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Asia and Pacific > India

You are looking at 1 - 10 of 84 items for :

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Cover IMF Working Papers
The Price of De-Risking Reshoring, Friend-Shoring, and Quality Downgrading
Diego A. Cerdeiro
,
Parisa Kamali
,
Siddharth Kothari
, and
Dirk V Muir
This paper estimates the costs of ‘de-risking’ scenarios between China and OECD members at the aggregate and sectoral levels. Aggregate large-scale de-risking – reshoring by increasing reliance on domestic production and friend-shoring by reducing imports from specific foreign countries – is quantified with the IMF’s GIMF model, suggesting significant permanent effects on the global economy. Returning integration to 2000 levels translates into long-term global GDP losses of 4.5 percent under reshoring and as much as 1.8 percent under friend-shoring. Friend-shoring does not necessarily deliver a boon to third countries as trade diversion benefits might be largely offset by contractions in China and OECD members. Sectoral de-risking, where all trade between rivals is eliminated in specific products, is quantified through empirical estimation of the scope for quality downgrading. The results demonstrate the potential for significant losses in input quality should there be an escalation in export bans. Losses are asymmetric against China in the specific case of semiconductors but can be significant for both sides in other sectors—including in critical areas such as environmental goods.
Keywords:
De-risking; fragmentation; reshoring; friend-shoring; export bans; quality downgrading.; GIMF model; quality downgrading; trade diversion benefit; OECD member; OECD economy; Global value chains; Exports; Imports; Global; Southeast Asia; Asia and Pacific
Cover IMF Working Papers
Monitoring Privately-held Firms' Default Risk in Real Time: A Signal-Knowledge Transfer Learning Model
Jorge A Chan-Lau
,
Ruofei Hu
,
Luca Mungo
,
Ritong Qu
,
Weining Xin
, and
Cheng Zhong
We develop a mixed-frequency, tree-based, gradient-boosting model designed to assess the default risk of privately held firms in real time. The model uses data from publicly-traded companies to construct a probability of default (PD) function. This function integrates high-frequency, market-based, aggregate distress signals with low-frequency, firm-level financial ratios, and macroeconomic indicators. When provided with private firms' financial ratios, the model, which we name signal-knowledge transfer learning model (SKTL), transfers insights gained from 35 thousand publicly-traded firms to more than 4 million private-held ones and performs well as an ordinal measure of privately-held firms' default risk.
Keywords:
Default risk; Corporate sector; Privately-held firm; Gradient boosting; Transfer learning; signal-knowledge transfer learning model; publicly-traded firm; gradient-boosting model; transfers insight; held firm; Financial statements; Debt default; Solvency; Credit risk; Europe; North America; Global; Asia and Pacific
Cover IMF Working Papers
Unveiling the Informal Economy: An Augmented Factor Model Approach
Jiaxiong Yao
This paper develops a new approach to estimating the degree of informality in an economy. It combines direct yet infrequent measures of the informal economy in micro data with an augmented factor model that links macro indicators of the informal economy to its causes. We show that the prevailing model used in the literature, the multiple indicators multiple causes model, is a special case of the augmented factor model and depicts an incomplete picture of the informal economy. Using the augmented factor model approach, we show that the dynamics of the informal economy is shaped by the strength of overall economic activity as well as the interplay between the formal and informal economies. Contrary to previous work that typically finds declining informality for most countries, we find that the degree of informality has increased for low-income countries for the past two decades.
Keywords:
Informality; augmented factor model; MIMIC model; survey data; indicators of the informal economy; WBES data; D. adding nighttime; nighttime Light; component analysis; Informal economy; Factor models; Monetary base; Electricity; Consumption; Global
Cover IMF Working Papers
Exploring the Role of Public Expenditure in Advancing Female Economic Empowerment and Gender Equality
Charla Britt
and
Danielle Egerer
This paper discusses connections between female economic empowerment and government spending. It is an abbreviated overview for non-gender-experts on how fiscal expenditure may support female economic empowerment as an interim step toward advancing gender equality. From this perspective, it offers a preliminary exploration of key factors and indicators associated with gender-differentiated impacts in each of five main categories of public spending (education, health, capital expenditure, government employment and compensation, and social protection and labor market programs). It examines and proposes indices within each category that can be used to identify and measure related gender gaps and suggests associations and connections between those indices, public spending, and other available proxy measurements with some benchmarking potential which is summarized at the end of each category in a Gender Lens Matrix for ease of reference. The paper draws on an extensive literature review and examination of publicly available datasets. It also highlights and discusses gaps in data which limit gender analysis. The purpose of the paper is to advance dialogue on the adoption of a gendered approach to government spending, by providing a gender lens that may assist country level assessments and discussions among IMF staff and member country authorites.
Keywords:
Women’s economic empowerment; gender equality; gender analysis; gender gaps; fiscal expenditure; government spending; youth literacy Gender Parity Index; labor market program; IMF working paper No. 24/108; IMF's expenditure assessment tool; maternity leave; Women; Gender inequality; Sub-Saharan Africa; Global; Caribbean; South Asia; Asia and Pacific
Cover IMF Working Papers
EMDE Central Bank Interventions during COVID-19 to Support Market Functioning
Kelly Eckhold
,
Julia Faltermeier
,
Darryl King
,
Istvan Mak
, and
Dmitri Petrov
This paper examines emerging market and developing economy (EMDE) central bank interventions to maintain financial stability during the COVID-19 pandemic. Through empirical analysis and case study reviews, it identifies lessons for designing future programs to address challenges faced in EMDEs, including less-developed financial markets and lower levels of institutional credibility. The focus is on the functioning of the financial markets that are key to maintaining financial stability—money, securities, and FX funding markets. Several lessons emerge, including: (i) objectives should be well-specified and communicated to facilitate eventual exit; (ii) intervention triggers should prioritize liquidity metrics over prices; (iii) actions should be sufficiently large to address market dysfunction; (iv) the risks of fiscal dominance and moral hazard should be minimized; and (v) program design should incentivize self-liquidation by appropriate pricing or through short-term operations that quickly liquidate. While interventions may increase risks to central bank balance sheets, potentially challenging policy solvency and operational independence, a well-designed framework can significantly mitigate these risks.
Keywords:
COVID-19 pandemic; central bank interventions; liquidity; and financial stability.; intervention trigger; money market intervention; market dysfunction; Chicago Board option exchange volatility index; government securities intervention; Central bank operations; Financial sector stability; Securities markets; Money markets; Global; Africa
Cover IMF Working Papers
The Pitfalls of Protectionism: Import Substitution vs. Export-Oriented Industrial Policy
Reda Cherif
and
Fuad Hasanov
Industrial policies pursued in many developing countries in the 1950s-1970s largely failed while the industrial policies of the Asian Miracles succeeded. We argue that a key factor of success is industrial policy with export orientation in contrast to import substitution. Exporting encouraged competition, economies of scale, innovation, and local integration and provided market signals to policymakers. Even in a large market such as India, import substitution policies in the automotive industry failed because of micromanagement and misaligned incentives. We also analyze the risk tradeoffs involved in various industrial policy strategies and their implications on the 21st century industrial policies. While state interventions may be needed to develop some new capabilities and industries, trade protectionism is neither a necessary nor a sufficient tool and will most likely be counterproductive.
Keywords:
Industrial policy; export orientation; import substitution; growth; diversification; innovation; technology; import substitution policy; D. export orientation; risk tradeoff; policies in India; Policy strategy; Exports; Manufacturing; Imports; Tariffs; Competition; Global; Caribbean; North America
Cover IMF Working Papers
Global Value Chain and Inflation Dynamics
Vu Chau
,
Marina Conesa Martinez
,
Taehoon Kim
, and
John A Spray
We study the inflationary impacts of pandemic lockdown shocks and fiscal and monetary stimulus during 2020-2022 using a novel harmonized dataset of sectoral producer price inflation and input-output linkages for more than 1000 sectors in 53 countries. The inflationary impact of shocks is identified via a Bartik shift-share design, where shares reflect the heterogeneous sectoral exposure to shocks and are derived from a macroeconomic model of international production network. We find that pandemic lockdowns, and subsequent reopening policies, were the most dominant driver of global inflation in this period, especially through their impact on aggregate demand. We provide a decomposition of lockdown shock by sources, and find that between 20-30 percent of the demand effect of lockdown/reopening is due to spillover from abroad. Finally, while fiscal and monetary policies played an important role in preventing deflation in 2020, their effects diminished in the recovery years.
Keywords:
Inflation; global value chains; network; pandemic; spillovers; inflation dynamics; lockdown shock; producer price inflation; reopening policy; PPI inflation; Supply shocks; Fiscal stimulus; COVID-19; Global; Asia and Pacific; North America; Northern Europe
Cover IMF Working Papers
The Economic Impacts and the Regulation of AI: A Review of the Academic Literature and Policy Actions
Mariarosaria Comunale
and
Andrea Manera
We review the literature on the effects of Artificial Intelligence (AI) adoption and the ongoing regulatory efforts concerning this technology. Economic research encompasses growth, employment, productivity, and income inequality effects, while regulation covers market competition, data privacy, copyright, national security, ethics concerns, and financial stability. We find that: (i) theoretical research agrees that AI will affect most occupations and transform growth, but empirical findings are inconclusive on employment and productivity effects; (ii) regulation has focused primarily on topics not explored by the academic literature; (iii) across countries, regulations differ widely in scope and approaches and face difficult trade-offs.
Keywords:
Artificial Intelligence (AI); labor market; task exposure; productivity; regulation; governance.; productivity effect; regulation of AI; AI system; AI model; AI technology; Artificial intelligence; Machine learning; Automation; Global
Cover IMF Working Papers
Fiscal Implications of Global Decarbonization
Simon Black
,
Ruud de Mooij
,
Vitor Gaspar
,
Ian W.H. Parry
, and
Karlygash Zhunussova
Internationally coordinated climate mitigation policies can effectively put the world on a path toward achieving the agreed Paris temperature goals. Such coordination could be initiated by large players, such as China, the US, India, the African Union, and the European Union. We find that the implications for fiscal revenues over time will be shaped by a combination of rising carbon prices, the gradual erosion of existing fuel tax bases, and possible revenue sharing arrangements. Public spending rises during the transition to build green public infrastructure, promote innovation, and support clean technology deployment. Countries will also need financing for compensating vulnerable households and industries, and to transfer funds to poor countries. With well-designed climate-fiscal policy relying on carbon pricing, global decarbonization will have anything from moderately positive to moderately negative impacts on fiscal balances in high-income countries. For middle and low-income countries, net fiscal impacts are generally positive and can be significant. Revenue sharing at the global level would make an historical contribution to breaching the financial divide between rich and poor countries.
Keywords:
Climate mitigation policy; Fiscal impact; Global coordination; Carbon pricing; climate policy assessment tool; decarbonization scenario; sectoral mitigation option; climate-fiscal policy; Greenhouse gas emissions; Climate policy; Carbon tax; Global; Europe
Cover IMF Working Papers
Determinants of Zombie Banks in Emerging Markets and Developing Economies
Torsten Wezel
,
Hannah Sheldon
, and
Zhengwei Fu
While deeply undercapitalized banks have been shown to misallocate credit to weak firms, the drivers of such zombie banks are less researched, particularly across countries. To furnish empirical evidence, we compile a dataset of undercapitalized banks from emerging markets and developing economies. We classify zombie banks as those not receiving remedial treatment by owners or regulators or, alternatively, remaining chronically undercapitalized. Using logit regressions, we find that country-specific factors are more influential for zombie status than bank characteristics, alhough some become significant when disaggreating by region. The paper’s overall findings imply the need for a proper regulatory framework and an effective resolution regime to deal with zombie banks more decisively.
Keywords:
Banks; Capital Requirements; Financial Crises; summary statistics; zombie bank; zombie share; zombie status; equity ratio; Banking crises; Bank resolution; Credit; Asia and Pacific; Global; Europe; Africa