Download or read book The Rewards of Fiscal Consolidation Sovereign Spreads and Confidence Effects written by Mr.Antonio David and published by International Monetary Fund. This book was released on 2019-07-02 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the effects of fiscal consolidation announcements on sovereign spreads in a panel of 21 emerging market economies during 2000-18. We construct a novel dataset using a global news database to identify the precise announcement date of fiscal consolidation actions. Our results show that sovereign spreads decline significantly following news that austerity measures have been approved by the legislature (congress or parliament), in periods of high sovereign spreads or in countries under an IMF program. In addition, consolidation announcements are less contractionary when sovereign spreads decline, with the reduction in output being half of the counterfactual case in which spreads do not respond to announcements. These results constitute direct evidence that confidence effects, in the form of lower sovereign spreads, are an important transmission channel of fiscal shocks. We also find that the role of confidence effects increases with the level of spreads such that countries with high spread levels stand to benefit the most from putting in place credible austerity packages.
Download or read book The Rewards of Fiscal Consolidation Sovereign Spreads and Confidence Effects written by Mr.Antonio David and published by International Monetary Fund. This book was released on 2019-07-02 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the effects of fiscal consolidation announcements on sovereign spreads in a panel of 21 emerging market economies during 2000-18. We construct a novel dataset using a global news database to identify the precise announcement date of fiscal consolidation actions. Our results show that sovereign spreads decline significantly following news that austerity measures have been approved by the legislature (congress or parliament), in periods of high sovereign spreads or in countries under an IMF program. In addition, consolidation announcements are less contractionary when sovereign spreads decline, with the reduction in output being half of the counterfactual case in which spreads do not respond to announcements. These results constitute direct evidence that confidence effects, in the form of lower sovereign spreads, are an important transmission channel of fiscal shocks. We also find that the role of confidence effects increases with the level of spreads such that countries with high spread levels stand to benefit the most from putting in place credible austerity packages.
Download or read book Numerical Fiscal Rules for Economic Unions the Role of Sovereign Spreads written by Juan Carlos Hatchondo and published by International Monetary Fund. This book was released on 2021-07-23 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study gains from introducing a common numerical fiscal rule in a “Union” of model economies facing sovereign default risk. We show that among economies in the Union, there is significant disagreement about the common debt limit the Union should implement: the limit preferred by some economies can generate welfare losses in other economies. In contrast, a common sovereign spread limit results in higher welfare across economies in the Union.
Download or read book Fiscal Consolidation Taking Stock of Success Factors Impact and Design written by Vybhavi Balasundharam and published by International Monetary Fund. This book was released on 2023-03-17 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: Fiscal Consolidation: Taking Stock of Success Factors, Impact, and Design
Download or read book International Capital Markets written by Morris Goldstein and published by International Monetary Fund. This book was released on 1994 with total page 65 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Effects of Fiscal Measures During COVID-19
Download or read book Can Fiscal Consolidation Announcements Help Anchor Inflation Expectations written by Mr. Antonio David and published by International Monetary Fund. This book was released on 2024-03-15 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we use quarterly data and a novel database on fiscal policy consolidation announcements, for a sample of advanced economies and emerging markets to quantify the effects of fiscal tightening on inflation expectations. We find that fiscal consolidation announcements reduce inflation expectations over the medium-term (three and five-years ahead), but not in the short-term (one-year ahead). There is also some evidence that consolidation announcements reduce “disagreement” about expected future inflation at longer horizons. The inflation anchoring role of consolidation announcements is enhanced by the strength of a country’s fiscal and monetary frameworks, and when fiscal and monetary policy work in tandem. In addition, we find that initial conditions matter—inflation expectation’s response to consolidation announcements is larger in periods of high contemporaneous inflation. With these results in hand, we show that the effectiveness of fiscal consolidation in controlling realized inflation depends greatly on the response of inflation expectations to consolidation announcements. These results show that fiscal policy is crucial to anchor inflation expectations and a key element of a credible disinflationary process.
Download or read book The Return to Fiscal Rules written by Francesca Caselli and published by International Monetary Fund. This book was released on 2022-10-11 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: Governments face difficult policy trade-offs with record debt levels, tightening monetary policies, and urgent demands, including food and energy crises, the climate agenda, and population aging. Governments need to communicate fiscal plans to reduce debt sustainability risks and promote consistent macroeconomic policies. Many envisage a return to fiscal rules that had been suspended during the pandemic to strengthen credibility. This situation offers an opportunity to rethink fiscal rules and determine how governments can make fiscal policy more agile, including in responding to crises, without undermining fiscal sustainability. A risk-based medium-term fiscal framework that combines standards, rules, and strengthened institutions would strike a better balance between flexibility and credibility.
Download or read book The Return of Expansionary Austerity Firms Investment Response to Fiscal Adjustments in Emerging Markets written by Mr. Nicolas E Magud and published by International Monetary Fund. This book was released on 2022-04-08 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the response of corporate investment in Emerging Markets to unexpected fiscal shocks. We find that, although firm-level investment decreases on impact following unexpected public expenditure adjustments (classical Keynesian multiplier effect), it quickly rises above pre-shock levels. The rebound in investment is facilitated by fiscal space, flexible exchange rates, and more predictable fiscal policy. We also show that the composition of fiscal adjustments matters for investment’s response—compared to public investment adjustments, reductions in public consumption lead to larger private investment contractions on impact, but drive private investment to above pre-shock levels. Finally, we exploit firm-level heterogeneity in several dimensions, including to show that corporate investment’s recovery is stronger in firms in the tradable sector and in larger and less indebted firms, and to show that the long-run benefits to economic activity of the fiscal shock appear to outweigh its short-run costs.
Download or read book Tax Policy for Inclusive Growth in Latin America and the Caribbean written by Santiago Acosta-Ormaechea and published by International Monetary Fund. This book was released on 2022-01-21 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: Tax Policy for Inclusive Growth in Latin America and the Caribbean
Download or read book Rwanda written by International Monetary Fund. African Dept. and published by International Monetary Fund. This book was released on 2023-12-18 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: Rwanda: Selected Issues
Download or read book Strengthening the Credibility of Public Finances written by International Monetary Fund and published by International Monetary Fund. This book was released on 2021-10-13 with total page 114 pages. Available in PDF, EPUB and Kindle. Book excerpt: Chapter 1 argues that fiscal policy should remain nimble and strengthen its medium-term frameworks, as countries face highly uncertain and differentiated prospects. Vaccination has saved lives and is helping fuel a nascent recovery, but risks are elevated amidst new virus variants, high debt, and poverty. In advanced economies, the shift in fiscal support toward medium-term packages to “build back better” will have overall positive effects globally. Emerging markets and low-income developing countries face a more challenging outlook, with permanent economic scarring and revenue losses. They need international support to increase vaccine availability and financing to achieve the Sustainable Development Goals. Many countries find themselves in a situation where fiscal support is still invaluable to protect lives and livelihoods. At the same time, governments are also facing questions on their elevated debt and gross financing needs. Chapter 2 provides countries with guidance on how they can both avoid withdrawing fiscal support too early, and yet signal to the public that their debt levels are sustainable in the long run. To commit to future deficit reduction, governments have several instruments, including undertaking structural fiscal reforms (such as pension reform or subsidies reform), pre-legislating changes to taxes or spending, committing to fiscal rules that lead to deficit reduction in the future. Countries that follow debt rules, for instance, manage to reduce debt faster that other countries, although fiscal rules should also provide enough flexibility to spend in times of need. Overall, governments that commit to sound public finances and that achieve high levels of fiscal transparency reap meaningful benefits: their budgets are more credible, their announcements are better perceived by the media, and they pay lower interest rates on their debt.
Download or read book Fiscal Rules Anchoring Expectations for Sustainable Public Finances written by International Monetary Fund. Fiscal Affairs Dept. and published by International Monetary Fund. This book was released on 2009-12-11 with total page 73 pages. Available in PDF, EPUB and Kindle. Book excerpt: The sharp increase in fiscal deficits and public debt in most advanced and several developing economies has raised concerns about the sustainability of public finances and highlighted the need for a significant adjustment over the medium term. This paper assesses the usefulness of fiscal rules in supporting fiscal consolidation, discusses the design and implementation of rules based on a new data base spanning the whole Fund membership, and explores the fiscal framework that could be adopted as countries emerge from the crisis.
Download or read book A Primer on Managing Sovereign Debt Portfolio Risks written by Thordur Jonasson and published by International Monetary Fund. This book was released on 2018-04-06 with total page 133 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides an overview of sovereign debt portfolio risks and discusses various liability management operations (LMOs) and instruments used by public debt managers to mitigate these risks. Debt management strategies analyzed in the context of helping reach debt portfolio targets and attain desired portfolio structures. Also, the paper outlines how LMOs could be integrated into a debt management strategy and serve as policy tools to reduce potential debt portfolio vulnerabilities. Further, the paper presents operational issues faced by debt managers, including the need to develop a risk management framework, interactions of debt management with fiscal policy, monetary policy, and financial stability, as well as efficient government bond markets.
Download or read book International Monetary Fund Annual Report 2019 Financial Statements written by International Monetary Fund and published by International Monetary Fund. This book was released on 2019-10-04 with total page 122 pages. Available in PDF, EPUB and Kindle. Book excerpt: The audited consolidated financial statements of the International Monetary Fund as of April 30, 2019 and 2018
Download or read book Guidelines for Public Debt Management Amended written by International Monetary Fund and published by International Monetary Fund. This book was released on 2003-09-12 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: NULL
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.
Download or read book Fiscal Adjustment for Stability and Growth written by Mr.James Daniel and published by International Monetary Fund. This book was released on 2006-08-17 with total page 80 pages. Available in PDF, EPUB and Kindle. Book excerpt: The pamphlet (which updates the 1995 Guidelines for Fiscal Adjustment) presents the IMF’s approach to fiscal adjustment, and focuses on the role that sound government finances play in promoting macroeconomic stability and growth. Structured around five practical questions—when to adjust, how to assess the fiscal position, what makes for successful adjustment, how to carry out adjustment, and which institutions can help—it covers topics such as tax policies, debt sustainability, fiscal responsibility laws, and transparency.
