This paper examines credit conditions and recoveries from financial crises. The paper highlights that the prospects for recovery from the 2008 global financial crisis appear to be on the horizon. The paper discusses that the question—what determines the path of recovery from a recession associated with a financial crisis—is of utmost importance as policymakers debate how soon to withdraw the extraordinary monetary and fiscal stimulus that were put in place soon after the onset of the crisis. The paper also analyzes inflation targeting in emerging economies.


This paper examines credit conditions and recoveries from financial crises. The paper highlights that the prospects for recovery from the 2008 global financial crisis appear to be on the horizon. The paper discusses that the question—what determines the path of recovery from a recession associated with a financial crisis—is of utmost importance as policymakers debate how soon to withdraw the extraordinary monetary and fiscal stimulus that were put in place soon after the onset of the crisis. The paper also analyzes inflation targeting in emerging economies.

IMF Working Papers

No. 09/142

Will they Sing the Same Tune? Measuring Convergence in the new European System of Financial Supervisors

Masciandaro, Donato; Nieto, María; Quintyn, Marc

No. 09/143

Bank Competition, Risk and Asset Allocations

Boyd, John H.; De Nicoló, Gianni; Jalal, Abu M.

No. 09/144

The Effects of the Financial Crisis on Public-Private Partnerships

Burger, Philippe; Tyson, Justin; Karpowicz, I.; Delgado Coelho, Maria

No. 09/145

Anatomy of Regional Disparities in the Slovak Republic

Banerjee, Biswajit; Jarmuzek, Mariusz

No. 09/146

Introducing the Euro as Legal Tender - Benefits and Costs of Eurorization for Cape Verde

Imam, Patrick A.

No. 09/147

Macroeconomic Fundamentals, Price Discovery and Volatility Dynamics in Emerging Markets

Nowak, Sylwia; Andritzky, Jochen R.; Jobst, Andreas; Tamirisa, Natalia T.

No. 09/148

In Search of Successful Inflation Targeting: Evidence from an Inflation Targeting Index

Miao, Yanliang

No. 09/149

Requirements for Using Interest Rates as an Operating Target for Monetary Policy: The Case of Tunisia

Chailloux, Alexandre; Durré, Alain; Laurens, Bernard

No. 09/150

Development of the Commercial Banking System in Afghanistan: Risks and Rewards

Pavlovic, Jelena; Charap, Joshua

No. 09/151

How the Financial Crisis Affects Pensions and Insurance and Why the Impacts Matter

Impavido, Gregorio; Tower, Ian

No. 09/152

Why Are Canadian Banks More Resilient?

Ratnovski, Lev; Huang, Rocco

No. 09/153

Do Workers' Remittances Promote Economic Growth?

Barajas, Adolfo; Chami, Ralph; Fullenkamp, Connel; Gapen, Michael T.; Montiel, Peter

No. 09/154

The Quality of Public Investment

Chakraborty, Shankha; Dabla-Norris, Era

No. 09/155

Spillovers from the Rest of the World into Sub-Saharan African Countries

Drummond, Paulo Flavio Nacif; Ramirez, Gustavo

No. 09/156

A Framework for Financial Market Development

Chami, Ralph; Fullenkamp, Connel; Sharma, Sunil

No. 09/157

Revenue Mobilization in Sub-Saharan Africa: Challenges from Globalization

Keen, Michael; Mansour, Mario

No. 09/158

Fiscal Cycles in the Caribbean

Araujo, Juliana Dutra

No. 09/159

Macroeconomic Fluctuations in the Caribbean: The Role of Climatic and External Shocks

Sosa, Sebastian; Cashin, Paul

No. 09/160

How Effective is Fiscal Policy Response in Systemic Banking Crises?

Baldacci, Emanuele; Gupta, Sanjeev; Mulas-Granados, Carlos

No. 09/161

Country Experiences with the Introduction and Implementation of Inflation Targeting

Freedman, Charles; Ötker, Inci

No. 09/162

Recent Advances in Credit Risk Modeling

Capuano, Christian; Chan-Lau, Jorge A.; Gasha, Jose Giancarlo; Medeiros, Carlos I.; Santos, Andre; Souto, Marcos

No. 09/163

Panacea, Curse, or Nonevent? Unconventional Monetary Policy in the United Kingdom

Meier, André

No. 09/164

The Composition Matters: Capital Inflows and Liquidity Crunch during a Global Economic Crisis

Tong, Hui; Wei, Shang-Jin

No. 09/165

An Assessment of External Price Competitiveness for Mozambique

Vitek, Francis

No. 09/166

Spillovers of the U.S. Subprime Financial Turmoil to Mainland China and Hong Kong SAR: Evidence from Stock Markets

Sun, Tao; Zhang, Xiaojing

No. 09/167

Measures of Underlying Inflation in Sri Lanka

Gupta, Souvik; Saxegaard, Magnus

No. 09/168

The Challenge of Enforcement in Securities Markets: Mission Impossible?

Carvajal, Ana; Elliott, Jennifer A.

No. 09/169

Employment Effects of Growth Rebalancing in China

Guo, Kai; N'Diaye, Papa

No. 09/170

Does Good Financial Performance Mean Good Financial Intermediation in China?

Feyzioglu, Tarhan

No. 09/171

Interest Rate Liberalization in China

Feyzioglu, Tarhan; Porter, Nathaniel John; Takáts, Elöd

No. 09/172

Is China's Export-Oriented Growth Sustainable?

Guo, Kai; N'Diaye, Papa

No. 09/173

Counterparty Risk, Impact on Collateral Flows and Role for Central Counterparties

Singh, Manmohan; Aitken, James

No. 09/174

Fiscal Vulnerability and Sustainability in Oil-Producing Sub-Saharan African Countries

York, Robert C.; Zhan, Zaijin

No. 09/175

India's Experience with Fiscal Rules: An Evaluation and The Way Forward

Simone, Alejandro; Topalova, Petia

No. 09/176

Tourism Specialization and Economic Development : Evidence from the UNESCO World Heritage List

Arezki, Rabah; Cherif, Reda; Piotrowski, John

No. 09/177

Towards a Principal-Agent Based Typology of Risks in Public-Private Partnerships

de Palma, André; Leruth, Luc; Prunier, Guillaume

No. 09/178

Incorporating Market Information into the Construction of the Fan Chart

Elekdag, Selim; Kannan, Prakash

No. 09/179

Setting up a Sovereign Wealth Fund: Some Policy and Operational Considerations

Das, Udaibir S.; Mulder, Christian B.; Sy, Amadou N.R.; Lu, Y.

No. 09/180

Credit Growth in Sub-Saharan Africa - Sources, Risks, and Policy Responses

Iossifov, Plamen; Khamis, May Y.

No. 09/181

Putting the Parts Together: Trade, Vertical Linkages, and Business Cycle Comovement

di Giovanni, Julian; Levchenko, Andrei A.

No. 09/182

Understanding the Growth of African Financial Markets

Yartey, Charles Amo; Andrianaivo, Mihasonirina

No. 09/183

International Evidence on Recovery from Recessions

Cerra, Valerie; Panizza, Ugo; Saxena, Sweta Chaman

No. 09/184

Establishing Conversion Values for New Currency Unions: Method and Application to the Planned Gulf Cooperation Council (GCC) Currency Union

Krueger, Russell C.; Kamar, Bassem; Carlotti, Jean-Etienne

No. 09/185

Euro Area Monetary Policy in Uncharted Waters

Cihák, Martin; Harjes, Thomas; Stavrev, Emil

No. 09/186

One Money, One Market - A Revised Benchmark

Eicher, Theo S.; Henn, Christian

No. 09/187

How Good Are Ex Ante Program Evaluation Techniques? The Case of School Enrollment in PROGRESA

Bornhorst, Fabian

No. 09/188

Search in the Labor Market Under Imperfectly Insurable Income Risk

Roca, Mauro

No. 09/189

What Drives China's Interbank Market?

Porter, Nathaniel John; Xu, TengTeng

No. 09/190

Fiscal Sustainability in Remittance-Dependent Economies

Abdih, Yasser; Chami, Ralph; Gapen, Michael T.; Mati, Amine

No. 09/191

Monetary Policy and the Central Bank in Jordan

Maziad, Samar

No. 09/192

The Gambia: Demand for Broad Money and Implications for Monetary Policy Conduct

Sriram, Subramanian S.

No. 09/193

Institutional Inertia

Valderrama, Laura

No. 09/194

Political Risk Aversion

Valderrama, Laura

No. 09/195

Lebanon-Determinants of Commercial Bank Deposits in a Regional Financial Center

Finger, Harald; Hesse, Heiko

No. 09/196

The Derivatives Market in South Africa: Lessons for Sub-Saharan African Countries

Adelegan, Olatundun Janet

No. 09/197

Frugality: Are We Fretting Too Much? Household Saving and Assets in the United States

Abdih, Yasser; Tanner, Evan

No. 09/198

The Real Effects of Financial Sector Risk

Tieman, Alexander F.; Maechler, Andrea M.

No. 09/199

Modernizing Bank Regulation in Support of Financial Deepening: The Case of Uruguay

Adler, Gustavo; Mansilla, Mario; Wezel, Torsten

No. 09/200

The Need for Special Resolution Regimes for Financial Institutions—The Case of the European Union

Cihák, Martin; Nier, Erlend

No. 09/201

French Banks Amid the Global Financial Crisis

Xiao, Yingbin

No. 09/202

Benchmark Priors Revisited: On Adaptive Shrinkage and the Supermodel Effect in Bayesian Model Averaging

Feldkircher, Martin; Zeugner, Stefan

No. 09/203

The Drivers of Housing Cycles in Spain

Aspachs-Bracons, Oriol; Rabanal, Pau

No. 09/204

How to Stop a Herd of Running Bears? Market Response to Policy Initiatives during the Global Financial Crisis

Aït-Sahalia, Yacine; Andritzky, Jochen R.; Jobst, Andreas; Nowak, Sylwia Barbara; Tamirisa, Natalia T.

No. 09/205

Commodity Terms of Trade: The History of Booms and Busts

Spatafora, Nikola; Tytell, Irina

No. 09/206

The Effectiveness of Central Bank Interventions During the First Phase of the Subprime Crisis

Frank, Nathaniel; Hesse, Heiko

No. 09/207

Accounting Discretion of Banks During a Financial Crisis

Huizinga, Harry; Laeven, Luc

No. 09/208

Controlling Capital? Legal Restrictions and the Asset Composition of International Financial Flows

Binici, Mahir; Hutchison, Michael; Schindler, Martin

No. 09/209

International Risk Sharing During the Globalization Era

Flood, Robert P. ; Marion, Nancy P.; Matsumoto, Akito

No. 09/210

Who Benefits from Capital Account Liberalization? Evidence from Firm-Level Credit Ratings Data

Prati, Alessandro; Schindler, Martin; Valenzuela, Patricio

No. 09/211

Revised System for the Classification of Exchange Rate Arrangements

Habermeier, Karl Friedrich; Kokenyne, Annamaria; Veyrune, Romain; Anderson, Harald

No. 09/212

Cointegrated TFP Processes and International Business Cycles

Rabanal, Pau; Rubio-Ramirez, Juan F.; Tuesta, Vicente

No. 09/213

What Determines Bond Market Development in Sub-Saharan Africa?

Adelegan, Olatundun Janet; Radzewicz-Bak, Bozena

No. 09/214

Constructing Forecast Confidence Bands during the Financial Crisis

Chen, Huigang; Clinton, Kevin; Johnson, Marianne; Kamenik, Ondra; Laxton, Douglas

No. 09/215

São Tomé and Príncipe: Domestic Tax System and Tax Revenue Potential

Farhan, Nisreen H.

No. 09/216

Determinants and Macroeconomic Impact of Remittances in Sub-Saharan Africa

Singh, Raju; Haacker, Markus; Lee, Kyung-woo

No. 09/217

Access to Market Financing for IDA-Eligible Countries—The Role of External Debt and IMF-Supported Programs

Thomas, Alun H.

No. 09/218

Do Trading Partners Still Matter for Nigeria's Growth? A Contribution to the Debate on Decoupling and Spillovers

Obiora, Kingsley I.

No. 09/219

The Uncertainty Channel of Contagion

Kannan, Prakash; Köhler-Geib, Fritzi

No. 09/220

Oil Prices and Bank Profitability: Evidence from Major Oil-Exporting Countries in the Middle East and North Africa

Poghosyan, Tigran; Hesse, Heiko

No. 09/221

External Balance in Low Income Countries

Christiansen, Lone Engbo; Prati, Alessandro; Ricci, Luca Antonio; Tressel, Thierry

No. 09/222

Euro Area Sovereign Risk During the Crisis

Sgherri, Silvia; Zoli, Edda

No. 09/223

Australian Bank and Corporate Sector Vulnerabilities—An International Perspective

Takáts, Elöd; Tumbarello, Patrizia

No. 09/224

New Zealand Bank Vulnerabilities in International Perspective

Brooks, Ray; Cubero, Rodrigo

No. 09/225

Revisiting the Determinants of Productivity Growth: What's New?

Loko, Boileau; Diouf, Mame Astou

No. 09/226

Unconventional Central Bank Measures for Emerging Economies

Ishi, Kotaro; Stone, Mark R.; Yehoue, Etienne B.

No. 09/227

Analyzing Fiscal Space Using the MAMS Model: An Application to Burkina Faso

Gottschalk, Jan; Manh Le,, Vu; Lofgren, Hans; Nouve, Kofi

No. 09/228

The Liquidity and Liquidity Distribution Effects in Emerging Markets: The Case of Jordan

Vandenbussche, Jérôme; Blazsek, Szabolcs; Watt, Stanley

No. 09/229

Macro-Hedging for Commodity Exporters

Borensztein, Eduardo; Jeanne, Olivier; Sandri, Damiano

No. 09/230

Global Market Conditions and Systemic Risk

González-Hermosillo, Brenda; Hesse, Heiko

No. 09/231

Three Cycles: Housing, Credit, and Real Activity

Igan, Deniz; Kabundi, Alain N.; Nadal-De Simone, Francisco; Pinheiro, Marcelo; Tamirisa, Natalia T.

No. 09/232

Monetary Policy and the Lost Decade: Lessons from Japan

Leigh, Daniel

No. 09/233

Excessive Lending, Leverage, and Risk-Taking in the Presence of Bailout Expectations

Georgiou, Andréas

No. 09/234

Hybrid Inflation Targeting Regimes

Roger, Scott; Restrepo, Jorge; Garcia, Carlos

No. 09/235

Is the Canadian Housing Market Overvalued? A Post-Crisis Assessment

Tsounta, Evridiki

No. 09/236

Inflation Targeting at 20: Achievements and Challenges

Roger, Scott

No. 09/237

Fiscal Deficits and Current Account Deficits

Kumhof, Michael; Laxton, Douglas

No. 09/238

Monetary Policy Analysis and Forecasting in the World Economy: A Panel Unobserved Components Approach

Vitek, Francis

No. 09/239

Sovereign Wealth Funds and Financial Stability - An Event Study Analysis

Sun, Tao; Hesse, Heiko

No. 09/240

Treating Intangible Inputs as Investment Goods: The Impact on Canadian GDP

Belhocine, Nazim

No. 09/241

The Role of Financial Variables in Predicting Economic Activity in the Euro Area

Espinoza, Raphael A.; Fornari, Fabio; Lombardi, Marco

No. 09/242

Valuation of Unlisted Direct Investment Equity

Kumah, Emmanuel; Damgaard, Jannick; Elkjaer, Thomas

No. 09/243

Top-Down Budgeting - An Instrument to Strengthen Budget Management

Ljungman, Gösta

No. 09/244

A Rule-Based Medium-Term Fiscal Policy Framework for Tanzania

Kim, Daehaeng; Saito, Mika

No. 09/245

What's the Damage? Medium-Term Output Dynamics After Banking Crises

Abiad, Abdul; Balakrishnan, Ravi; Koeva Brooks, Petya; Leigh, Daniel; Tytell, Irina

No. 09/246

Governance and Fund Management in the Chinese Pension System

Impavido, Gregorio; Hu, Yu-Wei; Li, Xiaohong

No. 09/247

Financial Sector Surveillance and the IMF

Gola, Carlo; Spadafora, Francesco

No. 09/248

Today versus Tomorrow: The Sensitivity of the Non-Oil Current Account Balance to Permanent and Current Income

Thomas, Alun H.; Bayoumi, Tamim

No. 09/249

Countering the Cycle - The Effectiveness of Fiscal Policy in Korea

Eskesen, Leif Lybecker

No. 09/250

The Stock of Intangible Capital in Canada: Evidence from the Aggregate Value of Securities

Belhocine, Nazim

No. 09/251

Monetary and Macroprudential Policy Rules in a Model with House Price Booms

Kannan, Prakash; Rabanal, Pau; Scott, Alasdair

No. 09/252

Macroeconomic Patterns and Monetary Policy in the Run-up to Asset Price Busts

Kannan, Prakash; Rabanal, Pau; Scott, Alasdair

No. 09/253

Adding Indonesia to the Global Projection Model

Andrle, Michal; Freedman, Charles; Garcia-Saltos, Roberto; Hermawan, Danny; Laxton, Douglas; Munandar, Haris

No. 09/254

Credit Derivatives: Systemic Risks and Policy Options?

Kiff, John; Elliott, Jennifer A.; Kazarian, Elias G.; Scarlata, Jodi G.; Spackman, Carolyne

IMF Working Papers and other IMF publications can be downloaded in full-text format from the Research at the IMF website: