC proposal; inflation impact; usage premium; calibrating contribution; Stress testing
Cover IMF Working Papers
Fiscal Stabilization and Growth: Evidence from Industry-level Data for Advanced and Developing Economies
Sangyup Choi
,
Davide Furceri
, and
João Tovar Jalles
Medium-term growth can be enhanced by fiscal stabilization. However, to date, no systematic effort has been made to study the specific channels through which fiscal stabilization affects growth. This paper examines the effect of fiscal stabilization on industrial growth and how this effect depends on different technological characteristics. It does so by applying a difference-in-difference approach to an unbalanced panel of 22 manufacturing industries for 55 advanced and developing economies over the period 1970-2014. The results suggest that fiscal stabilization fosters growth in industries with: i) higher external financial dependence and lower asset fixity; ii) higher degree of labor intensity; iii) higher investment lumpiness and relationship-specific input usage. These effects tend to be larger during economic recessions. The results are robust to different measures of fiscal stabilization and the inclusion of various interactions between a broad set of macroeconomic variables and production technologies.
Keywords:
WP; dependent variable; external finance; aggregate demand; capital depreciation; developing economy; interaction effect; industry-level data; fiscal stabilization; time varying coefficients; growth; technologies of production; asset fixity; baseline result; option-value effect; effect of fiscal stabilization; differential effect; Depreciation; Productivity; Global
Cover Departmental Papers
Cyclical Behavior of Fiscal Policy among Sub-Saharan African Countries
Mr. Tetsuya Konuki
and
Mr. Mauricio Villafuerte
Excessively procyclical fiscal policy can be harmful. This paper investigates to what extent the fiscal policies of sub-Saharan African countries were procyclical in recent years and the reasons for the degree of fiscal procyclicality among these countries. It finds that a tendency for procyclical fiscal policy was particularly pronounced among oil exporters and after the global financial crisis. It also finds a statistically significant causal link running from deeper financial markets and higher reserves coverage to lower fiscal policy procyclicality. Fiscal rules supported by strong political commitment and institutions seem to be key to facilitating progress for deeper financial markets and stronger reserves coverage.
Keywords:
DPPP; DP; country; price; GDP; fiscal policy stance; resource fund; fiscal policy principle; Nonresource output gaps; African country; fiscal policy Procyclicality; countercyclical fiscal policies; fiscal policy in the region; resource revenue; way fiscal policy; fiscal policy management; fiscal policy anchor; Fiscal stance; Procyclical fiscal policy; Output gap; Procyclicality; Sub-Saharan Africa; Global
Cover Fiscal Monitor, April 2015
Fiscal Monitor, April 2015
Now Is the Time: Fiscal Policies for Sustainable Growth
International Monetary Fund. Fiscal Affairs Dept.

Abstract

Fiscal risks remain significant in both advanced and emerging market and developing economies. Fiscal policy continues to play an essential role in building confidence and, where appropriate, sustaining aggregate demand. According to this issue of the Fiscal Monitor, strengthening fiscal frameworks—particularly to manage public finance risks and ensure debt sustainability—must be part of the fiscal policy response. Countries should seize the moment created by lower oil prices to start the process of energy taxation and energy subsidy reform. Finally, fiscal policy can contribute substantially to macroeconomic stability, through the workings of automatic stabilizers. By doing so, fiscal policy can also unlock significant growth dividends.

Keywords:
FM; def; country abbreviation; statistics manual; productivity-enhancing investment; commodity revenue; government debt markets; Fiscal stabilization; Automatic stabilizers; Fiscal stance; Global; Africa; Middle East; Asia and Pacific; North Africa; advanced economy; imputed interest; effectiveness coefficient; automatic stabilizers play; fiscal policy policy change; Oil prices; Central America; Caribbean
Cover Technical Notes and Manuals
Fiscal Multipliers: Size, Determinants, and Use in Macroeconomic Projections
Nicoletta Batini
,
Luc Eyraud
, and
Lorenzo Forni
Fiscal multipliers are important tools for macroeconomic projections and policy design. In many countries, little is known about the size of multipliers, as data availability limits the scope for empirical research. This note provides general guidance on the definition, measurement, and use of fiscal multipliers. It reviews the literature related to their size, persistence and determinants. For countries where no reliable estimate is available, the note proposes a simple method to come up with reasonable values. Finally, the note presents options to incorporate multipliers in macroeconomic forecasts.
Keywords:
TNM; spending; government spending; revenue management; spending shock; stance factor; Fiscal policy; fiscal multipliers; fiscal multiplier; multiplier estimate; multipliers in EME; shock effect; Fiscal consolidation; Output gap; Global
Cover IMF Working Papers
Fiscal Policy in Latin America over the Cycle
Mr. Alexander D Klemm
This paper provides an analysis of the cyclical stance of fiscal policy in Latin America. Its contributions include developing a new measure of the cyclicality of fiscal policy, careful analysis of the statistical significance of results, and accounting for the effect of commodity prices on fiscal balances. The new cyclicality measure takes into account both discretionary policy action and automatic stabilizers, but excludes additional revenues that are due to applying an unchanged average tax rate to nominal GDP in excess of potential. The paper finds that fiscal policy has been procyclical on average in Latin America, but counter or acyclical in advanced economies. Country-specific results are mostly insignificant, except in a few cases where policy is clearly procyclical. For some countries (Brazil, Chile, Colombia, El Salvador, and Mexico), there is evidence of a recent move toward more countercyclical policies.
Keywords:
WP; price index; spending; commodity price; Fiscal policy; business cycle; Latin America; commodity export; countercyclical fiscal policy; commodity price data; revenue reform; commodity export price; commodity revenue; price data; significance of the commodity price index; data from the UN Comtrade database; price data from the UN Comtrade database; gross commodity export; automatic stabilizers work; Fiscal stance; Output gap; Commodity prices; Automatic stabilizers; Sub-Saharan Africa
Cover IMF Working Papers
Incorporating Financial Sector Risk Into Monetary Policy Models: Application to Chile
Mr. Leonardo Luna
,
Mr. Dale F Gray
,
Jorge Restrepo
, and
Carlos Garcia
This paper builds a model of financial sector vulnerability and integrates it into a macroeconomic framework, typically used for monetary policy analysis. The main question to be answered with the integrated model is whether or not the central bank should include explicitly the financial stability indicator in its monetary policy (interest rate) reaction function. It is found in general, that including distance-to-default (dtd) of the banking system in the central bank reaction function reduces both inflation and output volatility. Moreover, the results are robust to different model calibrations: whenever exchange-rate pass-through is higher; financial vulnerability has a larger impact on the exchange rate, as well as on GDP (or the reverse, there is more effect of GDP on bank's equity - i.e., what we call endogeneity), it is more efficient to include dtd in the reaction function.
Keywords:
WP; interest rate; monetary policy; Financial vulnerability; central banking; asset volatility; bank assets; risk indicator; reaction function; monetary policy interest rate; Inflation; Asset valuation; Output gap; Financial sector risk; Stocks; Asia and Pacific
Cover IMF Working Papers
Estimates of the Output Gap in Armenia with Applications to Monetary and Fiscal Policy
International Monetary Fund
This paper employs several econometric techniques to estimate the Armenian output gap. The findings indicate that the output gap is significantly positive in 2007 and 2008 and decreased dramatically in 2009. The paper uses these results to estimate a New Keynesian Phillips curve for Armenia, suggesting a significant role of the output gap and inflation expectations in determining current inflation. Finally, the underlying fiscal stance over the period 2000-09 is assessed by estimating the cyclically-adjusted fiscal balance. Most of Armenia’s fiscal deficit is found to be structural. Fiscal policy, while providing counter-cyclical support in 2009, has been largely pro-cyclical in the past.
Keywords:
WP; open economy; Armenia; potential output; Bayesian Analysis; New Keynesian Phillips Curve; Cyclically-Adjusted Balance; Fiscal Stance; Fiscal Impulse; Automatic Stabilizers; output gap estimate; inflation expectation; estimation result; equilibrium unemployment; output gap development; Output gap; Inflation; Global