Statement by the Managing Director to the International Monetary and Financial Committee on the Global Economy and Financial Markets

Policy Papers ◽  
2011 ◽  
Vol 2011 (28) ◽  
Author(s):  
Keyword(s):  
Financial Markets ◽  
Global Economy ◽  
Developing Economies ◽  
Emerging Market ◽  
Balance Sheets ◽  
Fiscal Adjustment ◽  
Advanced Economies ◽  
Global Demand ◽  
Private Demand ◽  
Major Progress

The recovery is solidifying. However, old policy challenges still need to be fully addressed and new challenges are arising, especially on account of rising commodities prices. In many advanced economies the handoff from public to private demand is proceeding. But unemployment remains high and weak public balance sheets and still vulnerable financial sectors mean that the recovery is subject to downside risks. In many emerging market economies, overheating and financial imbalances present growing policy concerns. Monetary policy should stay accommodative in advanced economies, but needs further tightening in a number of emerging and developing economies to rein in inflationary pressure and rapid credit growth. Additionally, in emerging surplus economies, real exchange rate appreciation is needed to help contain inflation and support global demand rebalancing. In most economies, the time has come to begin fiscal adjustment by implementing measures to steadily reduce debt ratios toward more prudent levels. Moreover, financial sector repair and reform need to accelerate. Absent major progress on all these fronts, the recovery will remain vulnerable and job creation will continue to fall short of requirements in many parts of the world.

Statement by the Managing Director to the International Monetary and Financial Committee on the Global Economy and Financial Markets

Policy Papers ◽  
2010 ◽  
Vol 2010 (58) ◽  
Author(s):  
Keyword(s):  
Financial Markets ◽  
Emerging Economies ◽  
Global Economy ◽  
Developing Economies ◽  
Social Consequences ◽  
Smooth Transition ◽  
Macroeconomic Policies ◽  
Advanced Economies ◽  
Key Policy ◽  
Policy Challenge

The recovery remains fragile and uneven. In many advanced economies, activity is still sluggish and unemployment high, while legacy problems in the financial system remain unresolved. Activity is more robust in many emerging and developing economies. However, their prospects also depend on a healthy, broad-based recovery among the advanced economies, owing to deep real and financial linkages. The key policy challenge is to effect a smooth transition from public- to private-sector-led growth in many advanced economies, and from external to domestically driven growth in key emerging economies. While short-term macroeconomic policies are broadly appropriate, completing the two rebalancing acts will require tackling the medium-term fiscal, financial, and structural challenges raised by the crisis. Without such reforms, growth could sputter, with grave economic and social consequences.

Counting the Environment: The Environmental Implications of International Accounting Standards

2011 ◽  
Vol 11 (2) ◽  
pp. 75-97 ◽  
Author(s):  
Jason Thistlethwaite
Keyword(s):  
Financial Markets ◽  
Environmental Performance ◽  
Global Economy ◽  
Environmental Governance ◽  
Economic Value ◽  
Accounting Standards ◽  
International Accounting ◽  
International Accounting Standards ◽  
Environmental Implications ◽  
Balance Sheets

Although rarely studied, international accounting standards shape what information regarding a firm's environmental performance is communicated to international financial markets. This article builds on scholarship describing the influence of international accounting standards on private financial markets to show that nominally technical choices regarding how to recognize and measure firms' environmental impacts hold the potential to reduce these impacts. Obscure accounting debates within the International Accounting Standards Board (IASB) mask important political choices about what a firm must disclose to investors about its environmental liabilities and risks. IASB decisions about how these appear on corporate balance sheets change the link between a firm's environmental performance and its economic value and, thereby, contribute to steering private financial markets toward rewarding sustainable behavior within the global economy. This analysis demonstrates the authority of the IASB as an overlooked source of global environmental governance.

Commodities rout will fuel EM concerns and volatility

2015 ◽  
Keyword(s):  
Financial Markets ◽  
Interest Rates ◽  
Emerging Market ◽  
Commodity Prices ◽  
Content Type ◽  
Bear Market ◽  
Political Crises ◽  
Downward Pressure ◽  
Advanced Economies ◽  
Country Specific

Significance This drop has taken oil into its second bear market in the space of just over a year amid a broader rout in the prices of commodities, notably copper and gold. The commodity sell-off is fuelled by mounting concerns over the economy and financial markets of China, the world's top crude importer and its largest energy user. The sell-off is exacerbated by fears over the fallout from a US interest rates rise, which could come as early as September. Country-specific risks are weighing on emerging market (EM) assets, notably the currencies of large commodity exporters such as Brazil and Russia. Impacts The sharp fall in commodity prices will exert further downward pressure on inflation in both emerging and advanced economies. Re-emerging disinflationary trends will bode ill for the ECB efforts to boost inflation in the euro-area. The commodity sell-off will exacerbate economic and political crises in Brazil and Russia. The EM currencies fall is forcing many central banks to signal an end to monetary easing or to tighten policy.

A Barrel of Oil or a Bottle of Wine: How Do Global Growth Dynamics Affect Commodity Prices?

2014 ◽  
Vol 9 (1) ◽  
pp. 34-50 ◽  
Author(s):  
Serhan Cevik ◽  
Tahsin Saadi Sedik
Keyword(s):  
Crude Oil ◽  
Developing Economies ◽  
Emerging Market ◽  
Aggregate Demand ◽  
Commodity Prices ◽  
Growth Dynamics ◽  
Commodity Price ◽  
Output Growth ◽  
Incremental Change ◽  
Advanced Economies

AbstractThis paper explores empirically the causes of extreme fluctuations in commodity prices from January 1990 to June 2010 and seeks to identify the relative contribution of advanced and emerging market economies to the changes in commodity prices. Our assumption is that analyzing two very distinct goods—crude oil and fine wine—helps to identify common determinants of commodity prices. We find that the growth rate of global aggregate demand is the key macroeconomic determinant of the fluctuations in both crude oil and fine wine prices over the sample period. While advanced economies account for more than half of global consumption, emerging market and developing economies make up the bulk of the incremental change in demand, thereby having a greater weight in commodity price formation. The coefficient of emerging market industrial output growth is about three times as high as that of advanced economies in oil price regressions and almost five times as powerful in fine wine price regressions. The results also show that the shift in the composition of aggregate commodity demand is a recent phenomenon. (JEL Classifications: Q11, Q39, Q41, Q43)

Emerging Europe markets will be strong in 2016

2015 ◽  
Keyword(s):  
Monetary Policy ◽  
Financial Markets ◽  
Developing Economies ◽  
Emerging Market ◽  
Investor Sentiment ◽  
Commodity Prices ◽  
Oil Prices ◽  
Content Type ◽  
Central Eastern Europe ◽  
Equity Funds

Subject The prospects for Emerging Europe assets. Significance Despite record levels of outflows from emerging market (EM) bond and equity funds in 2015, the financial markets of Central-Eastern Europe (CEE) have remained remarkably resilient. They are likely to continue to outperform those of Latin America and Emerging Asia next year, because of a combination of relatively strong fundamentals and liquidity support from the ECB. Impacts Investor sentiment towards developing economies is now shaped almost entirely by dramatic declines in commodity prices. US monetary policy will now prove secondary to the plunge in oil prices. Growth in the CEE region picked up significantly this year and is still expected to remain relatively robust in 2016.

scholarly journals Limitations of the government budget constraint: Users vs. issuers of the currency

2011 ◽  
Vol 58 (1) ◽  
pp. 57-66 ◽  
Author(s):  
Stephanie Kelton
Keyword(s):  
Sovereign Debt ◽  
Full Employment ◽  
Debt Crisis ◽  
Balance Sheets ◽  
Fiscal Adjustment ◽  
Advanced Economies ◽  
Fiscal Support ◽  
Bona Fide ◽  
The Government ◽  
Run Up

The financial crisis and ensuing economic meltdown has led to sharp increases in the deficits and debt levels of many advanced economies. The run-up in public sector indebtedness helped to restore private sector balance sheets, laying the foundation for economic recovery in these regions. But the so-called ?sovereign? debt crisis in the Eurozone has undermined the fiscal resolve that has, thus far, kept truly sovereign governments from slipping into a bona fide depression. Fearful of becoming the next Greece, governments that could allow an unlimited fiscal adjustment to restore full employment, are methodically weakening their fiscal support mechanisms and setting themselves on a path to becoming the next Japan.

Planned fiscal adjustments: Do governments fulfil their commitments?

2018 ◽  
Vol 19 (3) ◽  
pp. 383-407 ◽  
Author(s):  
Sanjeev Gupta ◽  
João T Jalles ◽  
Carlos Mulas-Granados ◽  
Michela Schena
Keyword(s):  
Gross Domestic Product ◽  
Financial Markets ◽  
Domestic Product ◽  
Narrative Approach ◽  
Fiscal Consolidation ◽  
Political Factors ◽  
Fiscal Adjustment ◽  
Advanced Economies ◽  
Fiscal Adjustments

This article analyzes the causes and consequences of fiscal consolidation promise gaps, defined as the distance between planned fiscal adjustments and actual consolidations. Using 74 consolidation episodes derived from the narrative approach in 17 advanced economies during 1978–2015, the paper shows that promise gaps were sizeable (about 0.3% of gross domestic product per year or 1.1% of gross domestic product during an average fiscal adjustment episode). Both economic and political factors explain the gaps: for example, greater electoral proximity, stronger political cohesion and higher accountability were all associated with smaller promise gaps. Finally, governments that delivered on their fiscal consolidation plans were rewarded by financial markets and not penalized by voters.

Market conditions will outweigh Polish political risk

2017 ◽  
Keyword(s):  
Emerging Markets ◽  
Financial Markets ◽  
Interest Rates ◽  
Rule Of Law ◽  
Developing Economies ◽  
Emerging Market ◽  
Content Type ◽  
The Rule Of Law ◽  
Low Interest Rates ◽  
The Impact

Subject The impact of the European Commission decision to escalate the ‘rule of law’ procedure against Poland to its third and final stage. Significance The escalation in tensions between Warsaw and Brussels over reforms that threaten the independence of Poland’s judiciary is having a muted impact on sentiment in financial markets. More important are investors’ bullish stance on emerging markets (EM), and expectations that the ECB is in no rush to withdraw monetary stimulus. Impacts The dollar index against other currencies has fallen to its lowest level since May 2016, providing a major fillip to emerging market assets. Sentiment towards developing economies is buoyed by the prospect of persistently low interest rates. The severe escalation in US-North Korean tensions is having only a muted impact on financial markets, judging by the Vix Index ‘fear gauge’.

At a Glance…: The World Economy

2016 ◽  
Vol 235 ◽  
pp. F2-F2
Keyword(s):  
World Economy ◽  
Emerging Market ◽  
Commodity Prices ◽  
List Type ◽  
Equity Prices ◽  
Advanced Economies ◽  
Global Demand ◽  
The World ◽  
Recent Falls ◽  
Economic Outlook

The world economy grew by 3.0 per cent in 2015, as indicated in our last two forecasts. It is now projected to grow only slightly faster this year, by 3.2 per cent, and by 3.8 per cent in 2017.In the advanced economies, the modest and uneven recovery is expected to continue, while many major emerging market economies continue to face significant challenges, with slower growth in some cases and deep recessions in others.The renewed decline in global oil prices in the past three months, accompanied by sharp falls in equity prices worldwide, have increased uncertainty about the global economic outlook.Recent falls in oil and other global commodity prices will lower inflation again in the short term, but should boost global demand while increasing the challenges faced by commodity producers.

scholarly journals The International Monetary Fund: 70 Years of Reinvention

2016 ◽  
Vol 30 (1) ◽  
pp. 3-28 ◽  
Author(s):  
Carmen M. Reinhart ◽  
Christoph Trebesch
Keyword(s):  
Developing Economies ◽  
Emerging Market ◽  
Lender Of Last Resort ◽  
Multiple Dimensions ◽  
Advanced Economies ◽  
Imf Programs ◽  
Sovereign Defaults ◽  
Sustainability Problems ◽  
Over Time ◽  
The Imf

A sketch of the International Monetary Fund’s 70-year history reveals an institution that has reinvented itself over time along multiple dimensions. This history is primarily consistent with a “demand driven” theory of institutional change, as the needs of its clients and the type of crisis changed substantially over time. Some deceptively “new” IMF activities are not entirely new. Before emerging market economies dominated IMF programs, advanced economies were its earliest (and largest) clients through the 1970s. While currency problems were the dominant trigger of IMF involvement in the earlier decades, banking crises and sovereign defaults became the key focus after the 1980s. Around this time, the IMF shifted from providing relatively brief (and comparatively modest) balance-of-payments support in the era of fixed exchange rates to coping with more chronic debt sustainability problems that emerged with force in the developing economies and have now migrated to advanced economies. As a consequence, the IMF has engaged in “serial lending,” with programs often spanning decades. Moreover, the institution faces a growing risk of lending into insolvency; this has been most evident in Greece since 2010. We conclude with the observation that the IMF’s role as an international lender of last resort is endangered.

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