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Europe > Ireland

You are looking at 1 - 7 of 7 items for :

  • Type: Journal Issue x
  • International Policy Coordination and Transmission x
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Cover IMF Working Papers
Contagion as a Dealmaker? The Effect of Financial Spillovers on Regional Lending Programs
Alexandra Fotiou
,
Alica Ida Bonk
, and
Georgios Manalis
The recent European sovereign debt crisis highlighted the critical role of regional lending arrangements. For the first time, European mechanisms were called to design financing programmes for member countries in trouble. This paper analyses how the risk of contagion, an essential characteristic of interlinked economies, shapes borrowing conditions. We focus on the role of spillovers as a channel of bargaining power that a country might have when asking for financial support from regional lending institutions. We build and present a new database that records both the dates on which official meetings took place, relevant statements were released and the timing of the announcements regarding loan disbursements. This database allows us to assess the defining role that announcements of future actions have in mitigating spillover costs. In addition, we study the design of lending arrangements within a recursive contract between a lender and a sovereign country. When accounting for spillover costs, arising from the borrower to the creditor, we find that it is in the lender's best interest to back-load consumption by giving more weight to future transfers in order to reduce contagion cost. Subsequently, we test and validate our theoretical predictions by assessing the effect of spillovers on loan disbursements to programme-countries and by juxtaposing lending conditions imposed by the IMF and the European mechanisms.
Keywords:
Regional lending mechanisms; currency-union; spillovers; spillover cost; loan disbursement; lending condition; loan announcement; lending program; Loans; Consumption; Credit default swap; ESM disbursement; lending terms and conditions; lending agreement; IMF statement
Cover IMF Working Papers
Has Globalization Really Increased Business Cycle Synchronization?
Eric Monnet
and
Mr. Damien Puy
This paper assesses the strength of business cycle synchronization between 1950 and 2014 in a sample of 21 countries using a new quarterly dataset based on IMF archival data. Contrary to the common wisdom, we find that the globalization period is not associated with more output synchronization at the global level. The world business cycle was as strong during Bretton Woods (1950-1971) than during the Globalization period (1984-2006). Although globalization did not affect the average level of co-movement, trade and financial integration strongly affect the way countries co-move with the rest of the world. We find that financial integration de-synchronizes national outputs from the world cycle, although the magnitude of this effect depends crucially on the type of shocks hitting the world economy. This de-synchronizing effect has offset the synchronizing impact of other forces, such as increased trade integration.
Keywords:
WP; post-war period; International Business Cycles; Synchronization; Financial integration; Trade integration; Globalization; globalization period; Bretton Woods period; world business cycle; business cycle synchronization; movement pattern; Business cycles; Exchange rate arrangements; Global
Cover IMF Working Papers
Regulating Capital Flows at Both Ends: Does it Work?
Mr. Atish R. Ghosh
,
Miss Mahvash S Qureshi
, and
Naotaka Sugawara
This paper examines whether cross-border capital flows can be regulated by imposing capital account restrictions (CARs) in both source and recipient countries, as was originally advocated by John Maynard Keynes and Harry Dexter White. To this end, we use data on bilateral cross-border bank flows from 31 source to 76 recipient (advanced and emerging market) countries over 1995–2012, and combine this information with a new and comprehensive dataset on various outflow and inflow related capital controls and prudential measures in these countries. Our findings suggest that CARs at either end can significantly influence the volume of cross-border bank flows, with restrictions at both ends associated with a larger reduction in flows. We also find evidence of cross-border spillovers whereby inflow restrictions imposed by countries are associated with larger flows to other countries. These findings suggest a useful scope for policy coordination between source and recipient countries, as well as among recipient countries, to better manage potentially disruptive flows.
Keywords:
WP; recipient country; source country; capital control; bank flow; outflow control; real interest rate; cross-boder bank flows; capital controls; prudential measures; prudential measure; bank asset; FX assets; Capital flows; Cross-border banking; Credit controls; Global; Europe; Asia and Pacific
Cover IMF Working Papers
Connected to Whom? International Interbank Borrowing During the Global Crisis
Mr. Kalin I Tintchev
The unprecedented collapse of international interbank borrowing was a prominent feature of the global financial crisis that started in August 2007. This paper focuses on the drivers of the retrenchment from 32 advanced and emerging banking systems. Using novel risk-weighted indexes the paper examines whether the banking systems’ access to credit was related to their domestic financial soundness and exposure to distressed international counterparties. The empirical findings suggest that both domestic and international risk factors contributed to the decline in international interbank borrowing during the crisis.
Keywords:
WP; credit risk index; interbank market; Moody's KMV banking system default probability; liquidity risk; counterparty risk; financial interconnectedness; banking system borrowing; borrower effect; liquidity risk index; Commercial banks; Credit risk; Credit; Emerging and frontier financial markets; Global; Europe
Cover IMF Working Papers
Fiscal Adjustments: Determinants and Macroeconomic Consequences
Mr. Alexander Plekhanov
,
Mr. Manmohan S. Kumar
, and
Mr. Daniel Leigh
The paper analyzes the determinants of success of recent fiscal consolidations in the OECD countries as well as the short-run and long-run effects of fiscal adjustments on economic activity by looking at fourteen case studies, panel data for OECD countries, and the results of simulations using a non-Ricardian multi-country dynamic general equilibrium model. The study finds that while fiscal consolidations tend to have short-run contractionary effects, they can be expansionary in the long run, provided that they do not rely excessively on cuts in productive government expenditure. They can also create positive spillover effects for the rest of the world.
Keywords:
WP; government; country; OECD country experience; government action; coalition government; wage bill; Fiscal consolidation; fiscal adjustment; government debt; non-Ricardian model; government purchase; minority government; open economy; approval rating; government purchases of goods and service; government transfer; government saving; government participation; Global
Cover IMF Working Papers
The Disappearing Tax Base: Is Foreign Direct Investment (FDI) Eroding Corporate Income Taxes?
Mr. Reint Gropp
and
Ms. Kristina Kostial
This paper analyzes the link between FDI, corporate taxation, and corporate tax revenues. We find strong evidence that FDI in (out) flows are affected by tax regimes in the host (home) countries and FDI flows in turn affect the corporate tax base. Simulations of European Union (EU) harmonization (isolating the revenue effect of FDI on the tax base from direct effects through the rate harmonization) suggest that high (low) tax countries would gain (lose) revenue from harmonization; these effects may be substantial. Our results also suggest that EU tax harmonization would significantly affect the net FDI position of some countries.
Keywords:
WP; FDI inflow; FDI flow; FDI outflow; net FDI position; outflow component; revenue elasticity; Corporate taxation; foreign direct investment; revenues; simulations; OECD countries; equations following; Corporate income tax; Corporate taxes; Tax harmonization; Global
Cover IMF Working Papers
Globalization, Tax Competition and the Future of Tax Systems
Mr. Vito Tanzi
This paper discusses the implications for tax systems of globalization of capital markets and of economies. It shows the extent to which particular taxes are affected by the globalization process. It speculates on future developments in this area and on tax competition.
Keywords:
WP; enterprise; country; tax rate; tax competition; tax-haven country; multinational enterprise; tax authorities; net effect; closed economy; enterprise's branch; intra-firm trade; Income and capital gains taxes; Income tax systems; Competition; Corporate income tax; Global