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Social Science > Emigration and Immigration

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Cover IMF Staff Country Reports
Georgia: Selected Issues
International Monetary Fund. Middle East and Central Asia Dept.
This Selected Issues paper explores drivers of inflation and monetary policy in Georgia. Inflation spiked in Georgia following the pandemic and Russia’s war in Ukraine. A positive output gap indicates that high demand is generating inflationary pressure in the economy. Estimates suggest tighter monetary policy in 2021 helped significantly lower peak inflation in 2022. One response to uncertainty is for monetary policy makers to act more cautiously – responding less vigorously with monetary policy to shocks. Given the challenges in managing inflation in a highly dollarized, small open-economy prone to large external shocks, it is important to look at the drivers of inflation in Georgia, the monetary policy stance including the natural rate, the transmission mechanism including the impact of dollarization, and the appropriate monetary policy path going forward. Using a range of approaches, IMF establish that monetary policy in Georgia is effective, that it is close to neutral, and that heightened uncertainty supports a gradual policy normalization.
Keywords:
commodity import price index; Georgia population projection; trend inflation; IMF staff calculation; inflation projection; Inflation; Labor markets; Unemployment; Employment; Central Asia; Middle East
Cover IMF Staff Country Reports
New Zealand: Selected Issues
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper investigates why New Zealand’s inflation is higher and further from target than comparator economies considering two main hypotheses: (1) the persistence of pandemic era shocks, and (2) strong migration inflows fuelling demand. The paper finds that, like in many advanced economies, expansionary fiscal and monetary policy, high global commodity prices, exchange rates, and high maritime transport costs all fed into higher inflation. However, unique for New Zealand, the delayed reopening of the economy likely caused a postponed demand shock relative to similar economies. Results show that the impact of these shocks decay rapidly over time, suggesting positive short-term inflation dynamics. With an eye for what lies ahead, the paper finds that large migration waves are associated with short-run increases in inflation, but that these effects are relatively modest and no longer significant after four years. Instead, the long-run dynamics show evidence that migration can lead to significant long-term gains to productivity, output, and capital growth. Countries with tight labor markets exhibit similar patterns to those without, except the inflationary effects of migration dissipate faster.
Keywords:
supply and demand demand shock; PPI inflation; net migration trend; climate goal; impulse response; Migration; Inflation; Greenhouse gas emissions; Climate policy; Labor markets; Global
Cover IMF Staff Country Reports
Australia: Selected Issues
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper examines macroeconomic impact of migration in Australia. Migration in Australia has historically been a significant source of population growth, with a third of the population born overseas. Migration is set to become even more important as the population natural growth rate declines. Australia attracts some of the best-educated migrants to Organization for Economic Cooperation and Development countries who are mostly skilled workers and students, with high labor force participation rates and low unemployment. Disentangling macroeconomic effects of migration from drivers of migration is challenging, but within Australia, migration surges have historically been associated with higher growth and favorable labor market outcomes, with negligible price pressures except in the housing market. Cross-country analysis using instrumental variables confirms a positive impact of migration on macroeconomic outcomes—output, employment, and productivity—without significant inflationary impact. While housing affordability is impacted at the margin, this could represent structural supply shortages and would be best addressed by boosting supply.
Keywords:
inflow shock; labor market outcome; I. Effects of Migration shock; macroeconomic outcome; labour outcome; Migration; Labor force participation; Population growth; Housing prices; Global
Cover IMF Staff Country Reports
Costa Rica: Selected Issues
International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper focuses on the neutral interest rate in Costa Rica. Estimates of Costa Rica’s real natural rate of interest are between 0 and 3 percent, with a suite of semistructural and univariate methods reaffirming this conclusion at close to 1 percent. This toolkit of multiple differing methods accounts for characteristics of the Costa Rican economy and suggests current monetary policy remains restrictive. Univariate estimates for Costa Rica are between those for the United States and largest regional peers. Structural changes to the Costa Rican economy, particularly in recent years, have important implications for the movement in the neutral rate. A suite of univariate methods also reaffirms this conclusion and suggests current monetary policy remains restrictive. Estimates for Costa Rica are between the United States and largest regional peers. Replicating the univariate approach for the United States and other countries in Latin America suggests Costa Rica has a somewhat lower neutral real interest rate than the largest regional peers, Brazil and Mexico, which currently appear to have neutral rates above 2 percent but above the United States.
Keywords:
labor market characteristic; refugees in Costa rica; estimation uncertainty; neutral real interest rate; card payment fee; Real interest rates; Migration; Labor markets; Social assistance spending; Caribbean
Cover Selected Issues Papers
Cancellation of Public Holiday in Denmark
Gohar Minasyan
Denmark cancelled a public holiday to increase labor supply, GDP, and fiscal revenues. This chapter discusses the expected labor supply impact of this change and compares it to alternative options for increasing labor supply.
Keywords:
Public holidays; labor regulation; leisure choices; labor supply impact; cancellation of public holiday; copyright page; main takeaway; Labor supply; Migration; Retirement; Employment rate; Labor markets
Cover IMF Staff Country Reports
Denmark: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper analyzes wage and inflation dynamics in Denmark. High profit margins contributed to growth in the gross domestic product deflator. Historical evidence suggests that the contribution from wages to price deflators will likely pick up. Nominal wage growth in Denmark has so far been modest and outpaced by high inflation, putting real wage growth in negative territory. Amid still-tight labor markets, this has raised concerns about wage pressures going forward and the eventual impact on inflation. The analysis suggests that wage formation in Denmark has historically been partly backward looking, and economic slack has played a role. Given these, high inflation realized thus far and the tightness in the labor market implies that wage pressures are expected to remain elevated in the near term. Some of these wage pressures, in turn, are expected to be passed on to core inflation, sustaining high inflation. Thus, determined policies to fight inflation are important.
Keywords:
B. inflation dynamics; inflation dynamics in Denmark; inflation expectation; main takeaway; IMF staff calculation; Inflation; Labor supply; Wages; Labor markets; Migration; Europe
Cover IMF Staff Country Reports
Nepal: Selected Issues
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper utilizes a new macro-model capturing food insecurity, migration and trade in Nepal. It shows that low yields and remoteness explain a majority of the difference in prevalence of food insecurity across districts in Nepal; both climate shocks and persistent climate-change increase food insecurity and disproportionately harm the most vulnerable; and lower wages in migrant destinations would reduce remittances, increase food insecurity and lower welfare. The paper then presents and quantifies a number of potential policies to address these issues. The paper quantifies the impact of a number of policy options (cash transfers, better infrastructure, and improved agricultural productivity) to address food insecurity and climate change. In addition to climate shocks, persistent climate change will lower welfare, increase food insecurity, and migration. Given the model results show that agricultural productivity is a key determinant of food security, Nepal can learn from other countries policies including in agricultural extension, improved community water management techniques, and climate resilient agriculture in line with the National Adaptation Plan.
Keywords:
food insecurity in Nepal; NAC's risk rating; migration cost; remittances in Nepal; NAC's borrowing; Climate change; Food security; Loans; Migration; Global
Cover Policy Papers
2021 Comprehensive Surveillance Review— Background Paper on The Surveillance Priority Preempting and Mitigating Spillovers
International Monetary Fund. Strategy, Policy, & Review Department
The Fund has a range of modalities and tools to cover spillovers. However, there remains scope to enhance synergies between global and country-specific spillover coverage and to foster cross-country dialogue. Practical guidance and enhanced information-sharing would also allow for more systematic surveillance of spillovers. Furthermore, the COVID-19 pandemic has underscored the need to continue expanding the research frontier covering new spillovers and channels and developing new tools and data sets. Therefore, filling these remaining gaps in the Fund’s spillover work would allow for a more coordinated and evenhanded surveillance of spillovers.
Keywords:
spillover discussion; WEO spillover chapter; spillover coverage; transparency policy; Policy spillover; Spillovers; COVID-19; International monetary system; Migration; Financial sector stability; Global; Trade tensions
Cover IMF Working Papers
Impact of Remittances on Natural Rate of Dollarization—Trends in Caucasus and Central Asia
Rocio Gondo
,
Altynai Aidarova
, and
Mr. Manmohan Singh
This paper discusses migration and remittances trends, and calculates the natural (or benchmark) level of dollarization in Caucasus, Central Asia and others in the region. This natural level of dollarization is conceptually linked to the currency allocation in a portfolio of deposits to maximize welfare, in line with Ize and Levy Yeyati (2003). The fall in remittances due to the economic slowdown since the spread of COVID-19 affects the macroeconomic fundamentals that determine demand for foreign currency deposits. We calculate the natural dollarization level by integrating structural macroeconomic characteristics. We show that despite the reduction in deposit dollarization, there is still a gap with respect to the natural level of dollarization, especially in a scenario of (persistent) lower remittance inflows.
Keywords:
WP; remittance; deposit dollarization; natural rate of dollarization; Russia; COVID; remittances; Central Asia; Caucasus; remittance inflow; dollarization policy; benchmark dollarization; dollarization level; exchange rate depreciation; Dollarization; Exchange rates; Currencies; Income; Global; Central Asia and the Caucasus; loan dollarization rate; Migration
Cover World Economic Outlook, April 2020
World Economic Outlook, April 2020
The Great Lockdown
International Monetary Fund. Research Dept.

Abstract

The COVID-19 pandemic is inflicting high and rising human costs worldwide, and the necessary protection measures are severely impacting economic activity. As a result of the pandemic, the global economy is projected to contract sharply by –3 percent in 2020, much worse than during the 2008–09 financial crisis. In a baseline scenario--which assumes that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound--the global economy is projected to grow by 5.8 percent in 2021 as economic activity normalizes, helped by policy support. The risks for even more severe outcomes, however, are substantial. Effective policies are essential to forestall the possibility of worse outcomes, and the necessary measures to reduce contagion and protect lives are an important investment in long-term human and economic health. Because the economic fallout is acute in specific sectors, policymakers will need to implement substantial targeted fiscal, monetary, and financial market measures to support affected households and businesses domestically. And internationally, strong multilateral cooperation is essential to overcome the effects of the pandemic, including to help financially constrained countries facing twin health and funding shocks, and for channeling aid to countries with weak health care systems.

Keywords:
WEO; CCDFEF; monetary policy; emerging market; economy