Abstract
IMF Country Report No. 22/194
Copyright Page
IMF Country Report No. 22/194
ICELAND
SELECTED ISSUES
June 2022
This Selected Issues paper on Iceland 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 June 3, 2022.
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Title page
ICELAND
SELECTED ISSUES
June 3, 2022
Approved By
Iva Petrova
Prepared By Mahir Binici, Jorge Ivan Canales Kriljenko, Nujin Suphaphiphat
Contents
HOUSING MARKET RISKS AND HOUSING AFFORDABILITY
A. Surging House Prices
B. Rising Systemic Risks
C. Informing Housing Market Policies
D. Containing Housing Market Risks
E. Addressing Housing Affordability
F. Designing Effective Policies to Tackle Housing Affordability
BOX
1. The Index of Macroprudential Measures
FIGURES
1. The Growth of Housing Prices
2. Financial Accelerator in a Housing Crisis
3. House Price Cycle and Real Economic Activity
4. Impulse and Response Functions for a House Price Shock
5. Response to House Prices to Monetary Policy and MPM Shock
References
ON THE ROAD TO CARBON NEUTRALITY, FISHING FOR ENERGY EXCHANGE AND CARBON ABSORPTION
A. Starting from Behind with Clean Fuel
B. Advancing on Separate Tracks: Emissions Under and Outside the European ETS
C. Doing Iceland’s Share: Ambitious Goals and Comprehensive Plans
D. On the Road and Fishing for Lower Emissions
E. The Energy Exchange Transition Toward Clean Vehicles
F. Fiscal Incentives to Reduce Emissions in Road Transportation
G. Realigning and Broadening the Base of Energy Taxation
H. Insights from the Climate Policy Assessment Tool
I. Carbon Absorption to Net Down Emissions
J. Conclusions
BOXES
1. What Needs to Take Place to Reduce Net Emissions and Related Challenges: A Conceptual Framework
2. In Search of Electric Fuels for Energy Exchange
FIGURE
1. Climate Policy Assessment Tool Baseline Simulation: 2022–2030
References