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Europe > Ireland

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

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Cover IMF Working Papers
Monetary Policy and the Relative Price of Durable Goods
Mr. Alessandro Cantelmo
and
Mr. Giovanni Melina
In a SVAR model of the US, the response of the relative price of durables to a monetary contraction is either flat or mildly positive. It significantly falls only if narrowly defined as the ratio between new-house and nondurables prices. These findings are rationalized via the estimation of a two-sector New-Keynesian (NK) models. Durables prices are estimated to be as sticky as nondurables, leading to a flat relative price response to a monetary shock. Conversely, house prices are estimated to be almost flexible. Such results survive several robustness checks and a three-sector extension of the NK model. These findings have implications for building two-sector NK models with durable and nondurable goods, and for the conduct of monetary policy.
Keywords:
WP; durable goods; monetary policy; durables; nondurables; price stickiness; relative price; nondurable goods; markup shock; price indexation; nondurables price; monetary policy shock; Sticky prices; Housing; Housing prices; Consumption; Inflation
Cover IMF Working Papers
Effectiveness and Channels of Macroprudential Instruments: Lessons from the Euro Area
Mr. Thierry Tressel
and
Ms. Yuanyan S Zhang
The crisis has highlighted the importance of setting up macro-prudential oversight frameworks, having effective macro-prudential instruments in place to be called upon to mitigate growing financial imbalances as needed. We develop a new approach using the euro area Bank Lending Survey to assess the effectiveness of macro-prudential policies in containing credit growth and house price appreciation in mortgage markets. We find instruments targeting the cost of bank capital most effective in slowing down mortgage credit growth, and that the impact is transmitted mainly through price margins, the same banking channel as monetary policy. Limits on loan-to-value ratios are also effective, especially when monetary policy is excessively loose.
Keywords:
WP; lending standard; mortgage loan; cost of funds; house price appreciation; macroprudential policy; LTV ratios; capital requirement; mortage; bank lending; credit growth; lending survey; liquidity position; Mortgages; Housing prices; Credit; Estimation techniques; Financial statements; Global
Cover IMF Working Papers
Boosting Competitiveness to Grow Out of Debt: Can Ireland Find a Way Back to Its Future?
Ms. Mwanza Nkusu
This paper investigates the prospects for Ireland to grow its economy against the backdrop of high indebtedness. The paper uses vector autoregressive analysis to explore the interlinkages among competitiveness, exports, economic growth, and fiscal performance. The emerging conclusion is that Ireland, which has regained cost competitiveness following the crisis-driven fall in domestic prices, is poised to return to its path of strong exports and economic growth and lower imbalances provided that it maintains competitiveness, though a pickup in external demand is critical. Three main findings underpin this conclusion. First, external demand is an important driver of exports and also the single most important determinant of Ireland’s GDP and government revenue. Second, declines in price competitiveness, featured by real effective exchange rate (REER) appreciations, restrain exports and economic growth. Third, exports boost output, which in turn enhances fiscal performance.
Keywords:
WP; export; Ireland; GDP; FDI; revenue; Simultaneous equation models; economic growth; financial crises; public debt; economywide country studies; trading partners; FDI flow; market share; high-tech export sector; triangle exports growth; FDI dynamics; inward FDI; exports of G&S; Euro area debt crisis; Ireland's export; REER appreciation; housing market bubble; Exports; Real effective exchange rates; Export performance; Foreign direct investment; Vector autoregression; Global
Cover IMF Working Papers
Short-Term Wholesale Funding and Systemic Risk: A Global Covar Approach
International Monetary Fund
In this paper we identify some of the main factors behind systemic risk in a set of international large-scale complex banks using the novel CoVaR approach. We find that short-term wholesale funding is a key determinant in triggering systemic risk episodes. In contrast, we find no evidence that a larger size increases systemic risk within the class of large global banks. We also show that the sensitivity of system-wide risk to an individual bank is asymmetric across episodes of positive and negative asset returns. Since short-term wholesale funding emerges as the most relevant systemic factor, our results support the Basel Committee's proposal to introduce a net stable funding ratio, penalizing excessive exposure to liquidity risk.
Keywords:
WP; balance sheet; financial system; Systemic Risk; Wholesale Funding; Liquidity Risk; Macroprudential Regulation; ranking bank; balance-sheet data; bank characteristic; yield spread; bank overdraft; BAA corporate bond yield; composite index; bank recapitalization date; bank Dummiesj; Financial statements; Vector autoregression; Commercial banks; Global; Africa; Europe
Cover IMF Working Papers
Cyclical Behavior of Inventories and Growth Projections Recent Evidence From Europe and the United States
Mr. Willy A Hoffmaister
and
Mr. Jens R Clausen
In the United States and a few European countries, inventory behavior is mainly the outcome of demand shocks: a standard buffer-stock model best characterizes these economies. But most European countries are described by a modified buffer-stock model where supply shocks dominate. In contrast to the United States, inventories boost growth with a one-year lag in Europe. Moreover, inventories provide limited information to improve growth forecasts particularly when a modified buffer-stock model characterizes inventory behavior.
Keywords:
WP; stock; inventory behavior; buffer-stock model; Inventories; business cycle; forecasting; inventory investment; foresight inventory model; stylized fact; inventory change; inventories stem; Production growth; Business cycles; Employment protection; Vector autoregression; Supply shocks; Europe
Cover IMF Working Papers
Spillovers of Domestic Shocks: Will They Counteract the “Great Moderation”?
Mr. Ashoka Mody
and
Ms. Alina Carare
Even prior to the extreme volatility just observed, output growth volatility-following protracted decline-was flattening or mildly rising in some countries. More widespread was an increasing tendency from the mid-1990s for shocks in one country to transmit rapidly to other countries, creating the potential for heightened global volatility. The higher sensitivity to foreign shocks, in turn, appears related to stepped-up vertical specialization associated with the integration of emerging markets in international trade. Increased international spillovers call for stronger ex post coordination mechanisms when shocks are large but the best ex ante prevention strategy probably is sensible national policies.
Keywords:
WP; global economy; GDP ratio; trade share
Cover IMF Working Papers
Spillovers to Ireland
Mr. Daniel S Kanda
This paper discusses Ireland's trade and financial linkages with key partner countries, and uses a vector autoregression to examine the impact of shocks to partner country GDP and shocks to Irish competitiveness on Irish GDP. Two main findings are that shocks to U.S. GDP have a larger impact on Irish GDP than shocks to the euro area or the U.K. Also, the share of the variance of Irish GDP explained by shocks to competitiveness rises with the forecast horizon, suggesting that past erosion of competitiveness may yet have a more substantial impact on economic activity.
Keywords:
WP; GDP; real GDP; Ireland; area GDP
Cover IMF Working Papers
Endogenous Money Supply and Money Demand
Woon Gyu Choi
and
Seonghwan Oh
This paper explores the behavior of money demand by explicitly accounting for the money supply endogeneity arising from endogenous monetary policy and financial innovations. Our theoretical analysis indicates that money supply factors matter in the money demand function when the money supply partially responds to money demand. Our empirical results with U.S. data provide strong evidence for the relevance of the policy stance to the demand for MI under a regime in which monetary policy is substantially endogenous. Specifically, we find that tighter monetary policy has substantial positive impacts on money demand under the recent Federal funds rate targeting.
Keywords:
WP; funds rate; monetary policy; money stock; financial service; Money Demand; Money Supply Endogeneity; Financial Innovation; Monetary Policy Stance; money holding; first-half-period money demand; money demand function; money supply factor; Demand for money; Monetary base; Monetary tightening; Vector autoregression
Cover IMF Working Papers
Regional Trade Agreements Versus Broad Liberalization: Which Path Leads to Faster Growth? Time-Series Evidence
Mr. Athanasios Vamvakidis
Should a closed economy open its trade to all countries or limit itself to participation in regional trade agreements (RTAs)? Based on time-series evidence for a data set for 1950-92, this paper estimates and compares the growth performance of countries that liberalized broadly and those that joined an RTA. The comparisons show that economies grew faster after broad liberalization, both in the short and long run, but slower after participation in an RTA. Economies also had higher investment shares after broad liberalization, but lower ones after joining an RTA. The policy implications support broad liberalization.
Keywords:
WP; trade share; RTA dummy; Years before; open economy; Economic Growth of Open Economies; RTAs lead; investment share; liberalization case; Trade policy; Trade liberalization; Population growth; Trade barriers; Logit models; Global
Cover IMF Working Papers
Is Regionalism Simply a Diversion? Evidence from the Evolution of the EC and EFTA
Mr. Tamim Bayoumi
and
Mr. Barry J. Eichengreen
This paper considers the impact on trade of preferential arrangements in Europe since the 1950s. Using a first difference version of the gravity model, we find that the EEC and EFTA altered the pattern of international trade. We also find evidence of trade diversion in several cases, notably that of the EEC in the 1960s.
Keywords:
WP; EEC trade; trade creation; EEC membership; free trade; EFTA country; constant term; third-country effect; Customs unions; Gravity models; Purchasing power parity; Plurilateral trade; Trade agreements; Europe; Global; Asia and Pacific