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Real imports in China have decelerated significantly over the last two years to below 4 percent (yoy) from double-digit growth in previous years. Weaker investment, partly due to progress in rebalancing from investment to consumption, has been the main factor accounting for about 40–50 percent of slowdown during this period. Weaker exports also account for about 40 percent of slowdown, of which about a quarter is due to stronger RMB. Onshoring—substitution of imported intermediate inputs with domestic production—has not been an additional drag over this period but it continues to slow import growth at a similar pace as previous periods. There is large uncertainty about the impact of rebalancing on the import slowdown due to difficulties in identifying the counterfactual nonrebalancing path.

Imports --- International trade --- Consumption --- Currency --- Economic & financial crises & disasters --- Economics --- Empirical Studies of Trade --- Exports and Imports --- Exports --- Financial Crises --- Financial crises --- Foreign Exchange --- Foreign exchange --- Global financial crisis of 2008-2009 --- Global Financial Crisis, 2008-2009 --- International economics --- Macroeconomics --- Macroeconomics: Consumption --- National accounts --- Real effective exchange rates --- Saving --- Trade: General --- Wealth --- China, People's Republic of

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We construct the first comprehensive dataset of contingent liability realizations in advanced and emerging markets for the period 1990–2014. We find that contingent liability realizations are a major source of fiscal distress. The average fiscal cost of a contingent liability realization is 6 percent of GDP but costs can be as high as 40 percent for major financial sector bailouts. Contingent liability realizations are correlated among each other and tend to occur during periods of growth reversals and crises, accentuating pressure on the budget during already difficult times. Countries with stronger institutions are able to better control and address the underlying risks so that they are less exposed to contingent liability realizations.

Macroeconomics --- Public Finance --- Industries: Financial Services --- Fiscal Policy --- National Budget, Deficit, and Debt: General --- Debt --- Debt Management --- Sovereign Debt --- Public Administration --- Public Sector Accounting and Audits --- Financial Institutions and Services: General --- Financial Crises --- Public finance & taxation --- Economic & financial crises & disasters --- Contingent liabilities --- Financial sector --- Public debt --- Fiscal risks --- Global financial crisis of 2008-2009 --- Public financial management (PFM) --- Economic sectors --- Financial crises --- Fiscal policy --- Financial services industry --- Debts, Public --- Global Financial Crisis, 2008-2009 --- Brazil

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We propose a stress testing framework of credit risk, which analyzes macro-financial linkages, generates consistent forecasts of macro-financial variables, and projects non-performing loans (NPL) on the basis of such forecasts. Economic contractions are generally associated with increases in NPL. However, despite the common assumption used in the empirical literature of homogeneous impact across banks, the strength of this relationship is often bank-specific, and imposing homogeneity may lead to over or underestimating the resilience of the financial system to macroeconomic woes. Our approach accounts for banks’ heterogeneous reaction to macro-financial shocks in a dynamic context and potential cross-sectional dependence across banks caused by common shocks. An application to Ecuador suggests that substantial heterogeneity is present and that this should be taken into account when trying to anticipate inflections in the quality of portfolio.

Bank loans. --- Credit --- Economic forecasting --- Economics --- Forecasting --- Economic indicators --- Borrowing --- Finance --- Money --- Loans --- Bank credit --- Banks and Banking --- Econometrics --- Macroeconomics --- Money and Monetary Policy --- Industries: Financial Services --- Forecasting and Other Model Applications --- Financial Markets and the Macroeconomy --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Energy: Demand and Supply --- Prices --- Time-Series Models --- Dynamic Quantile Regressions --- Dynamic Treatment Effect Models --- Diffusion Processes --- Financial Crises --- Banking --- Monetary economics --- Econometrics & economic statistics --- Economic & financial crises & disasters --- Nonperforming loans --- Oil prices --- Vector autoregression --- Financial institutions --- Econometric analysis --- Global financial crisis of 2008-2009 --- Financial crises --- Banks and banking --- Global Financial Crisis, 2008-2009 --- Ecuador

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In the paper we show that, most of the time, smooth reduction in the debt ratio is optimal for tax-smoothing purposes when fiscal risks are asymmetric, with large debt-augmenting shocks more likely than commensurate debt reducing shocks. Asymmetric risks are a feature of 200 years of data for the U.S. and the U.K.: rare but recurrent large surges of the debt-to-GDP ratio, followed by very gradual but persistent declines over long periods. More informal evidence from many other countries suggests that asymmetry is a general feature of fiscal shocks. The gradual smooth reduction in the public debt to GDP ratio is not a response to past developments. Instead it is optimal given recurrent fiscal risks and the empirical characteristics of fiscal shocks. The behavior of the debt-to-GDP ratio in the U.K. and the U.S. seems roughly compatible with the prescriptions of the tax-smoothing model.

Debts, Public. --- Financial risk management. --- Debt-to-equity ratio --- Debt equity ratios --- Business enterprises --- Debt --- Equity --- Ratio analysis --- Risk management --- Debts, Government --- Government debts --- National debts --- Public debt --- Public debts --- Sovereign debt --- Bonds --- Deficit financing --- Valuation --- Asset and liability management --- Debt Management --- Debt reduction --- Debts, External --- Debts, Public --- Economic & financial crises & disasters --- Efficiency --- Expenditure --- Expenditures, Public --- Finance --- Financial Crises --- Financial Risk Management --- Fiscal Policy --- Fiscal policy --- Fiscal stance --- Global financial crisis of 2008-2009 --- Global Financial Crisis, 2008-2009 --- Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General --- Macroeconomics --- National Deficit Surplus --- National Government Expenditures and Related Policies: General --- Optimal Taxation --- Policy Coordination --- Policy Designs and Consistency --- Policy Objectives --- Public finance & taxation --- Public Finance --- Revenue administration --- Revenue --- Sovereign Debt --- Studies of Particular Policy Episodes --- Taxation, Subsidies, and Revenue: General --- United Kingdom

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This paper finds that financial spillovers from China to regional markets are on the rise. The main transmission channel appears to be trade linkages, although direct financial linkages are playing an increasing role. Without an impact on global risk premiums, China’s influence on regional markets is not yet to the level of the United States, but comparable to that of Japan. If China-related shocks are coupled with a rise in global risk premiums, as in August 2015 and January 2016, spillovers to the region could be significantly larger. Over the medium term, China’s financial spillovers could rise further with tighter financial linkages with the region, including through the ongoing internationalization of the renminbi and China’s capital account liberalization.

Money market --- Foreign exchange rates --- China --- Asia --- Foreign economic relations --- Money markets --- Finance --- Financial institutions --- Money --- Asian and Pacific Council countries --- Eastern Hemisphere --- Eurasia --- Cina --- Kinë --- Cathay --- Chinese National Government --- Chung-kuo kuo min cheng fu --- Republic of China (1912-1949) --- Kuo min cheng fu (China : 1912-1949) --- Chung-hua min kuo (1912-1949) --- Kina (China) --- National Government (1912-1949) --- China (Republic : 1912-1949) --- People's Republic of China --- Chinese People's Republic --- Chung-hua jen min kung ho kuo --- Central People's Government of Communist China --- Chung yang jen min cheng fu --- Chung-hua chung yang jen min kung ho kuo --- Central Government of the People's Republic of China --- Zhonghua Renmin Gongheguo --- Zhong hua ren min gong he guo --- Kitaĭskai︠a︡ Narodnai︠a︡ Respublika --- Činská lidová republika --- RRT --- Republik Rakjat Tiongkok --- KNR --- Kytaĭsʹka Narodna Respublika --- Jumhūriyat al-Ṣīn al-Shaʻbīyah --- RRC --- Kitaĭ --- Kínai Népköztársaság --- Chūka Jinmin Kyōwakoku --- Erets Sin --- Sin --- Sāthāranarat Prachāchon Čhīn --- P.R. China --- PR China --- PRC --- P.R.C. --- Chung-kuo --- Zhongguo --- Zhonghuaminguo (1912-1949) --- Zhong guo --- Chine --- République Populaire de Chine --- República Popular China --- Catay --- VR China --- VRChina --- 中國 --- 中国 --- 中华人民共和国 --- Jhongguó --- Bu̇gu̇de Nayiramdaxu Dundadu Arad Ulus --- Bu̇gu̇de Nayiramdaqu Dumdadu Arad Ulus --- Bu̇gd Naĭramdakh Dundad Ard Uls --- BNKhAU --- БНХАУ --- Khi︠a︡tad --- Kitad --- Dumdadu Ulus --- Dumdad Uls --- Думдад Улс --- Kitajska --- China (Republic : 1949- ) --- Capital market --- Currency markets --- Economic & financial crises & disasters --- Economic Integration --- Emerging and frontier financial markets --- Externalities --- Finance: General --- Financial Crises --- Financial markets --- Financial sector policy and analysis --- Financial services industry --- Foreign exchange market --- General Financial Markets: General (includes Measurement and Data) --- Global financial crisis of 2008-2009 --- Global Financial Crisis, 2008-2009 --- International finance --- International Financial Markets --- Investment Decisions --- Macroeconomics --- Open Economy Macroeconomics --- Portfolio Choice --- Securities markets --- Spillovers --- Stock exchanges --- Stock markets --- China, People's Republic of