IMF releases

Here are the latest releases from the IMF:

Surveys

• IMF Head Urges Greater Regulation of Financial Sector
  IMF Managing Director Dominique Strauss-Kahn welcomes the $700 billion rescue plan for U.S. financial markets to "put out the fire" engulfing the banking system, but says a broader global solution to the crisis is needed.
• IMF to Launch Trust Funds to Support Technical Assistance
  The IMF plans to launch a series of trust funds to channel its technical assistance to specific policy topics. The menu-based Topical Trust Funds approach is designed to augment IMF resources already allocated to technical assistance.
• Inflation Risks Remain Despite Slowing Growth
  Commodity prices will likely remain high and volatile, contributing to risks of second-round effects-such as wage hikes-across a range of emerging and developing economies, and further monetary policy tightening may be still relevant to contain these inflationary pressures, according to new IMF research.
• Making Fiscal Stimulus Effective During Downturns
  A new IMF study finds that although fiscal policy is a potentially valuable tool for stimulating growth, it can easily do more harm than good if it is not implemented well. Tax cuts or spending increases that make debt unsustainable are likely to cause output to fall, not rise
• Financial Stress Likely to Hit Real Economy Hard
  Episodes of financial turmoil that are characterized by stress in commercial and investment banks are more likely to be associated with severe and protracted economic downturns, according to new IMF research.
• Lessons From Cross-Regional Analysis
  A new IMF study explores the patterns of current account balances of emerging economies-especially in Asia and Europe-and asks why they have become much more diverse in recent years and what those differences mean for external vulnerability.
• Financial Crisis Likely to Worsen Economic Downturn
  The current financial market meltdown in the United States and other advanced economies will likely lead to longer and deeper economic downturns in some of these countries, according to new IMF research on the impact of the shocks on the world economy.

Working Papers

• Working Paper No. 08/233: Rapid Current Account Adjustments: Are Microstates Different?

Summary: We describe unique aspects of microstates-they are less diversified, suffer from lumpiness of investment, they are geographically at the periphery and prone to natural disasters, and have less access to capital markets-that may make the current account more vulnerable, penalizing exports and making imports dearer. After reviewing the "old" and "new" view on current account deficits, we attempt to identify policies to help reduce the current account. Probit regressions suggest that microstates are more likely to have large current account adjustments if (i) they are already running large current account deficits; (ii) they run budget surpluses; (iii) the terms of trade improve; (iv) they are less open; and (v) GDP growth declines. Monetary policy, financial development, per capita GDP, and the de jure exchange rate classification matter less. However, changes in the real effective exchange rate do not help drive reductions in the current account deficit in microstate!

• Working Paper No. 08/234: Inflation Targeting and Communication: It Pays Off to Read Inflation Reports

Summary: Inflation-targeting central banks have a respectable track record at explaining their policy actions and corresponding inflation outturns. Using a simple forward-looking policy rule and an assessment of inflation reports, we provide a new methodology for the empirical evaluation of consistency in central bank communication. We find that the three communication tools-inflation targets, inflation forecasts, and verbal assessments of inflation factors contained in quarterly inflation reports-provided a consistent message in five out of six observations in our 2000-05 sample of Chile, the Czech Republic, Hungary, Poland, Thailand, and Sweden.

• Working Paper No. 08/232: Bank Losses, Monetary Policy and Financial Stability-Evidence on the Interplay from Panel Data
• Working Paper No. 08/231: Beyond Macroeconomic Stability: The Quest for Industrialization in Uganda

Summary: Uganda has registered one of the most impressive economic turnarounds of recent decades. The amelioration of conflict and wide ranging economic reforms kick-started rapid economic growth that has now been sustained for some 20 years. But there is a strong sense in policy making circles that despite macroeconomic stability and reasonably well functioning markets, economic growth has not translated into significant structural transformation. This paper considers (i) Uganda's record of economic transformation relative to the high growth Asian countries and (ii) the contending explanations as to why more transformation and higher growth has proved elusive.

• Working Paper No. 08/228: Determinants of Government Efficiency
  Summary: We compile the first large cross-country panel dataset of public sector performance and efficiency, encompassing 114 countries on all income levels from 1980 to 2006, with about 1,800 country-year observations for the education sector and about 900 observations for health. We regress these indicators on potential economic, institutional, demographic, and geographic determinants. Our most resounding conclusion is that higher government expenditure relative to GDP tends to be associated with lower efficiency in the respective sector. Moreover, we find that richer countries exhibit better public sector performance and efficiency, and that institutional and demographic factors also play a significant role.
• Working Paper No. 08/229: Banks and Labor as Stakeholders: Impact on Economic Performance
  Summary: Traditionally, the impacts of the rights of financial institutions and workers on corporate performance have been analyzed independently. Yet, theory clearly indicates that the combination of relative powers of different stakeholders affects a firm overall performance. Using U.S. state level and state-industry level data, we investigate how output growth is affected by bank branch deregulation and employment protection occurring over 1972-1993. We find that financial liberalization positively impact overall state growth but greater workers' rights affects it ambiguously. At the industry level, however, employment protection promotes those industries that are more knowledge intensive, while the effect of financial liberalization does not differ across industries that vary in external financing dependency. The results hold controlling for changes in shareholders' rights, which itself is not significant. The findings suggest that financial liberalization operates mostl!
  y through an efficiency channel, better reallocating resources across sectors, while employment protection creates higher incentives and encourages more sector-specific, human capital investments. Overall, the results show that the strength of stakeholders' protection affects performance through efficiency channels and provide support for a stakeholders' view of corporate governance.
• Working Paper No. 08/230: Garbage In, Gospel Out? Controlling for the Underreporting of Remittances
  Summary: Empirical studies that use self-reported data on remittances to measure the latter's impact on microeconomic incentives mostly ignore the potential errors associated with reporting/measurement issues. An econometric procedure to control for these errors is developed and applied to household-level data from Armenia. We find evidence of systematic under-reporting of remittances. After controlling for this, we find a strong negative impact of remittances on incentives to work.
• Working Paper No. 08/226: An Anatomy of Credit Booms: Evidence From Macro Aggregates and Micro Data
  Summary: We study the characteristics of credit booms in emerging and industrial economies. Macro data show a systematic relationship between credit booms and economic expansions, rising asset prices, real appreciations and widening external deficits. Micro data show a strong association between credit booms and leverage ratios, firm values, and banking fragility. We also find that credit booms are larger in emerging economies, particularly in the nontradables sector; most emerging markets crises are associated with credit booms; and credit booms in emerging economies are often preceded by large capital inflows but not by financial reforms or productivity gains.
• Working Paper No. 08/225: Current and Proposed Non-Oil Tax System in Azerbaijan
  Summary: This paper analyzes developments in non-oil tax policy, administration, and revenues in Azerbaijan, and suggests measures for further improvement. The main finding is that Azerbaijan's non-oil tax revenues increased significantly as a share of non-oil GDP in the last five years, but remain below potential. The non-oil tax revenue shortfall is mainly due to widespread exemptions, but there is scope for strengthening tax and customs administration. In the short term, expanding the tax base and better tax and customs administration will yield more revenues. In the medium term, more far-reaching reforms including reducing some direct tax rates, should be considered. The overall reform package could be made broadly revenue neutral by improving taxpayers' compliance and reducing exemptions.
• Working Paper No. 08/227: Tax Reforms, "Free Lunches", and "Cheap Lunches" in Open Economies
  Author/Editor: Ganelli, Giovanni ; Tervala, Juha
  Summary: This paper focuses on the macroeconomic and budgetary impact of tax reforms in a New Keynesian two-country model. Our results show that both income and consumption unilateral tax rate reductions do not constitute a "free lunch", in the sense that they have negative budgetary consequences for the country which implements them. In addition, the degree of self-financing implied by our model is in the 8½-24 percent range. Since the degree of self-financing estimated in previous literature was larger, we conclude that in our model not only the "lunch" is not "free", but is also not that "cheap". A comparison of alternative (income-tax versus consumption-tax based) fiscal stimulus packages shows that consumption tax cuts imply a larger short-run impact on domestic output but the income tax cuts stimulate the domestic economy more in the long run. We also look at the implications of a revenue-neutral tax reform in which consumption taxes are increased to compensate for low!
  er income tax collection.
  

Country Reports

• The Gambia: Selected Issues and Statistical Appendix and Article IV Consultation
• Portugal: 2008 Article IV Consultation
• Qatar: Detailed Assessment Report on Anti-Money Laundering and Combating the Financing of Terrorism and Report on the Observance of Standards and Codes - FATF Recommendations for Anti-Money Laundering and Combating the Financing of Terrorism

Policy Paper

• The Macroeconomics of Scaling-up Aid: the Cases of Benin, Niger, and Togo
  Summary: In September 2007, the UN Secretary General launched the Millennium Development Goals (MDG) Africa Steering and Working Groups. The Steering Group brings together the leaders of multilateral institutions to identify practical steps needed for Africa to achieve the MDGs. The Managing Director of the IMF is a member of the Steering Group. The Working Group supports the Steering Group and is comprised of thematic groups in education, agriculture, health, infrastructure and trade facilitation, statistics, aid predictability, and MDG operationalization at the country level.
  The following three notes assess the macroeconomic implications of the spending of scaled-up aid to Benin, Niger, and Togo in line with that promised by the G-8 at Gleneagles, Scotland in 2005.

Extra

• IMF Financial Activities -- Update September 25, 2008
• Currency Composition of Official Foreign Exchange Reserves (COFER) -- Updated COFER tables include second quarter 2008 data. September 30, 2008