Working Papers
January 1, 0001
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January 1, 0001
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1994
March 1, 1994
Financial Structure, Bank Lending Rates, and the Transmission Mechanism of Monetary Policy
Description: The stickiness of bank lending rates with respect to money market rates is often regarded as an obstacle to the smooth transmission of monetary policy impulses. Yet, no systematic measure of the different degree of lending rate stickiness across countries has been attempted. This paper provides such a measure. It also relates the different degree of lending rate stickiness to structural features of the financial system, such as the existence of barriers to competition, the degree of development of financial markets, and the ownership structure of the banking system. Thus, the paper provides further evidence on the relationship between structural financial policies and monetary policy, as well as on the relevance of credit markets for the monetary policy transmission mechanism. The role of administered discount rates in speeding up the. adjustment of lending rates is also discussed.
Notes: Also published in Staff Papers, Vol. 41, No. 4, December 1994.
March 1, 1994
Economic Determinants of Fund Financial Arrangements
Description: This paper analyses empirically the economic factors that lead to approval of Fund financial arrangements. We account for both the economic variables that induce a country to seek an arrangement with the Fund ("demand-side" factors) and the macroeconomic policy commitments that the Fund considers when deciding whether to approve it ("supply-side" factors). Using a pooled sample of annual observations for 91 developing countries over 1973-1991, we obtain maximum likelihood estimates of bivariate and univariate probit equations to determine the probability of approval of a financial arrangement for a given country in a given year. A number of our chosen demand-side and supply-side variables are statistically significant determinants of the approval of a Fund arrangement, and the overall explanatory power of the equations is high.
March 1, 1994
Financial and Enterprise Restructuring in Emerging Market Economies
Description: This paper examines alternative approaches to building sound financial structures in emerging market economies. The foremost task is to resolve the bad loan problem and to recapitalize insolvent state banks. By restoring an incentive for banks to price accurately the risks of new lending, this effort would be an important first step in strengthening financial control. However, we argue that this endeavor is only part of the task at hand; the remainder is to provide financing that facilitates the economic restructuring of SOEs. A comprehensive strategy may involve combining discipline derived from enforcing existing loans to SOEs with adequate funding for new forms of ownership, including financing for enterprise sell-offs and leasing.
March 1, 1994
Taxation of Petroleum Products: Theory and Empirical Evidence
Description: The domestic taxation of petroleum products is an important source of revenue in most countries. However, there is a wide variation of tax rates on petroleum products across countries, which cannot be explained by economic theory alone. This paper surveys different considerations advanced for taxing petroleum and presents petroleum tax rate data in 120 countries. It concludes that a significant reduction in the present extremely wide variation in petroleum prices and tax rates appears warranted.
Notes: Presents petroleum tax rate data in 120 countries.
March 1, 1994
The Use of Financial Spreads As Indicator Variables: Evidence for the U.K. and Germany
Description: There has been growing interest in the use of financial spreads as advance indicators of real activity and inflation. Empirical evidence is marshalled on a range of spreads when these are used in vector autoregressive models of the UK and German economies. It is found that they do have significant information, even after allowing for the effects of other influences upon macro-economic activity.
Notes: Also published in Staff Papers, Vol. 41, No. 3, September 1994.
March 1, 1994
Labor Market Institutions and Flexibility in Italy: A Critical Evaluation and Some International Comparisons
Description: The paper surveys three broad categories of labor market institutions in Italy: employment protection legislation, unemployment benefit systems, and wage bargaining arrangements. In each case, the recent evolution and current state of Italian institutions are evaluated and compared with those in other major European countries.
March 1, 1994
Changing Patterns in Public Expenditure Management: An Overview
Description: Significant changes with far-reaching impact have taken place during recent years in public expenditure management. These changes which are being implemented in a few industrial countries are likely to be emulated by other industrial and developing countries. The content of these changes is enumerated in some detail, and their impact is assessed in terms of specified criteria. Other continuing problems that are not addressed by these advances are also considered in detail.
March 1, 1994
The "Hard" SDR: An Exploratory Analysis
Description: There has been considerable interest in recent years in the possibility of hardening the SDR, motivated by the desire for an international yardstick of monetary stability. This paper explores various ideas aimed at hardening the SDR in the light of the previous debate on the valuation of the SDR. The paper shows that the construction and implementation of a “hard” SDR which would preserve its purchasing power over goods and services is technically feasible and illustrates this by monthly computations covering the period from July 1974 to July 1993.
Notes: Construction and computation of a "hard SDR basket" is illustrated on a monthly basis for the period from July 1974 to July 1993. Also published in Staff Papers, Vol. 41, No. 3, September 1994.