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Europe > Iceland

You are looking at 1 - 10 of 14 items for :

  • Type: Journal Issue x
  • Macroeconomics: Production x
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Cover IMF Working Papers
The More the Merrier? A Machine Learning Algorithm for Optimal Pooling of Panel Data
Marijn A. Bolhuis
and
Brett Rayner
We leverage insights from machine learning to optimize the tradeoff between bias and variance when estimating economic models using pooled datasets. Specifically, we develop a simple algorithm that estimates the similarity of economic structures across countries and selects the optimal pool of countries to maximize out-of-sample prediction accuracy of a model. We apply the new alogrithm by nowcasting output growth with a panel of 102 countries and are able to significantly improve forecast accuracy relative to alternative pools. The algortihm improves nowcast performance for advanced economies, as well as emerging market and developing economies, suggesting that machine learning techniques using pooled data could be an important macro tool for many countries.
Keywords:
WP; country; algorithm; Machine learning; GDP growth; forecasts; panel data; pooling; proximate country; machine learning method; example country; macroeconomic aggregate; bias-variance tradeoff; country of interest; Production growth; Eastern Europe
Cover IMF Staff Country Reports
Iceland: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper examines scope for improving Iceland’s fiscal framework. Iceland’s fiscal framework provides for a forward-looking exercise in consolidated fiscal planning. The Icelandic fiscal framework shares most elements of successful fiscal frameworks but would benefit from more structured guidance in dealing with cyclical fluctuations. It is backed by a firm legal basis that reflects political support for the fiscal policy objectives, covers the consolidated general government, and is based on sound accounting practices and budget management arrangements. The current parameters of the policy rules have a bias to reduce net public debt and gradually build fiscal space to deal with adverse shocks to economic activity. Adding a primary structural balance rule to the framework would ensure a countercyclical fiscal policy but would add significant complexity. Once the net public debt reaches a socially desirable level, the fiscal rule parameters may be modified to keep net public debt fluctuating around that level.
Keywords:
ISCR; CR; interest rate; countercyclical fiscal policy; disp-formula id; fiscal policy statement; spending ratio; primary spending; Fiscal rules; Output gap; Fiscal stance; Global
Cover Staff Discussion Notes
Economic Gains From Gender Inclusion: New Mechanisms, New Evidence
Mr. Jonathan David Ostry
,
Mr. Jorge A Alvarez
,
Mr. Raphael A Espinoza
, and
Mr. Chris Papageorgiou
While progress has been made in increasing female labor force participation (FLFP) in the last 20 years, large gaps remain. The latest Fund research shows that improving gender diversity can result in larger economic gains than previously thought. Indeed, gender diversity brings benefits all its own. Women bring new skills to the workplace. This may reflect social norms and their impact on upbringing and social interactions, or underlying differences in risk preference and response to incentives for example. As such, there is an economic benefit from diversity, that is from bringing women into the labor force, over and above the benefit resulting from more (male) workers. The study finds that male and female labor are imperfect substitutes in production, and therefore gender differences in the labor force matter. The results also imply that standard models, which ignore such differences, understate the favorable impact of gender inclusion on growth, and misattribute to technology a part of growth that is actually caused by women’s participation. The study further suggests that narrowing gender gaps benefits both men and women, because of a boost to male wages from higher FLFP. The paper also examines the role of women in the process of sectoral reallocation from traditional agriculture to services and the resulting effect on productivity and growth. Because FLFP is relatively high in services, sectoral reallocation along development paths serves to boost gender parity and productivity.
Keywords:
SDN; labor force; capital stock; comparative advantage; Gender diversity; female labor force participation; production function; structural transformation; FLFP barrier; labor force participation; male-to-female employment ratio; employment growth; services employment share; Women; Gender inequality; Employment; South Asia; Middle East; North Africa; Central Asia; Sub-Saharan Africa
Cover IMF Working Papers
Effectiveness of Capital Outflow Restrictions
Christian Saborowski
,
Sarah Sanya
,
Hans Weisfeld
, and
Juan Yepez
This paper examines the effectiveness of capital outflow restrictions in a sample of 37 emerging market economies during the period 1995-2010, using a panel vector autoregression approach with interaction terms. Specifically, it examines whether a tightening of outflow restrictions helps reduce net capital outflows. We find that such tightening is effective if it is supported by strong macroeconomic fundamentals or good institutions, or if existing restrictions are already fairly comprehensive. When none of these three conditions is fulfilled, a tightening of restrictions fails to reduce net outflows as it provokes a sizeable decline in gross inflows, mainly driven by foreign investors.
Keywords:
WP; outflow control index; capital; outflow restriction; Capital flows; Capital controls; Emerging economies; inflow control intensity; flow variable; control tightening; capital flow restriction; interest rate stabilization; outflow control restriction; Capital outflows; Industrial production; Vector autoregression; Global
Cover IMF Staff Country Reports
Iceland: Selected Issues Paper
International Monetary Fund
This selected issues paper on Iceland reports that since mid-2009, Iceland has undergone a heavily frontloaded fiscal consolidation program to bring government finances to a sustainable level. To maintain the adjustment gains achieved during the last 2½ years, the authorities have started drafting a new organic budget law, which would codify recent reforms in the budget framework and introduce principles for fiscal policymaking. Iceland’s economy is exposed to adverse shocks. The external outlook continues to pose challenges, as key trading partners face weak growth prospects.
Keywords:
ISCR; CR; monetary policy; exchange rate; expenditure growth; inflation expectation; inflation targeting framework; growth limit; monetary policy framework; Inflation; Fiscal stance; Inflation targeting; Output gap; Global; Europe
Cover IMF Working Papers
Fiscal Policy During Absorption Cycles
Mr. Ferhan Salman
and
Miss Gabriela Dobrescu
Domestic absorption cycles are relevant in assessment and design of fiscal policies. Our cross-country analysis covers 59 advanced and emerging countries for the 1990-2009 period. We show that ignoring domestic absorption cycles leads to biased fiscal stance indicators, for both advanced and emerging economies, by up to 1.5 percent of GDP. The estimates of fiscal policy reaction functions indicate that absorption booms are associated with pro-cyclical fiscal policy. We tackle the endogeneity problem in reactions functions through stripping the cyclical component of the fiscal aggregates. We also find that simple filtering methods in the computation of absorption gaps perform as better as indirect methods of estimating trade balance gaps and stripping of output gaps.
Keywords:
WP; fiscal policy; structural fiscal balance; domestic absorption; output gap; fiscal reaction function; reaction function; fiscal policy behavior; absorption gap; asset price cycle; fiscal policy reaction; fiscal policy stance; Fiscal stance; Macro-fiscal analysis; Current account; Global
Cover IMF Working Papers
The Cross-Country Incidence of the Global Crisis
Mr. Gian M Milesi-Ferretti
and
Mr. Philip R. Lane
We examine whether the cross-country incidence and severity of the 2008-2009 global recession is systematically related to pre-crisis macroeconomic and financial factors. We find that the pre-crisis level of development, increases in the ratio of private credit to GDP, current account deficits, and openness to trade are helpful in understanding the intensity of the crisis. International risk sharing did little to shield domestic demand from the country-specific component of output declines, while those countries with large pre-crisis current account deficits saw domestic demand fall by much more than domestic output during the crisis.
Keywords:
WP; demand growth; crisis country; economic activity; financial crisis; dependent variable; foreign exchange; real GDP
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
Tax Revenue Response to the Business Cycle
Ms. Cemile Sancak
,
Jing Xing
, and
Ricardo Velloso
This paper examines tax revenue during the business cycle by estimating the relationship between tax revenue efficiency and the output gap. We find a positive and significant relationship between these variables; results are consistent for quarterly and annual data, and across advanced and developing economies. We also find that a worsening (improvement) in the VAT C-efficiency is driven by shifts in consumption patterns and changes in tax evasion during contractions (expansions). A key implication is that, particularly during major economic booms and downturns, policy makers should look beyond simple, long-run revenue elasticities and incorporate into their analysis the effects of the economic cycle on tax revenue efficiency.
Keywords:
WP; tax revenue; output gap coefficient; tax revenue forecasting; business cycle; tax revenue efficiency; C-efficiency; VAT elasticity; VAT C-efficiency; estimation result; output gap variable; Value-added tax; Output gap; Tax efficiency; Consumption; Baltics
Cover IMF Working Papers
Stabilizing Inflation in Iceland
Ms. Keiko Honjo
and
Mr. Benjamin L Hunt
This paper provides some empirical estimates on how tightly is it feasible to control inflation in a very small open economy such as Iceland. Estimated macroeconomic models of Canada, Iceland, New Zealand, the United Kingdom, and the United States are used to derive efficient monetary policy frontiers that trace out the locus of the lowest combinations of inflation and output variability that are achievable under a range of alternative monetary policy rules. These frontiers illustrate that inflation stabilization is more challenging in Iceland than in other industrial countries primarily because of the relative magnitudes of the economic shocks.
Keywords:
WP; inflation-output variability trade-off