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This paper uses the IMF's Global Integrated Monetary and Fiscal Model to compute shortrun multipliers of fiscal stimulus measures and long-run crowding-out effects of higher debt. Multipliers of two-year stimulus range from 0.2 to 2.2 depending on the fiscal instrument, the extent of monetary accommodation and the presence of a financial accelerator mechanism. A permanent 0.5 percentage point increase in the U.S. deficit to GDP ratio raises the U.S. tax burden and world real interest rates in the long run, thereby reducing U.S. and rest of the world output by 0.3-0.6 and 0.2 percent, respectively.

Banks and Banking --- Macroeconomics --- Money and Monetary Policy --- Public Finance --- Interest Rates: Determination, Term Structure, and Effects --- Fiscal Policy --- Monetary Policy --- Macroeconomics: Consumption --- Saving --- Wealth --- Finance --- Monetary economics --- Real interest rates --- Fiscal stimulus --- Accommodative monetary policy --- Fiscal policy --- Consumption --- Interest rates --- Monetary policy --- Economics --- United States

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The paper evaluates the costs and benefits of fiscal consolidation using simulations based on the IMFs global DSGE model GIMF. Over the longer run, well-targeted permanent reductions in budget deficits lead to a considerable increase in both the growth rate and the level of output. The gains may be enhanced by shifting some of the tax burden from incomes to consumption. In the short run, credibility plays a crucial role in determining the size of initial output loses. Global current account imbalances would be significantly reduced if budget consolidation was larger in countries with current account deficits.

Budget. --- Fiscal policy. --- Tax policy --- Taxation --- Economic policy --- Finance, Public --- Budgeting --- Expenditures, Public --- Government policy --- Forecasting --- Banks and Banking --- Macroeconomics --- Public Finance --- Fiscal Policy --- Interest Rates: Determination, Term Structure, and Effects --- Business Taxes and Subsidies --- Macroeconomics: Consumption --- Saving --- Wealth --- Debt --- Debt Management --- Sovereign Debt --- Public finance & taxation --- Finance --- Fiscal consolidation --- Real interest rates --- Consumption taxes --- Consumption --- Public debt --- Fiscal policy --- Interest rates --- Spendings tax --- Economics --- Debts, Public --- United States

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In this paper, we investigate the mechanisms through which import tariffs impact the macroeconomy in two large scale workhorse models used for quantitative policy analysis: a computational general equilibrium (CGE) model (Purdue University GTAP model) and a multi-country dynamic stochastic general equilibrium (DSGE) model (IMF GIMF model). The quantitative effects of an increase in tariffs reflect different mechanisms at work. Like other models in the trade literature, in GTAP higher tariffs generate a loss in terms of output arising from an inefficient reallocation of resources between sectors. In GIMF instead, as in other DSGE models, tariffs act as a disincentive to factor utilization. We show that the two models/channels can be broadly interpreted as capturing the impact of tariffs on different components of a country’s aggregate production function: aggregate productivity (GTAP) and factor supply/utilization (GIMF). We discuss ways to combine the estimates from these two models to provide a more complete assessment of the macro effects of tariffs.

Business and Economics --- Macroeconomics --- International Economics --- Development Planning and Policy: Trade Policy --- Factor Movement --- Foreign Exchange Policy --- General Equilibrium and Disequilibrium: Financial Markets --- Economic & financial crises & disasters --- Economics of specific sectors --- Financial crises --- Economic sectors --- Currency crises --- Informal sector --- Economics

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This paper uses two of the IMF’s DSGE models to simulate the benefits of international fiscal and macroprudential policy coordination. The key argument is that these two policies are similar in that, unlike monetary policy, they have long-run effects on the level of GDP that need to be traded off with short-run effects on the volatility of GDP. Furthermore, the short-run effects are potentially much larger than those of conventional monetary policy, especially in the presence of nonlinearities such as the zero interest rate floor, minimum capital adequacy regulations, and lending risk that depends in a convex fashion on loan-to-value ratios. As a consequence we find that coordinated fiscal and/or macroprudential policy measures can have much larger stimulus and spillover effects than what has traditionally been found in the literature on conventional monetary policy.

International finance. --- International monetary system --- International money --- Finance --- International economic relations --- Banks and Banking --- Macroeconomics --- Public Finance --- Money and Monetary Policy --- Financial Markets and the Macroeconomy --- Fiscal Policy --- International Policy Coordination and Transmission --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Interest Rates: Determination, Term Structure, and Effects --- Financial Institutions and Services: Government Policy and Regulation --- Monetary Policy --- Financial services law & regulation --- Monetary economics --- Fiscal stimulus --- Fiscal policy --- Real interest rates --- Capital adequacy requirements --- Macroprudential policy --- Financial services --- Financial sector policy and analysis --- Accommodative monetary policy --- Monetary policy --- Interest rates --- Asset requirements --- Economic policy --- United States

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We discuss and reconcile two diametrically opposed views concerning the future of world oil production and prices. The geological view expects that physical constraints will dominate the future evolution of oil output and prices. It is supported by the fact that world oil production has plateaued since 2005 despite historically high prices, and that spare capacity has been near historic lows. The technological view of oil expects that higher oil prices must eventually have a decisive effect on oil output, by encouraging technological solutions. It is supported by the fact that high prices have, since 2003, led to upward revisions in production forecasts based on a purely geological view. We present a nonlinear econometric model of the world oil market that encompasses both views. The model performs far better than existing empirical models in forecasting oil prices and oil output out of sample. Its point forecast is for a near doubling of the real price of oil over the coming decade. The error bands are wide, and reflect sharply differing judgments on ultimately recoverable reserves, and on future price elasticities of oil demand and supply.

Petroleum industry and trade --- Petroleum products --- Mazut --- Petroleum --- Hydraulic fluids --- Energy industries --- Oil industries --- Economic aspects. --- Prices --- Econometric models. --- Forecasting. --- Refining --- Investments: Energy --- Macroeconomics --- Economic Theory --- Industries: Energy --- Production and Operations Management --- Inflation --- Bayesian Analysis: General --- Forecasting and Other Model Applications --- Nonrenewable Resources and Conservation: Demand and Supply --- Exhaustible Resources and Economic Development --- Energy: Demand and Supply --- Energy: General --- Macroeconomics: Production --- Agriculture: Aggregate Supply and Demand Analysis --- Price Level --- Deflation --- Investment & securities --- Petroleum, oil & gas industries --- Economic theory & philosophy --- Oil prices --- Oil --- Oil production --- Output gap --- Demand elasticity --- Commodities --- Production --- Economic theory --- Elasticity --- Economics --- United States