Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

The paper revisits the link between fiscal policy and macroeconomic stability. Two salient features of our analysis are (1) a systematic test for the government’s ambivalent role as a shock absorber and a shock inducer—removing a downward bias present in existing estimates of the impact of automatic stabilizers—and (2) a broad sample of advanced and emerging market economies. Results provide strong support for the view that fiscal stabilization operates mainly through automatic stabilizers. Also, the destabilizing impact of policy changes not systematically related to the business cycle may not be as robust as suggested in the literature.

Economic stabilization --- Fiscal policy --- Econometric models. --- Tax policy --- Taxation --- Economic policy --- Finance, Public --- Adjustment, Economic --- Business stabilization --- Economic adjustment --- Stabilization, Economic --- Government policy --- Banks and Banking --- Macroeconomics --- Public Finance --- Comparative or Joint Analysis of Fiscal and Monetary Policy --- Stabilization --- Treasury Policy --- Fiscal Policy --- National Government Expenditures and Related Policies: General --- Central Banks and Their Policies --- Public finance & taxation --- Banking --- Automatic stabilizers --- Expenditure --- Fiscal stabilization --- Central bank autonomy --- Expenditures, Public --- United States

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

What might interest rate liberalization do to intermediation and the cost of capital in China? China’s most binding interest rate control is a ceiling on the deposit rate, although lending rates are also regulated. Through case studies and model-based simulations, we find that liberalization will likely result in higher interest rates, discourage marginal investment, improve the effectiveness of intermediation and monetary transmission, and enhance the financial access of underserved sectors. This can occur without any major disruption. International experience suggests, however, that achieving these benefits without unnecessary instability, requires vigilant supervision, governance, and monetary policy, and a flexible policy toolkit.

Banks and banking. --- Banking --- Banks and Banking --- Banks and banking --- Banks --- Central Banks and Their Policies --- Commercial banks --- Deposit rates --- Depository Institutions --- Event Studies --- Finance --- General Financial Markets: Government Policy and Regulation --- Industries: Financial Services --- Information and Market Efficiency --- Interbank rates --- Interest rates --- Interest Rates: Determination, Term Structure, and Effects --- Loans --- Market Structure and Pricing: Oligopoly and Other Forms of Market Imperfection --- Micro Finance Institutions --- Mortgages --- China, People's Republic of

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This paper develops a small open economy dynamic stochastic general-equilibrium model with macrofinancial linkages. The model includes a financial accelerator--entrepreneurs are assumed to partially finance investment using domestic and foreign currency debt--to assess the importance of financial frictions in the amplification and propagation of the effects of transitory shocks. We use Bayesian estimation techniques to estimate the model using India data. The model is used to assess the importance of the financial accelerator in India and the optimality of monetary policy.

Finance --- Business & Economics --- Money --- Monetary policy --- Banks and banking, Central --- Econometric models. --- Banker's banks --- Banks, Central --- Central banking --- Central banks --- Monetary management --- Banks and banking --- Economic policy --- Currency boards --- Money supply --- Foreign Exchange --- Inflation --- Investments: General --- Labor --- Macroeconomics --- Monetary Policy --- Central Banks and Their Policies --- Policy Objectives --- Policy Designs and Consistency --- Policy Coordination --- Labor Demand --- Price Level --- Deflation --- Macroeconomics: Consumption --- Saving --- Wealth --- Investment --- Capital --- Intangible Capital --- Capacity --- Labour --- income economics --- Currency --- Foreign exchange --- Self-employment --- Exchange rates --- Consumption --- Depreciation --- Prices --- National accounts --- Self-employed --- Economics --- Saving and investment --- India --- Income economics

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This paper analyzes the institutional conditions affecting the establishment and effectiveness of independent central banks and of budgetary institutions. It draws on the recent theory developed by North, Wallis and Weingast on the transition from a closed and fragile state to an open economic and political environment. The paper presents a composite indicator allowing for the identification of a country’s position along this transition path. The findings suggest that (i) while the establishment of autonomous central banks seems to be relatively independent from the broader institutional framework, sound budgetary institutions tend to be established in countries with higher levels of rule of law for the elites, and (ii) while central bank independence is effective in reducing inflation irrespective of a country’s position along the transition path, budget institutions seem to be most effective as a disciplining device in weak institutional environments.

Banks and banking, Central --- Monetary policy --- Econometric models. --- Banker's banks --- Banks, Central --- Central banking --- Central banks --- Banks and banking --- Budgeting --- Inflation --- Public Finance --- Monetary Policy --- Central Banks and Their Policies --- Fiscal Policy --- National Budget --- Budget Systems --- Fiscal and Monetary Policy in Development --- Political Economy --- Other Economic Systems: Political Economy --- Legal Institutions --- Property Rights --- Taxation, Subsidies, and Revenue: General --- Price Level --- Deflation --- Debt --- Debt Management --- Sovereign Debt --- Public finance & taxation --- Macroeconomics --- Budgeting & financial management --- Institutional arrangements for revenue administration --- Budget planning and preparation --- Public debt --- Legal support in revenue administration --- Prices --- Revenue administration --- Public financial management (PFM) --- Revenue --- Budget --- Debts, Public --- Mauritius

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

In responding to the global crisis, central banks in several advanced economies ventured beyond traditional monetary policy. A variety of unorthodox measures, including purchases of public and private assets, have significantly enlarged their balance sheets. As recoveries take hold, focus will increasingly shift from countering the Great Recession to orchestrating an exit and returning to a more normal monetary framework. Five years ago, as its economy recovered from a severe financial crisis, Japan attempted just such an exit. This note revisits the Bank of Japan’s experience and draws potential lessons for managing an orderly exit today, with a focus on technical aspects, practicalities, and communication strategies. While the nature of the assets acquired during the present crisis could pose additional complications, parts of Japan’s arsenal—communication, flexibility, a sufficient set of policy tools and a strategy for using them, safeguards against potential losses, the revival of risk appetite through decisive restructuring of balance sheets, and refinements to the monetary framework upon exit—also could be important this time around.

Monetary policy --- Economic development --- Japan --- Economic policy. --- Development, Economic --- Economic growth --- Growth, Economic --- Economic policy --- Economics --- Statics and dynamics (Social sciences) --- Development economics --- Resource curse --- Accounting --- Banks and Banking --- Finance: General --- Money and Monetary Policy --- Investments: Stocks --- Financial Markets and the Macroeconomy --- Monetary Policy --- Central Banks and Their Policies --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Public Administration --- Public Sector Accounting and Audits --- Interest Rates: Determination, Term Structure, and Effects --- Portfolio Choice --- Investment Decisions --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Banking --- Financial reporting, financial statements --- Monetary economics --- Finance --- Investment & securities --- Financial statements --- Central bank policy rate --- Unconventional monetary policies --- Liquidity --- Public financial management (PFM) --- Financial services --- Asset and liability management --- Stocks --- Financial institutions --- Banks and banking --- Finance, Public --- Interest rates