Front Matter Page
© 2009 International Monetary Fund
July 2009
IMF Country Report No. 09/233
France: Selected Issues
This Selected Issues paper for France was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on July 14,2009. The viewes expressed in this document are those of the staff team and do not necessarily reflect the viewes of the goverment of France of the Executive Boars of the IMF.
The policy of publication of staff reports and other documents by the IMF allows for the deletion of market-sensitive information.
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Front Matter Page
INTERNATIONAL MONETARY FUND
FRANCE
Selected Issues
Prepared by Brieuc Monfort, Yingbin Xiao, Boriana Yontcheva, (all EUR), and Irina Yakadina (FAD)
Approved by the European Department
July 14, 2009
Contents
I. French Banks Amid the Global Financial Crisis
A. Introduction
B. Banking and Supervisory Structure
C. International Comparative Analyses
Profitability
Asset quality
Capital adequacy
Leverage
Quality of capital
Funding
D. Analyses of Business and Exposures
E. An Event Study of the French Bank Support
F. Conclusions
References
Figures
I-1. Profitability
I-2. Asset Quality
I-3. Capital Adequacy
I-4. Leverage
I-5. Capital Quality
I-6. Funding
I-7. Liquidity
I-8. Business Lines
I-9. Foreign Exposure
I-10. Emerging Market Exposure
I-11. Writedowns, Losses, and Capital Raised
I-12. CDS Spreads
I-13. Impact on Debt
I-14. Impact on Equity
I-15. Share of Capital Injections Transferred into Debt
II. Countercyclical Stimulus and Long-Term Sustainability: Insights from a Fiscal SVAR for France
A. Introduction
B. Methodology and Data
Theoretical setup
Data
Model specification
C. Fiscal Multipliers in a Model With or Without Debt Feedback
Baseline fiscal multipliers
Fiscal multipliers with debt feedback
D. Discussion of the Results
E. Conclusions
References
Annexes
Figures
II-1. Impulse Response Functions to Fiscal Shocks in Baseline Model
II-2. Recursive Estimation of Long-Term Fiscal Multipliers
II-3. Multipliers in Baseline Model and Model with Debt Feedback
II-4. Impulse Responses of Fiscal Shocks on Themselves in Baseline and Extended Models
Tables
II-1. Survey of Fiscal Multipliers
III. Recession and Recovery: Automatic Stabilizers and Discretionary Fiscal Response in France
A. Overview
B. Economic and Fiscal Challenges
C. Methodology and Model Description
D. Impact of a Discretionary Fiscal Stimulus
E. Fiscal Policy in Dire Times
F. The Costs and Consequences of a Stimulus
G. Conclusion and Policy Implications
References
Figures
III-1. Contribution to Growth, 2001–2009
III-2. Impact of a Fiscal Stimulus in France
III-3. The Impact of Coordinated Europe-Wide Fiscal Stimulus
III-4. Global Recession
III-5. Impact of a Fiscal Stimulus During the Global Recession
III-6. Comparison of Different Fiscal Stimulus
III-7. Cost of Fiscal Stimulus in Global Recession
Tables
III-1. The Impact of Coordinated Europe-Wide Fiscal Stimulus
III-2. The Impact of French Fiscal Stimulus Extended by 1 Year