IN THE MEDIA
Official statistics probably exaggerate global current-account imbalances
November 12, 2011
ECONOMISTS are constantly urging governments to adopt policies that would reduce global imbalances—which, in crude terms, means that China should slash its current-account surplus and America its deficit. Yet they ignore the biggest imbalance of all: the current-account surplus that planet Earth appears to run with extraterrestrials. In theory, countries' current-account balances should all sum to zero because ... read more
What would happen if China revalued the yuan? The past offers some clues
April 22, 2010
A BIG export-oriented economy is booming but its trading partners are livid. Year after year, they point out, it runs large current-account surpluses. The country regards itself as an export powerhouse whose goods are prized abroad. Others castigate it for mercantilism. Some argue that it subsidises its exports unfairly by giving exporters credit at cheap rates and by keeping its currency artificially undervalued. Pressure builds on the country to revalue its currency and boost domestic consumption, which makes up an unusually small share of its GDP ... read more
July 30, 2009
by The Economist
DURING the stimulus debate opponents of a government stimulus package sometimes argued that any anticipated multiplier effect couldn't emerge if the financial system was broken; private lending simply wouldn't emerge. But via Menzie Chinn, it seems that fiscal expansion may actually help bring financial crises ... read more
Will emerging economies change the shape of global finance?
October 9, 2008
“THE United States has been a model for China,” says Yu Yongding, a prominent economist in Beijing. “Now that it has created such a big mess, of course we have to think twice.”
The future of global finance depends on what kind of rethinking takes place in Beijing and the rest of the emerging world. So far the signals have been mixed, even within the same country. In India, for instance, the central bank—long a reluctant liberaliser—recently changed its mind about allowing credit-default swaps, ... read more
The subprime-mortgage meltdown is strikingly similar to major financial crises in other countries. Will the aftermath be as costly?
July 4, 2008
Is the U.S. economy in a recession? By a well-known rule of thumb — two or more consecutive quarters of negative growth — no. Gross domestic product grew an estimated 0.6 percent in the first quarter of 2008, the same pace as in the fourth quarter of 2007. Many economists forecast more growth for the rest of the year, albeit
small. ... read more
What causes people to save and invest?
September 22, 2005
AT FIRST sight, the idea of a “saving glut”—an excess of saving over investment—seems odd. According to the economics textbooks, saving and investment are always equal. People cannot save without investing their money somewhere, and they cannot invest without using somebody's savings. Saving and investment are two sides of the same coin ... read more
Soaring house prices have given a huge boost to the world economy. What happens when they drop?
Jun 16, 2005
PERHAPS the best evidence that America's house prices have reached dangerous levels is the fact that house-buying mania has been plastered on the front of virtually every American newspaper and magazine over the past month. Such bubble-talk hardly comes as a surprise to our readers. We have been warning for some time that the price of housing was rising at an alarming rate all around the globe, including in America. Now that others have noticed as well, the day of reckoning is closer at hand. It is not going to be pretty. How the current housing boom ends could decide the course of the entire world economy over the next few years ... read more
The Global House Price Boom
In come the waves
June 16, 2005
NEVER before have real house prices risen so fast, for so long, in so many countries. Property markets have been frothing from America, Britain and Australia to France, Spain and China. Rising property prices helped to prop up the world economy after the stock market bubble burst in 2000. What if the housing boom now turns to bust? ... read more
Budget finances in emerging economies are in worse shape than in the developed world.
September 25, 2003
INTERNATIONAL organisations such as the IMF and the OECD are constantly lecturing rich-country governments about their hefty debt burdens. Yet governments in many emerging economies have been even more profligate. In most developed economies, with the notable exception of Japan, public debt has fallen as a percentage of GDP since the mid-1990s. In emerging economies,
however, the average debt ratio has risen sharply and now exceeds that in the richer economies.
... read more
In many countries the stockmarket bubble has been replaced by a property-price bubble. Sooner or later it will burst, says Pam Woodall, our economics editor
May 29, 2003
“BUYING property is by far the safest investment you can make. House prices will never fall like share prices.” This is the advice offered by countless estate agents around the globe. In the absence of attractive investment opportunities elsewhere, home buyers have needed little encouragement: from London to Madrid and from Washington to Sydney, rising house prices have been the hot topic of conversation at dinner parties. Over the past seven years, house prices ... read more
Plunging Stock Prices Are Good Recession Predictor
By Ian Talley
October 3, 2013
Equity price drops have long been dismissed as a reliable harbinger of recessions. Nobel winning economist Paul Samuelson famously quipped in 1966, "The stock market has forecast nine of the last five recessions." But economists have largely focused on indicators relative to an entire recession, and that may have skewed the data.
By looking at a variety of indicators in relation to just the start of major economic downturns over the last 40 years, however, International Monetary Fund economists John Bluedorn, Jorg Decressin and Marco Terrones show that "equity prices particularly useful predictors of recessions." read more
By Bob Davis,
April 14, 2010
China and other countries with big trade surpluses can slash them without sacrificing economic growth, the International Monetary Fund said, through a package of measures including revaluing their currencies, shifting policies toward domestic consumption and pursuing more-sophisticated markets. ... read more
By Tom Barkley
April 16, 2009
The global and financial nature of the economic crisis means that the eventual recovery will likely be weak and drawn out despite an aggressive policy response, the International Monetary Fund said Thursday.
The worst slump since the Great Depression presents a unique challenge in that it combines a financial blowup in the world’s largest economy with a global downturn, the IMF said in a chapter in its World Economic Outlook. The fund reiterated the need for coordinated and forceful monetary, fiscal and especially financial actions ... read more
By Jon Hilsenrath, Joanna Slater and Justin Lahart
September 29, 2008
The Wall Street turmoil is shaking an already-weakened U.S. economy and could hit households and businesses in the form of fewer loans and higher interest rates in the months ahead -- in turn sending unemployment higher and corporate profits lower. ... read more
By Jon Hilsenrath and Patrick Barta
June 16, 2005
It was a familiar story from Golden Land Property Development PLC. With its 35-story Sky Villas condominiums nearly sold out, it unveiled plans for an even more lavish project. The Infinity features a replica of Rome's Spanish Steps, a spa in a restored historic mansion and faux-Venetian canals. Some 90% of the units in the new development sold out in less than three months, even though some units were priced at more than $1 million, or over 831,000 euros. ... read more
By Floyd Norris
April 19, 2013
This has not been a good recovery for the wealthy countries. Growth has lagged, in part, because government spending has been far more restrained than in past recoveries from major recessions.
But developing economies have been free to increase government spending, and their economies are generally growing more rapidly than they did after past recessions.... read more
By Gavyn Davies
April 21, 2013
This week’s IMF meetings in Washington lacked the sense of crisis which has characterised many such meetings since the crash in 2008. Although the official IMF growth forecasts were revised down slightly for 2013, mainly due to tighter fiscal policy in the US, the organisation also said that downside risks, relative to the central forecasts, had diminished since the October 2012 meetings.
These improved downside risks seem to have stemmed mainly from greater confidence in the financial system, reflecting the budget deal on the US fiscal cliff, and the actions of the ECB to reduce ... read more
By David Keohane
April 30, 2012. FT Alphaville
As part of our “questions that are asked an awful lot” series (not really) we have decided to revisit the comparison between the current economic slump and previous depressions/recessions.
In a recent report a trio of IMF researchers (messrs Kose, Loungani and Terrones) argue that the ongoing recovery has been quite similar to previous ones and that, for advanced economies at least, we are essentially back in 1991 ... read more
By Samuel Brittan
March 12, 2009
As can be imagined, international economic organisations, whatever else they do or do not do, spawn vast numbers of research papers. Most of them are worthy but of limited interest, a hypothetical example being “Forward Markets and Cash Crops in Ruritania”. But occasionally something of real interest arrives. A recent example is an International Monetary Fund working paper entitled “What Happens During Recessions, Crunches and Busts?”* Although there is no such thing as “letting the figures speak for themselves”, this paper is relatively theory-light ... read more
GOVERNMENTS that run persistent budget deficits must sooner or later finance those deficits through money creation, thus producing inflation. So says a well-established macroeconomic theory, but empirical work has had little success proving this. A recent IMF Working Paper by Luis Catão and Marco E. Terrones of the IMF’s Research Department reexamines this issue and finds evidence to support the theory. The authors talk with the IMF Survey about their findings ... read more
By John Connor
April 18, 2003
DJ International News
A strong positive association between fiscal deficits and inflation can be found
among high-inflation and developing countries but not among low-inflation advanced economies, according to a new International Monetary Fund study. .... read more
Dow Jones Capital Markets Report
April 3, 2003
Economic policymakers in countries now experiencing housing-price booms should be worried given the frequency and painful consequences of housing-market busts in the past, the International Monetary Fund said Thursday. ... read more
By Sarah Edmonds
September 22, 2004
Lofty house prices in many rich countries are in danger of a correction as
central banks raise interest rates to check inflation, a fall that could ripple through the global economy, the IMF said on Wednesday. .... read more
Just How Bad Was the 2009 Global Recession? Really, Really Bad.
By Andrew Mayeda
October 20, 2015
The global recession that followed the financial crisis was the most severe in half a century, an unusually synchronized shock that paralyzed trade and left 23 million more people out of work. Yet the response by policy makers hasn't been up to the task, with central banks bearing too much of the burden. And the world may be on the edge of another recession, even though it hasn't recovered from the last one. Those are the conclusions of a new book on business cycles released Tuesday by the International Monetary Fund. ... read more.
Recession Warnings Found in Assets Price Declines: Cutting Research
By Simon Kennedy
October 3, 2013
Slumping asset prices show a recession is probably on its way.
That's the case for the Group of Seven economies, according to a study by International Monetary Fund economists John C. Bluedorn, Jorg Decressin and Marco E. Terrones. It found that declining asset prices are "significantly" associated with the beginning of an economic contraction.
Stocks tend to fall more frequently and further than property values, so they are better recession-predictors, said the economists, who studied the period 1970 to 2011. Oil prices don't seem to be useful predictors of shrinking output, they said. ... read more.
By Carmen M. Reinhart & Kenneth S. Rogoff
April 2, 2012
With the U.S. economy yielding firmer data, some researchers are beginning to argue that recoveries from financial crises might not be as different from the aftermath of conventional recessions as our analysis suggests. Their case is unconvincing.
The point that all recoveries are the same -- whether preceded by a financial crisis or not -- is argued in a recent Federal Reserve working paper by Greg Howard, Robert Martin and Beth Anne Wilson. It was also discussed in a recent article in the Wall Street Journal ... read more
By John C. Williams
May 20, 2013
The economy and the labor market have improved substantially since the Federal Reserve started its current $85 billion monthly asset purchase program last September. However, it will take further gains to demonstrate that the “substantial improvement” test for ending Fed asset purchases has been met ... read more.
September 27, 2011
Equity markets are famously not very good at predicting recessions. As economist
and Nobel laureate Paul Samuelson pithily put it, the stock market has forecast nine
of the last five.
Samuelson made this remark in 1966 of course, and while the fundamental balance of fear and greed remains as true today as it was then, much else has changed. High frequency trading, 24-hour news and passive fund flows have arguably changed the relationship between values and real life effect .... read more
Every year, DG ECFIN’s Annual Research Conference presents current research and insight into issues relating to Europe’s economy. Last year’s event, held on 16-17 October, heard from economists from DG ECFIN, universities and research institutes on the role of international flows of goods, services, capital and labour in boosting growth and productivity. ... read more
By Barrie McKenna
January 10, 2006
Here are a few sobering thoughts to ponder as you gaze out over the economic landscape of the New Year: Housing busts, like booms, are typically global in nature. They almost always bring on recessions or significant economic slumps. In most cases, busts occur after a rise in short-term interest rates. And, finally, every major banking crisis to hit the developing world since the Second World War has coincided with a housing market collapse..... read more
By AMANDA RUGGERI
April 30, 2009
President Barack Obama may be right in saying that there are "glimmers" of hope in the economy, but the International Monetary Fund says that overall, economic predictions continue to be glum—both in terms of how much longer the global recession is likely to last and how it will compare to past downturns.
"There are signs that things are turning around, but I'm worried that the message is that things are fine," the IMF's chief economist, Olivier Blanchard, said at the Carnegie Endowment for International Peace today. "The need for strong policies is still acute." ... read more
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