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iMFdirect wrote a new blog post titled China’s Housing Market: Defying the Odds?
by iMFdirect Housing is on everyone’s mind. The collapse of housing bubbles can be very costly. In Japan, house prices rose by about 40 percent during the mid-1980s; the collapse was followed by a ‘lost decade’ in which incomes did not grow and house prices fell by over 40 percent. In the United States, house prices increased by about 30 percent between 2001 and 2006; their collapse was followed by the global financial crisis. The collapse of the housing sector can often lead to a broader collapse of the financial sector. And the cost to the government of cleaning up the mess can be very...
1327 days ago
iMFdirect wrote a new blog post titled Competitiveness in Sub-Saharan Africa: Time to Move Ahead
By Antoinette Sayeh The sub-Saharan Africa region is facing severe shocks associated with the steep decline in commodity prices and tightening global financial conditions. Against this background, it’s a good time to look back at the region’s recent growth experience and examine the relationship between growth rates and competitiveness. The extent to which sub-Saharan African companies are able to compete against their foreign competitors (that is, the extent to which they are competitive) could indeed play a role in sustaining growth going ahead. Sub-Saharan Africa’s rapid growth in recent...
1331 days ago
iMFdirect wrote a new blog post titled Latin America and the Caribbean in 2016: Adjusting to a Harsher Reality
Alejandro Werner By Alejandro Werner (Versions in Español and Português) It’s been a rough start to 2016, as seen by the recent bouts of financial volatility, stemming from uncertainties related to the slowdown in China, lower commodity prices, and divergent monetary policy in advanced economies. The global recovery continues to struggle to gain its footing, with strains in some large emerging market economies weighing on growth prospects. For Latin America and the Caribbean, growth in 2016 is now expected to be negative for the second consecutive year—the first time since the debt crisis of...
1337 days ago
iMFdirect wrote a new blog post titled Virtual Currencies: The Public Impact of Private Money
By iMFdirect Technology and finance have always gone together. So what’s new this time around? Virtual currencies are part of a broader tech revolution that is driving fundamental change in the global economy. While the money is virtual, the rewards and the risks are very real. It boils down to this: how best to encourage financial innovation while regulating to protect consumers and avoid other possible harm. A few of our economists, financial experts, and lawyers decided to tackle the issue in a new paper with a global view. Christine Lagarde, the IMF’s Managing Director also...
1339 days ago
iMFdirect wrote a new blog post titled Subdued Growth, Diminished Prospects, Action Needed
By Maurice Obstfeld At the start of 2016, turbulence in financial markets has returned amid renewed concern about risks to global economic growth. The fundamental forces that underlay our October World Economic Outlook projections have not dissipated, and in some respects have intensified, leading us to trim our expectations for future medium-term growth of the world economy. In the World Economic Outlook Update released today, we still, however, expect growth to pick up this year in most countries. Despite the modesty of the reduction we see in general growth prospects and the promise of...
1340 days ago
iMFdirect wrote a new blog post titled Oil Low-Commotion
Brent crude oil fell below $30 a barrel yesterday for the first time since 2004, which reminds us that commodity prices are a hot topic that impact everyone, everywhere, one way or another. So we thought you might like to read a few of our recent blogs about what the !@#$% is going on, and why it matters for the global economy. Back in September we looked beyond oil to other commodities and the relationship between the two in Metals and Oil: A Tale of Two Commodities. In October we pulled back the curtain on Sovereign Wealth Funds in the New Era of Oil. And in December we took the long view...
1345 days ago
iMFdirect wrote a new blog post titled Climate Change: How To Price Paris
by Vitor Gaspar, Michael Keen, and Ian Parry The Paris Agreement on Climate Change is a historic diplomatic achievement. Climate change is a global problem. Many believed that global problem solving would prove elusive: the benefits of cutting emissions arise globally while the costs of doing so are borne nationally, so national self-interest would prevent a meaningful agreement. Paris proves otherwise—creating a commonality of purpose at the global level.  At the core of the agreement are the country-level emission reduction pledges and timetables that were submitted by 186 countries. The...
1348 days ago
iMFdirect wrote a new blog post titled The Top Ten Blogs of 2015
by iMFdirect 2015 was a bold year for blogs at the IMF.  Boldness grows less common in the higher ranks, according to Prussian general and military theorist Carl von Clausewitz, but he couldn’t be more wrong when it comes to these blogs: the list includes work by the IMF’s former chief economist Olivier Blanchard and Vitor Gaspar, head of the Fiscal Affairs Department. Our readers’ interests focused on blogs about tough choices for Greece, the slump in commodity prices, the real cost of energy subsidies, how the poor and middle class contribute to growth, and new insights...
1360 days ago
iMFdirect wrote a new blog post titled China and Africa: Will the Honeymoon Continue?
By Wenjie Chen and Roger Nord China’s President Xi Jinping’s recent pledge of US$60 billion in financial support over the next three years illustrates the depth of the partnership between China and Africa. However, China’s shift from an investment-heavy, export led growth strategy to an economic model that relies more on domestic consumption has led to a dramatic decline in commodity prices. Lower commodity prices and lower volumes of trade have hit sub-Saharan Africa’s commodity exporters hard. But over the medium term, this shift may offer sub-Saharan African countries the opportunity to...
1369 days ago
iMFdirect wrote a new blog post titled The Specter of Risk in the Derivatives of Bond Mutual Funds
By Fabio Cortes Current regulations only require U.S. and European bond mutual funds to disclose a limited amount of information about the risks they have taken using financial instruments called derivatives. This leaves investors and policymakers in the dark on a key issue for financial stability.  Our new research in the October 2015 Global Financial Stability Report looks at just how much is at stake.  A number of large bond mutual funds use derivatives—contracts that permit investors to bet on the future direction of interest rates. However, unlike bonds, most derivatives only require a...
1373 days ago
iMFdirect wrote a new blog post titled It’s Getting Hot in Here: Climate Change
by iMFdirect World leaders are meeting in Paris to forge a new climate deal.  We interviewed two  leading thinkers on climate, Nick Stern and Christiana Figueres. In this podcast, Nick Stern, Professor of Economics and Government at the London School of Economics, says the world is not yet on the two degree path as carbon emissions continue to rise. Stern is author of “The Low-Carbon Road” in the December issue of Finance & Development. Back in October, we caught up with Christiana Figueres, head of the United Nations framework convention on climate change, when she was in Lima, Peru for...
1380 days ago
iMFdirect wrote a new blog post titled Are Capital Flows Expansionary or Contractionary? It Depends What Kind
By Olivier Blanchard, Jonathan D. Ostry, Atish R. Ghosh, and Marcos Chamon With the expected move by the Federal Reserve to raise interest rates before the end of the year, many are asking about the effects on emerging market countries. Will outflows increase, and how will this affect economic activity in emerging markets? To answer that, we need to know if capital inflows are in general expansionary or contractionary. One would think that the question was settled long ago. But, in fact, it is not. It is a case where theory suggests one thing and practice another. The workhorse model of...
1383 days ago
iMFdirect wrote a new blog post titled The Price of Oil and the Price of Carbon
By Rabah Arezki and Maurice Obstfeld “The human influence on the climate system is clear and is evident from the increasing greenhouse gas concentrations in the atmosphere, positive radiative forcing, observed warming, and understanding of the climate system.” —Intergovernmental Panel on Climate Change, Fifth Assessment Report Fossil fuel prices are likely to stay “low for long.” Notwithstanding important recent progress in developing renewable fuel sources, low fossil fuel prices could discourage further innovation in and adoption of cleaner energy technologies. The result would be higher...
1388 days ago
iMFdirect wrote a new blog post titled A Glimpse of the Future
by Jeff Hayden One of my favorite car trips in the United States heads east out of Los Angeles and runs through the windswept San Gorgonio Pass, gateway to the Mojave and Sonoran deserts. I’m a fan of the drive on Interstate 10 not only because it affords access to a dramatic desert landscape but also because the funnel-like pass at San Gorgonio prompts thoughts about the planet’s energy future. The pass—one of the windiest places in the United States—is home to the San Gorgonio Pass Wind Farm, an array of more than 4,000 turbines that harness wind to produce...
1390 days ago
iMFdirect wrote a new blog post titled Openness and Inequality: Distributional Impacts of Capital Account Liberalization
By Davide Furceri and Prakash Loungani It is well accepted that trade generates winners and losers. The past few decades have seen increases not just in trade in goods and services but trade in assets, as countries relax restrictions on the ability of capital to flow across national boundaries. Surprisingly, while the impact of trade in goods and services on inequality has been extensively studied, little attention has been paid to the distributional impacts of opening up capital markets. Our paper fills this gap. Using a data set for nearly 150 countries from 1970 to 2010, we show that...
1396 days ago
iMFdirect wrote a new blog post titled Reviving Credit in the Euro Area
by Jean Portier and Luca Sanfilippo A stock in excess of €900 billion of nonperforming loans continue to clutter the European banking system, impeding economic growth.  This issue remains a key challenge for policy makers. As we show in our latest Global Financial Stability Report, part of the solution to address this legacy is an upgrade in legal systems. Current inefficiencies—long foreclosure times and insolvency procedures—are a reason for the gap between the value of loans on bank balance sheets and the price investors are willing to pay. A reliable legal environment and an efficient...
1397 days ago
iMFdirect wrote a new blog post titled The Effects of Wage Moderation: Can Internal Devaluations Work?
By Jorg Decressin and Prakash Loungani Devaluation is often part of the remedy for a country in financial trouble. Devaluation boosts the competitiveness of a country’s exports and curtails imports by making them more costly. Together, the higher exports and the reduced imports generate some of the financial resources needed to help the country get out of trouble. For countries that belong to—and want to stay in—a currency union, however, devaluation is not an option. This was the situation facing several euro area economies at the onset of the global financial crisis: capital had been...
1403 days ago
iMFdirect wrote a new blog post titled Tackling Inequality in sub-Saharan Africa Could Yield Mileage on Growth
by Antoinette Sayeh Rising inequality is both a moral and economic issue that has implications for the general health of the global economy, and impacts prosperity and growth. So it’s not surprising that reducing inequality is an integral part of the Sustainable Development Goals  adopted by world leaders at the United Nations summit in September. I often discuss with my colleagues where sub-Saharan Africa stands with respect to these objectives. Unfortunately, the region remains one of the most unequal in the world, on par with Latin America (see Chart 1). In fact, inequality seems markedly...
1404 days ago
iMFdirect wrote a new blog post titled Migration: A Global Issue in Need of a Global Solution
By Christine Lagarde As the Group of Twenty leaders gather in Turkey this weekend, they will have on their minds heartbreaking images of displaced people fleeing countries gripped by armed conflict and economic distress.  The surge of refugees in the last few years has reached levels not seen in decades. And these numbers could increase further in the near future.  The immediate priority must be to help the refugees—who bear the heaviest burden, and too often tragically—with better access to shelter, health care and quality education. Many of the countries neighboring conflict zones—which...
1409 days ago
iMFdirect wrote a new blog post titled Bad Debt in Emerging Markets: Still Early Days
by John Caparusso, Yingyuan Chen, Evan Papageorgiou and Shamir Tanna Emerging markets have had a great run. The fifteen largest emerging market economies grew by 48% from 2009 to 2014, a period when the Group of Twenty economies collectively expanded by 6%. How did emerging markets sustain this growth? In part, they drew upon bank lending to drive corporate credit expansion, strong earnings, and low defaults. This credit boom, combined with falling commodity prices and foreign currency borrowing, now leaves emerging market firms vulnerable and financial sectors under stress, as we discuss in...
1411 days ago