The Role of Interest Rates in Business Cycle Fluctuations in Emerging Market Countries

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Publisher : International Monetary Fund
ISBN 13 : 1451863705
Total Pages : 24 pages
Book Rating : 4.4/5 (518 download)

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Book Synopsis The Role of Interest Rates in Business Cycle Fluctuations in Emerging Market Countries by : Mr.Ivan Tchakarov

Download or read book The Role of Interest Rates in Business Cycle Fluctuations in Emerging Market Countries written by Mr.Ivan Tchakarov and published by International Monetary Fund. This book was released on 2006-05-01 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: Emerging market countries have enjoyed an exceptionally favorable economic environment throughout 2004, 2005, and early 2006. In particular, accommodative U.S. monetary policy in recent years has helped create an environment of low interest rates in international capital markets. However, if world interest rates were to take a sudden upward course, this would lead to less hospitable financing conditions for emerging market countries. The purpose of this paper is to measure the effects of world interest rate shocks on real activity in Thailand. The analysis incorporates balance sheet related credit market frictions into the IMF’s Global Economy Model (GEM) and finds that Thailand would best minimize the adverse effects of rising world interest rates if it were to follow a flexible exchange rate regime.

Emerging Market Business Cycles

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Publisher : International Monetary Fund
ISBN 13 : 147551249X
Total Pages : 51 pages
Book Rating : 4.4/5 (755 download)

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Book Synopsis Emerging Market Business Cycles by : Ms.Emine Boz

Download or read book Emerging Market Business Cycles written by Ms.Emine Boz and published by International Monetary Fund. This book was released on 2012-10-09 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: Emerging economies are characterized by higher consumption and real wage variability relative to output and a strongly countercyclical current account. A real business cycle model of a small open economy that embeds a Mortensen-Pissarides type of search-matching frictions and countercyclical interest rate shocks can jointly account for these regularities. In the face of countercyclical interest rate shocks, search-matching frictions increase future employment uncertainty, improving workers’ incentive to save and generating a greater response of consumption and the current account. Higher consumption response in turn feeds into larger fluctuations in the workers’ bargaining power while the interest rates shocks lead to variations in the firms’ willingness to hire; both of which contribute to a highly variable real wage.

International Macroeconomics in the Wake of the Global Financial Crisis

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Publisher : Springer
ISBN 13 : 3319790757
Total Pages : 298 pages
Book Rating : 4.3/5 (197 download)

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Book Synopsis International Macroeconomics in the Wake of the Global Financial Crisis by : Laurent Ferrara

Download or read book International Macroeconomics in the Wake of the Global Financial Crisis written by Laurent Ferrara and published by Springer. This book was released on 2018-06-13 with total page 298 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book collects selected articles addressing several currently debated issues in the field of international macroeconomics. They focus on the role of the central banks in the debate on how to come to terms with the long-term decline in productivity growth, insufficient aggregate demand, high economic uncertainty and growing inequalities following the global financial crisis. Central banks are of considerable importance in this debate since understanding the sluggishness of the recovery process as well as its implications for the natural interest rate are key to assessing output gaps and the monetary policy stance. The authors argue that a more dynamic domestic and external aggregate demand helps to raise the inflation rate, easing the constraint deriving from the zero lower bound and allowing monetary policy to depart from its current ultra-accommodative position. Beyond macroeconomic factors, the book also discusses a supportive financial environment as a precondition for the rebound of global economic activity, stressing that understanding capital flows is a prerequisite for economic-policy decisions.

Preventing Currency Crises in Emerging Markets

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Publisher : University of Chicago Press
ISBN 13 : 0226185052
Total Pages : 783 pages
Book Rating : 4.2/5 (261 download)

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Book Synopsis Preventing Currency Crises in Emerging Markets by : Sebastian Edwards

Download or read book Preventing Currency Crises in Emerging Markets written by Sebastian Edwards and published by University of Chicago Press. This book was released on 2009-02-15 with total page 783 pages. Available in PDF, EPUB and Kindle. Book excerpt: Economists and policymakers are still trying to understand the lessons recent financial crises in Asia and other emerging market countries hold for the future of the global financial system. In this timely and important volume, distinguished academics, officials in multilateral organizations, and public and private sector economists explore the causes of and effective policy responses to international currency crises. Topics covered include exchange rate regimes, contagion (transmission of currency crises across countries), the current account of the balance of payments, the role of private sector investors and of speculators, the reaction of the official sector (including the multilaterals), capital controls, bank supervision and weaknesses, and the roles of cronyism, corruption, and large players (including hedge funds). Ably balancing detailed case studies, cross-country comparisons, and theoretical concerns, this book will make a major contribution to ongoing efforts to understand and prevent international currency crises.

Business Cycles in Emerging Markets

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Publisher : International Monetary Fund
ISBN 13 : 1455259381
Total Pages : 40 pages
Book Rating : 4.4/5 (552 download)

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Book Synopsis Business Cycles in Emerging Markets by : International Monetary Fund

Download or read book Business Cycles in Emerging Markets written by International Monetary Fund and published by International Monetary Fund. This book was released on 2011-06-01 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines how durable goods and financial frictions shape the business cycle of a small open economy subject to shocks to trend and transitory shocks. In the data, nondurable consumption is not as volatile as income for both developed and emerging market economies. The simulation of the model implies that shocks to trend play a less important role than previously documented. Financial frictions improve the ability of the model to match some key business cycle properties of emerging economies. A countercyclical borrowing premium interacts with the nature of durable goods delivering highly volatile consumption and very countercyclical net exports.

Country Spreads and Emerging Countries

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Publisher :
ISBN 13 :
Total Pages : 64 pages
Book Rating : 4.:/5 (318 download)

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Book Synopsis Country Spreads and Emerging Countries by : Martin Uribe

Download or read book Country Spreads and Emerging Countries written by Martin Uribe and published by . This book was released on 2003 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: "A number of studies have stressed the role of movements in US interest rates and country spreads in driving business cycles in emerging market economies. At the same time, country spreads have been found to respond to changes in both the US interest rate and domestic conditions in emerging markets. These intricate interrelationships leave open a number of fundamental questions: Do country spreads drive business cycles in emerging countries or vice versa, or both? Do US interest rates affect emerging countries directly or primarily through their effect on country spreads? This paper addresses these and other related questions using a methodology that combines empirical and theoretical elements. The main findings of the paper are: (1) US interest rate shocks explain about 20 percent of movements in aggregate activity in emerging market economies at business-cycle frequency. (2) Country spread shocks explain about 12 percent of business-cycle movements in emerging economies. (3) About 60 percent of movements in country spreads are explained by country-spread shocks. (4) In response to an increase in US interest rates, country spreads first fall and then display a large, delayed overshooting; (5) US-interest-rate shocks affect domestic variables mostly through their effects on country spreads. (6) The fact that country spreads respond to business conditions in emerging economies significantly exacerbates aggregate volatility in these countries. (7) The US-interest-rate shocks and country-spread shocks identified in this paper are plausible in the sense that they imply similar business cycles in the context of an empirical VAR model as they do in the context of a theoretical dynamic general equilibrium model of an emerging market economy"--NBER website

Hysteresis and Business Cycles

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Publisher : International Monetary Fund
ISBN 13 : 1513536990
Total Pages : 50 pages
Book Rating : 4.5/5 (135 download)

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Book Synopsis Hysteresis and Business Cycles by : Ms.Valerie Cerra

Download or read book Hysteresis and Business Cycles written by Ms.Valerie Cerra and published by International Monetary Fund. This book was released on 2020-05-29 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: Traditionally, economic growth and business cycles have been treated independently. However, the dependence of GDP levels on its history of shocks, what economists refer to as “hysteresis,” argues for unifying the analysis of growth and cycles. In this paper, we review the recent empirical and theoretical literature that motivate this paradigm shift. The renewed interest in hysteresis has been sparked by the persistence of the Global Financial Crisis and fears of a slow recovery from the Covid-19 crisis. The findings of the recent literature have far-reaching conceptual and policy implications. In recessions, monetary and fiscal policies need to be more active to avoid the permanent scars of a downturn. And in good times, running a high-pressure economy could have permanent positive effects.

Systemic Banking Crises Revisited

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Publisher : International Monetary Fund
ISBN 13 : 1484377044
Total Pages : 48 pages
Book Rating : 4.4/5 (843 download)

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Book Synopsis Systemic Banking Crises Revisited by : Mr.Luc Laeven

Download or read book Systemic Banking Crises Revisited written by Mr.Luc Laeven and published by International Monetary Fund. This book was released on 2018-09-14 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper updates the database on systemic banking crises presented in Laeven and Valencia (2008, 2013). Drawing on 151 systemic banking crises episodes around the globe during 1970-2017, the database includes information on crisis dates, policy responses to resolve banking crises, and the fiscal and output costs of crises. We provide new evidence that crises in high-income countries tend to last longer and be associated with higher output losses, lower fiscal costs, and more extensive use of bank guarantees and expansionary macro policies than crises in low- and middle-income countries. We complement the banking crises dates with sovereign debt and currency crises dates to find that sovereign debt and currency crises tend to coincide or follow banking crises.

U.S. Monetary Policy Normalization and Global Interest Rates

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Publisher : International Monetary Fund
ISBN 13 : 1475543069
Total Pages : 46 pages
Book Rating : 4.4/5 (755 download)

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Book Synopsis U.S. Monetary Policy Normalization and Global Interest Rates by : Carlos Caceres

Download or read book U.S. Monetary Policy Normalization and Global Interest Rates written by Carlos Caceres and published by International Monetary Fund. This book was released on 2016-09-29 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: As the Federal Reserve continues to normalize its monetary policy, this paper studies the impact of U.S. interest rates on rates in other countries. We find a modest but nontrivial pass-through from U.S. to domestic short-term interest rates on average. We show that, to a large extent, this comovement reflects synchronized business cycles. However, there is important heterogeneity across countries, and we find evidence of limited monetary autonomy in some cases. The co-movement of longer term interest rates is larger and more pervasive. We distinguish between U.S. interest rate movements that surprise markets versus those that are anticipated, and find that most countries receive greater spillovers from the former. We also distinguish between movements in the U.S. term premium and the expected path of risk-free rates, concluding that countries respond differently to these shocks. Finally, we explore the determinants of monetary autonomy and find strong evidence for the role of exchange rate flexibility, capital account openness, but also for other factors, such as dollarization of financial system liabilities, and the credibility of fiscal and monetary policy.

Effects of Financial Globalization on Developing Countries

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Publisher : International Monetary Fund
ISBN 13 : 9781589062214
Total Pages : 68 pages
Book Rating : 4.0/5 (622 download)

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Book Synopsis Effects of Financial Globalization on Developing Countries by : Mr.Ayhan Kose

Download or read book Effects of Financial Globalization on Developing Countries written by Mr.Ayhan Kose and published by International Monetary Fund. This book was released on 2003-09-03 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study provides a candid, systematic, and critical review of recent evidence on this complex subject. Based on a review of the literature and some new empirical evidence, it finds that (1) in spite of an apparently strong theoretical presumption, it is difficult to detect a strong and robust causal relationship between financial integration and economic growth; (2) contrary to theoretical predictions, financial integration appears to be associated with increases in consumption volatility (both in absolute terms and relative to income volatility) in many developing countries; and (3) there appear to be threshold effects in both of these relationships, which may be related to absorptive capacity. Some recent evidence suggests that sound macroeconomic frameworks and, in particular, good governance are both quantitatively and qualitatively important in affecting developing countries’ experiences with financial globalization.

The Sources of Business Cycles in a Low Income Country

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Publisher : International Monetary Fund
ISBN 13 : 1484388194
Total Pages : 34 pages
Book Rating : 4.4/5 (843 download)

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Book Synopsis The Sources of Business Cycles in a Low Income Country by : Romain Houssa

Download or read book The Sources of Business Cycles in a Low Income Country written by Romain Houssa and published by International Monetary Fund. This book was released on 2015-02-25 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the role of global and domestic shocks in driving macroeconomic fluctuations for Ghana. We are able to study the impact of exogenous shocks including productivity, credit supply, and commodity price shocks. We identify the shocks with a combination of sign and recursive restrictions within Bayesian VAR models. As a benchmark we provide results for South Africa to document the difference between two economies with similar structures but different levels of development. We find that global shocks play a more dominant role in South Africa than in Ghana. These shocks operate through three channels: trade, credit and commodity prices.

What Happens During Recessions, Crunches and Busts?

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Publisher : International Monetary Fund
ISBN 13 : 1451871325
Total Pages : 77 pages
Book Rating : 4.4/5 (518 download)

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Book Synopsis What Happens During Recessions, Crunches and Busts? by : Mr.Ayhan Kose

Download or read book What Happens During Recessions, Crunches and Busts? written by Mr.Ayhan Kose and published by International Monetary Fund. This book was released on 2008-12-01 with total page 77 pages. Available in PDF, EPUB and Kindle. Book excerpt: We provide a comprehensive empirical characterization of the linkages between key macroeconomic and financial variables around business and financial cycles for 21 OECD countries over the period 1960–2007. In particular, we analyze the implications of 122 recessions, 112 (28) credit contraction (crunch) episodes, 114 (28) episodes of house price declines (busts), 234 (58) episodes of equity price declines (busts) and their various overlaps in these countries over the sample period. Our results indicate that interactions between macroeconomic and financial variables can play major roles in determining the severity and duration of recessions. Specifically, we find evidence that recessions associated with credit crunches and house price busts tend to be deeper and longer than other recessions. JEL Classification Numbers: E32; E44; E51; F42

Inflation in Emerging and Developing Economies

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Publisher : World Bank Publications
ISBN 13 : 1464813760
Total Pages : 513 pages
Book Rating : 4.4/5 (648 download)

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Book Synopsis Inflation in Emerging and Developing Economies by : Jongrim Ha

Download or read book Inflation in Emerging and Developing Economies written by Jongrim Ha and published by World Bank Publications. This book was released on 2019-02-24 with total page 513 pages. Available in PDF, EPUB and Kindle. Book excerpt: This is the first comprehensive study in the context of EMDEs that covers, in one consistent framework, the evolution and global and domestic drivers of inflation, the role of expectations, exchange rate pass-through and policy implications. In addition, the report analyzes inflation and monetary policy related challenges in LICs. The report documents three major findings: In First, EMDE disinflation over the past four decades was to a significant degree a result of favorable external developments, pointing to the risk of rising EMDE inflation if global inflation were to increase. In particular, the decline in EMDE inflation has been supported by broad-based global disinflation amid rapid international trade and financial integration and the disruption caused by the global financial crisis. While domestic factors continue to be the main drivers of short-term movements in EMDE inflation, the role of global factors has risen by one-half between the 1970s and the 2000s. On average, global shocks, especially oil price swings and global demand shocks have accounted for more than one-quarter of domestic inflation variatio--and more in countries with stronger global linkages and greater reliance on commodity imports. In LICs, global food and energy price shocks accounted for another 12 percent of core inflation variatio--half more than in advanced economies and one-fifth more than in non-LIC EMDEs. Second, inflation expectations continue to be less well-anchored in EMDEs than in advanced economies, although a move to inflation targeting and better fiscal frameworks has helped strengthen monetary policy credibility. Lower monetary policy credibility and exchange rate flexibility have also been associated with higher pass-through of exchange rate shocks into domestic inflation in the event of global shocks, which have accounted for half of EMDE exchange rate variation. Third, in part because of poorly anchored inflation expectations, the transmission of global commodity price shocks to domestic LIC inflation (combined with unintended consequences of other government policies) can have material implications for poverty: the global food price spikes in 2010-11 tipped roughly 8 million people into poverty.

Sharing a Ride on the Commodities Roller Coaster

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Publisher : International Monetary Fund
ISBN 13 : 1513549421
Total Pages : 60 pages
Book Rating : 4.5/5 (135 download)

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Book Synopsis Sharing a Ride on the Commodities Roller Coaster by : Andres Fernandez

Download or read book Sharing a Ride on the Commodities Roller Coaster written by Andres Fernandez and published by International Monetary Fund. This book was released on 2015-12-29 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: Fluctuations in commodity prices are an important driver of business cycles in small emerging market economies (EMEs). We document how these fluctuations correlate strongly with the business cycle in EMEs. We then embed a commodity sector into a multi-country EMEs’ business cycle model where exogenous fluctuations in commodity prices follow a common dynamic factor structure and coexist with other driving forces. The estimated model assigns to commodity shocks 42 percent of the variance in income, of which a considerable part is linked to the common factor. A further amplification mechanism is a ”spillover” effect from commodity prices to risk premia.

Economic and Financial Crises in Emerging Market Economies

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Publisher : University of Chicago Press
ISBN 13 : 0226241106
Total Pages : 540 pages
Book Rating : 4.2/5 (262 download)

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Book Synopsis Economic and Financial Crises in Emerging Market Economies by : Martin Feldstein

Download or read book Economic and Financial Crises in Emerging Market Economies written by Martin Feldstein and published by University of Chicago Press. This book was released on 2007-11-01 with total page 540 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the late 1990s, economic and financial crises raged through East Asia, devastating economies that had previously been considered among the strongest in the developing world. The crises eventually spread to Russia, Turkey, and Latin America, and impacted the economies of many industrialized nations as well. In today's increasingly interdependent world, finding ways to reduce the risk of future crises—and to improve the management of crises when they occur—has become an international policy challenge of paramount importance. This book rises to that challenge, presenting accessible papers and commentaries on the topic not only from leading academic economists, but also from high-ranking government officials (in both industrial and developing nations), senior policymakers at international institutions, and major financial investors. Six non-technical papers, each written by a specialist in the topic, provide essential economic background, introducing sections on exchange rate regimes, financial policies, industrial country policies, IMF stabilization policies, IMF structural programs, and creditor relations. Next, personal statements from the major players give firsthand accounts of what really went on behind the scenes during the crises, giving us a rare glimpse into how international economic policy decisions are actually made. Finally, wide-ranging discussions and debates sparked by these papers and statements are summarized at the end of each section. The result is an indispensable overview of the key issues at work in these crises, written by the people who move markets and reshape economies, and accessible to not just economists and policymakers, but also to educated general readers. Contributors: Montek S. Ahluwalia, Domingo F. Cavallo, William R. Cline, Andrew Crockett, Michael P. Dooley, Sebastian Edwards, Stanley Fischer, Arminio Fraga, Jeffrey Frankel, Jacob Frenkel, Timothy F. Geithner, Morris Goldstein, Paul Keating, Mervyn King, Anne O. Krueger, Roberto Mendoza, Frederic S. Mishkin, Guillermo Ortiz, Yung Chul Park, Nouriel Roubini, Robert Rubin, Jeffrey Sachs, Ammar Siamwalla, George Soros

Modeling with Macro-Financial Linkages

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Publisher : International Monetary Fund
ISBN 13 :
Total Pages : 36 pages
Book Rating : 4.3/5 ( download)

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Book Synopsis Modeling with Macro-Financial Linkages by : Ms.Inci Ötker

Download or read book Modeling with Macro-Financial Linkages written by Ms.Inci Ötker and published by International Monetary Fund. This book was released on 2009-06 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes the evolution of the degree of global cyclical interdependence over the period 1960-2005. We categorize the 106 countries in our sample into three groups-industrial countries, emerging markets, and other developing economies. Using a dynamic factor model, we then decompose macroeconomic fluctuations in key macroeconomic aggregates-output, consumption, and investment-into different factors. These are: (i) a global factor, which picks up fluctuations that are common across all variables and countries; (ii) three group-specific factors, which capture fluctuations that are common to all variables and all countries within each group of countries; (iii) country factors, which are common across all aggregates in a given country; and (iv) idiosyncratic factors specific to each time series. Our main result is that, during the period of globalization (1985-2005), there has been some convergence of business cycle fluctuations among the group of industrial economies and among the group of emerging market economies. Surprisingly, there has been a concomitant decline in the relative importance of the global factor. In other words, there is evidence of business cycle convergence within each of these two groups of countries but divergence (or decoupling) between them.

Macroeconomics in Emerging Markets

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Publisher : Cambridge University Press
ISBN 13 : 0521780608
Total Pages : 457 pages
Book Rating : 4.5/5 (217 download)

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Book Synopsis Macroeconomics in Emerging Markets by : Peter J. Montiel

Download or read book Macroeconomics in Emerging Markets written by Peter J. Montiel and published by Cambridge University Press. This book was released on 2003-04-10 with total page 457 pages. Available in PDF, EPUB and Kindle. Book excerpt: Table of contents