Reforming the International Monetary and Financial System
Peter B. Kenen and Alexander K. Swoboda, Editors
This volume, the record of a conference organized by the IMF Research Department in May 1999, examines the implications of greater financial integration on for the international monetary and financial system and on how it should be reformed.
Following an introductory discussion by former IMF Managing Director Michel Camdessus about international monetary and financial stability as a global public good, various experts consider the most disruptive manifestations of instability in the current system, as well as the appropriate policy responses to them: volatility and misalignments in the exchange rates of the dollar, euro, and yen (Benoit Coeuré and Jean Pisani-Ferry); instability of capital flows to emerging market economies (Michael Mussa, Alexander Swoboda, Jeromin Zettelmeyer, and Olivier Jeanne); consequences of abrupt capital flow reversals for balance of payments adjustment and financing, and for a country’s choice of exchange rate regime (Guillermo Calvo and Carmen Reinhart); and private sector involvement in crisis resolution (Barry Eichengreen). The role of the IMF in crisis prevention and resolution is also examined (Takatoshi Ito and David Lipton). Twenty-four substantive comments by prominent academics, policymakers, and other experts are included. Perhaps not surprisingly, the general conclusion of the contributors is that segmented and slower, rather than widespread and radical, reform is the way to proceed.
Kosovo: Macroeconomic Issues and Fiscal Sustainability
Robert Corker, Dawn Rehm, and Kristina Kostial
Kosovo, a province of Serbia in the Federal Republic of Yugoslavia, is under temporary United Nations administration. Extensive technical assistance from the IMF has aided the UN authorities in constructing tax and budgetary institutions and in setting up a payments and banking system. This new book provides a macroeconomic perspective on some of the problems Kosovo faces as it tries to rebuild its economy following the conflict in 1999.
The authors provide a first estimate of aggregate income levels (per capita GDP is found to be lower than in neighboring Albania), analyze the budget structure, and examine the conditions for sustainable fiscal accounts in the medium run. While any type of prediction is necessarily a speculative exercise in view of the political uncertainties, the authors conclude that it will take several years before public spending in Kosovo can be fully financed by self-generated revenues—even given the assumption of a fast-recovering economy. Any rapid reduction in donor support to Kosovo would thus produce quite stringent conditions. Meanwhile, the interim UN authorities should not delay in pressing ahead with broadening the tax system and strengthening the legal framework for private enterprise. Reforms such as these will help Kosovo reestablish a stronger economy sooner.