The pervasiveness and relevance of asset price booms and busts in modern economies has now been fully acknowledged. So has the case for combining prudential regulation and monetary policy in the complementary pursuit of financial and macroeconomic stability.
Global financial integration and the linkages between the financial and the real sides of economies are sources of huge policy challenges. This is now beyond doubt, after what we saw in the run-up to and the unfolding of the 2008 global financial crisis.
Some analysts are predicting that the commodity price boom of the new millennium is something that has played itself out. Except for shale gas and its downward pressure on U.S. natural gas prices, however, natural resource-based commodity prices have remained high by historical records in the last few years, despite the feebleness of the recent global economic recovery.
The decision last week by the Swiss government to sign the OECD’s somewhat lengthily named Convention on Mutual Administrative Assistance in Tax Matters is the latest of a series of developments that have radically increased the amount and quality of tax information available to governments.
Summer was marked by a strong pressure of capital outflows and exchange rate devaluations in several systemically relevant emerging markets. A global portfolio rebalancing was put in motion on May 22, when talk of the U.S. Federal Reserve shrinking -- and eventually reversing -- its asset purchase program (QE or quantitative easing) was made public.
In recent decades, Least Developed Countries (LDCs) have been using their natural-resources as collateral to access sources of finance for investment, countervailing the barriers they face when accessing conventional bank lending and capital markets. Depending on whom you ask, such financing models have been alternately vilified and sanctified in the global development debate.
International long-term private finance to developing countries has changed dramatically in the wake of the global financial crisis. Caught in “post-crisis blues”, as my World Bank colleagues Jeff Chelsky, Claire Morel and Mabruk Kabir called it in a recent Economic Premise, some traditional sources of long-term finance are strained, and alternatives have not been able to adequately compensate. Private financing of infrastructure has been particularly hurt.
Brazil’s GDP performance has been lackluster since the post-crisis rebound in 2010. Prospects for 2013 look a little better: unemployment rates have remained low, and data from the first quarter of the year suggest improving growth rates. Investment also rose ahead of consumption, which may mean a more balanced growth pattern (see Chart 1).
The International Monetary Fund (IMF) is taking a new look at Sovereign Debt Restructuring. There are at least two major reasons for this: First, it is expected that official creditors play a unique role during sovereign debt crises, since lending of last resort becomes the only bridge over default and/or drastically forced adjustments when a country faces very restricted market access. Therefore it makes sense that a number of recent cases warrant an update on what has worked well or not. Second, particularly in light of the recent experiences of Argentina and Greece, the existing framework for sovereign debt restructurings has increasingly been seen as in need of fixing – perhaps even a revamping - if it is to facilitate more orderly processes and outcomes in the future.
Despite tremendous progress in poverty reduction over the last two decades, poverty still persists. Along with South Asia, Africa is a region where large numbers of people continue to live in extreme poverty. It is also a region where there is clearly room for higher foreign trade levels (see Chart). Given that trade can generate growth – and thus poverty reduction – focus on trade-related reforms (e.g. lower tariffs, better logistics, and trade facilitation) deserves to be a high priority of the region.