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Journal Cover IMF Working Papers
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   Full-text available via subscription Subscription journal
   ISSN (Print) 1018-5941
   Published by International Monetary Fund Homepage  [11 journals]
  • How Should Shale Gas Extraction Be Taxed'
    • Abstract: This paper suggests that the environmental and commercial features of shale gas extraction do not warrant a significantly different fiscal regime than recommended for conventional gas. Fiscal policies may have a role in addressing some environmental risks (e.g., greenhouse gases, scarce water, local air pollution) though in some cases their net benefits may be modest. Simulation analyses suggest, moreover, that special fiscal regimes are generally less important than other factors in determining shale gas investments (hence there appears little need for them), yet they forego significant revenues.
      PubDate: 16 Nov 2017 09:00:00 EST
  • Does Import Competition Induce R&D Reallocation' Evidence from the
    • Abstract: We analyze the impact of rising import competition from China on U.S. innovative activities.Using Compustat data, we find that import competition induces R&D expenditures to bereallocated towards more productive and more profitable firms within each industry. Suchreallocation effect has the potential to offset the average drop in firm-level R&D identified inthe previous literature. Indeed, our quantitative analysis shows no adverse impact of importcompetition on aggregate R&D expenditures. Taking the analysis beyond manufacturing, wefind that import competition has led to reallocation of researchers towards booming serviceindustries, including business and repairs, personal services, and financial services.
      PubDate: 16 Nov 2017 09:00:00 EST
  • Bank Capital and Lending: An Extended Framework and Evidence of
    • Abstract: This paper studies the transmission of bank capital shocks to loan supply in Indonesia. Aseries of theoretically founded dynamic panel data models are estimated and find nonlineareffects of capital on loan growth: the response of weaker banks to changes in their capitalpositions is larger than that of stronger banks. This non-linearity implies that not only thelevel of capital but also its distribution across banks in the financial system affects thetransmission of shocks to aggregate lending. Likewise, the effects of bank recapitalization onloan growth depend on banks’ starting capital positions and the size of capital injections.
      PubDate: 16 Nov 2017 09:00:00 EST
  • Booms, Crises, and Recoveries: A New Paradigm of the Business Cycle and
           its Policy Implications
    • Abstract: All types of recessions, on average, not just those associated with financial and political crises (as in Cerra and Saxena, AER 2008), lead to permanent output losses. These findings have far-reaching conceptual and policy implications. A new paradigm of the business cycle needs to account for shifts in trend output and the puzzling inconsistency of output dynamics with other cyclical components of production. The ‘output gap’ can be ill-conceived, poorly measured, and inconsistent over time. Persistent losses require more buffers and crisis-avoidance policies, affecting tradeoffs in prudential, macroeconomic, and reserve management policies. The frequency and depth of crises are key determinants of long-term growth and drive a new stylized model of economic development.
      PubDate: 16 Nov 2017 09:00:00 EST
  • LAO P.D.R.: Assessing the Quality of Trade Statistics
    • Abstract: This paper assesses external trade statistics in Lao PDR by looking at mirror statistics, andwith reference to international experience in compilation and dissemination of external tradedata. We find that exports could be underreported by 8 to 50 percent, while imports could beunderreported by 30 to 70 percent, and the trade deficit could be 20 percent to 280 percenthigher. Underreporting is concentrated in trade with major partners, including Thailand(17 percent of total trade), China (10 percent of total trade) and Vietnam (3 percent of totaltrade). On the export side, underreporting is concentrated in wood and wood products, whilefor imports it is concentrated in a much wider variety of products, including food, fuel,vehicles, machinery, chemical products, plastics and rubber, and construction materials.Possible sources and implications of these discrepancies are discussed.
      PubDate: 16 Nov 2017 09:00:00 EST
  • The Sectoral Effects of Real Depreciations in Latin America
    • Abstract: This papers explores the effects of real exchange rate depreciations on growth across sectors,identifying export, cost, and import-penetration channels. It tests the existence and magnitudeof these channels in a panel difference-in-difference methodology. Sectors that export moreto begin with, grow relatively more in response to a depreciation. The same is true of sectorswhere import penetration in final demand is higher. There is no evidence that depreciationsreduce growth by making imported inputs more expensive. A 10 percent real depreciationwould increase growth of nontraditional sectors in Latin America by 0.6-2 percentage pointsmostly through the export channel.
      PubDate: 16 Nov 2017 09:00:00 EST
  • Enforcing Public-Private Partnership Contract: How do Fiscal Institutions
    • Abstract: Public-private partnerships (PPPs) have increased rapidly in emerging and developing countries, creating both opportunities and fiscal challenges. One of the main challenges is that while governments have increased commitments in guarantees and direct subsidies to promote PPPs, contractual disputes remain high with significant costs. This paper examines how fiscal institutions affect the selection of PPP contracts and the probability of contract disputes using about 6,000 PPP contract-level data. The analysis shows that larger government financing needs, lower budget transparency and bureaucratic efficiency are associated with higher probability for governments to offer guarantees. Propensity score matching results show that disputes are more common for guaranteed contracts due to adverse selection and contingent liability effects. PPP management quality and budget transparency are found to be key determinants for a longer survival of PPPs.
      PubDate: 15 Nov 2017 09:00:00 EST
  • The Slowdown in Global Trade: A Symptom of A Weak Recovery
    • Abstract: Global trade growth has slowed since 2012 relative both to its strong historical performance and to overall economic growth. This paper aims to quantify the role of weak economic growth and changes in its decomposition in accounting for the slowdown in trade using a reduced form and a structural approach. Both analytical investigations suggest that the overall weakness in economic activity, particularly investment, has been the primary restraint on trade growth, accounting for over 80 percent of the decline in the growth of the volume of goods trade between 2012–16 and 2003–07. However, other factors are also weighing on trade in recent years, especially in emerging market and developing economies, as evidenced by the non-negligible role attributed to trade costs by the structural approach.
      PubDate: 15 Nov 2017 09:00:00 EST
  • Hollowing Out: The Channels of Income Polarization in the United States
    • Abstract: Data show that middle-income households have continued moving down, and less so up, the income distribution in the United States since the 1970s—a phenomenon that is often referred to as the polarization or “hollowing out” of the income distribution. While the level of income polarization is generally lower in the richer states (i.e., those with higher median household income levels), there have been wide variations in the changes in income polarization over time across states. The paper develops two indices to measure income polarization including a novel hollowing-out index. Another important contribution of the paper is to examine the proximate causes of income polarization. The econometric analysis is done at both state and household levels. The results suggest that technology, measured by job routinization, and international trade, measured by job offshoring, can fully explain the non-trend rise in income polarization, with broadly equal contributions. Household characteristics, including age, education, race, and gender have also been important drivers but with a net countervailing effect on income polarization. This is mainly thanks to the rising education level of households, which has led to better incomes.
      PubDate: 15 Nov 2017 09:00:00 EST
  • Fiscal Spillovers in the Euro Area: Letting the Data Speak
    • Abstract: We estimate a panel VAR model that captures cross-country, dynamic interlinkages for 10 euro area countries using quarterly data for the period 1999-2016. Our analysis suggests that fiscal spillovers are significant and tend to be larger for countries with close trade and financial links as well, as for fiscal shocks originating from larger countries. The current account appears to be the main channel of transmission, although strong trade integration among countries in the euro area and spillback effects tend to zero-out the net trade impact in some cases. A subsample analysis shows that the effects of fiscal policy have changed over time, with larger estimated domestic multipliers and spillovers between 2011 and 2014.
      PubDate: 15 Nov 2017 09:00:00 EST
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Heriot-Watt University
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