Spillover Reports
What are spillover reports, and what do they cover? As part of its broader efforts to strengthen its surveillance, the IMF adopted an Integrated Surveillance Decision (ISD) in 2012, which calls for more systematic coverage of spillovers from members’ economic and financial policies in Article IV consultations and better integrates bilateral and multilateral surveillance. The Decision allows the IMF to discuss with its members the full range of spillovers from their policies, on domestic but also global stability, and encourage discussion of spillovers issues at multilateral forums to foster policy attention and multilateral dialogue.
The IMF’s spillover reports started in 2011. Until 2013, they focused on the external effects of domestic policies in five systemic economies (S5): China, the euro area, Japan, United Kingdom and the United States. Since 2014, the IMF has shifted to a more thematic approach in organizing the spillover report, focusing on key spillover issues. The specific topics have been chosen based on their conjunctural relevance from a spillover perspective: for example, examining spillovers that are policy induced—including from economies outside of the S5 (i.e., policy-induced global spillovers)—or spillovers that are relevant for policies in the spillover-recipient economies even when the exact source of the spillover is not fully identified (i.e., policy-relevant global spillovers).
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2015
June 8, 2015
2015 Spillover Report
Many countries around the globe, particularly the systemic advanced economies, face the challenge of closing output gaps and raising potential output growth. Addressing these challenges requires a package of macroeconomic, financial and structural policies that will boost both aggregate demand and aggregate supply, while closing the shortfall between demand and supply. Each element of this package is important and one cannot substitute for the other: easy monetary policy will not raise potential output just as structural reforms will not close the output gap. This report studies the impact on emerging markets and nonsystemic advanced economies from monetary policy actions in systemic advanced economies, with a look also at knock-on effects from the decline in world oil prices.
2014
June 25, 2014
2014 Spillover Report
Global spillovers have entered a new phase. With crisis-related spillovers and risks fading, changing growth patterns are the main source of spillovers in the global economy at this juncture. Two key trends are highly relevant here. First, signs of self-sustaining recovery in some advanced economies indicate that the unwinding of exceptional monetary accommodation will proceed and lead to a tightening of global financial conditions in the coming years. An uneven recovery, though, suggests normalization will proceed at different times in different countries, with possible spillover implications. Second, growth in emerging markets is slowing on a broad basis since its precrisis peak and can carry noticeable spillover effects at the global level.
Model code and programs used for the spillover simulations can be made available. Data used for the empirical analysis can be made available unless restricted by copyright or confidentiality issues.
Catalogue of all charts from the 2014 Spillover Report
Model code and programs used for the spillover simulations can be made available. Data used for the empirical analysis can be made available unless restricted by copyright or confidentiality issues.
Catalogue of all charts from the 2014 Spillover Report
2013
High uncertainty in general, and high policy uncertainty more specifically, can have important impact on global investment and output growth. Much of the recent policy uncertainty emanated from the United States and Europe—the world’s two largest economies. Spillovers from policy uncertainty can occur through several channels. Trade can be affected if increased policy uncertainty adversely affects economic activity and import demand in the United States and Europe. Policy uncertainty could also raise global risk aversion, resulting in sharp corrections in financial markets and capital outflows from emerging markets. This background note attempts to quantify the impact of U.S. and European policy uncertainty on other regions. Specifically, it addresses the following questions: What do we mean by policy uncertainty? How well can we measure it? How has policy uncertainty in the United States and Europe evolved during the past several decades? And how large are the spillovers to economic activity in other regions? The analysis suggests that sharp increases in U.S. and European policy uncertainty in the past have temporarily lowered investment and output in other regions to varying degrees. It also suggests that a marked decrease in policy uncertainty in the United States and Europe in the near term could help boost global investment and output.
July 2, 2013
2013 Spillover Report
Five years after the global financial crisis, the severe tensions and risks rooted last year in some of the “Systemic five” (S5)—China, euro area, Japan, United Kingdom, United States––have abated but all five are still operating below potential, i.e., they are not contributing to global activity as much as they might: if they could somehow close their output gaps, global output would be closer to potential by 3 percentage points. Meanwhile, many parts of the rest of the world have been at or near potential. Most recently though, there have been signs of accelerated recovery in the United States and slowdown in emerging markets. This continued divergence in cyclical positions poses a global challenge, namely to find policies that help the S5 close their output gap without over-stimulating or over-tightening, through spillovers, economies that do not need it.
2012
July 10, 2012
2012 Spillover Report - Background Papers
This note conducts a business cycle accounting analysis for systemic economies, with an emphasis on spillover effects from macroeconomic versus financial shocks. The systemic economies under consideration are China, the Euro Area, Japan, the United Kingdom, and the United States. This analysis is based on historical decompositions of output growth derived from the estimated structural macroeconometric model of the world economy, disaggregated into thirty five national economies, documented in Vitek (2012). Within this framework, each economy is represented by interconnected real, external, monetary, fiscal, and financial sectors. Spillovers are transmitted across economies via trade, financial, and commodity price linkages.
July 9, 2012
2012 Spillover Report
Spillover reports examine the external effects of domestic policies in five systemic economies (S5), comprising China, the Euro Area, Japan, the United Kingdom, and the United States. The report aims to provide an added perspective to the policy line developed in the Article IV discussions with these entities and an input into the Fund’s broader multilateral surveillance.
Topics for this report were chosen based on consultations with officials from the S5 and selected emerging markets (Brazil, the Czech Republic, India, Korea, Mexico, Poland, Russia, Saudi Arabia, Singapore, South Africa, and Turkey). Each participant was asked about policy concerns and spillovers from the S5. To facilitate candor, the report does not attribute views regarding partner countries.
Rather than try to capture the full range of spillovers, this report builds on last year’s findings, focusing on the forward-looking issues raised by partners and on S5 officials’ reactions.
Topics for this report were chosen based on consultations with officials from the S5 and selected emerging markets (Brazil, the Czech Republic, India, Korea, Mexico, Poland, Russia, Saudi Arabia, Singapore, South Africa, and Turkey). Each participant was asked about policy concerns and spillovers from the S5. To facilitate candor, the report does not attribute views regarding partner countries.
Rather than try to capture the full range of spillovers, this report builds on last year’s findings, focusing on the forward-looking issues raised by partners and on S5 officials’ reactions.
2011
Spillover reports explore the external effects of policies in five systemic economies based on the issues identified by partners. Without reprising all the results and nuances, this paper draws some overarching lessons from the exercise for the global policy debate.
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