The Gambia: IMF Executive Board Completes the Second Review Under the Extended Credit Facility
December 20, 2024
IMF Executive Board Completes the First Review under the Extended Credit Facility (ECF) Arrangement for Togo
December 20, 2024
IMF Executive Board Completes the Sixth Review of the Extended Arrangement under the Extended Fund Facility for Ukraine
December 20, 2024
How Has Dollarization Served Timor-Leste So Far?
December 20, 2024
This paper analyzes Timor-Leste’s historical economic performance and structure under dollarization. It considers several dimensions that determine the benefits and costs of the regime: (i) growth and inflation performance; (ii) business and financial cycle synchronization; (iii) adjustment to external shocks; and (iv) competitiveness. Dollarization has helped Timor-Leste achieve relatively low and stable inflation in the context of post conflict fragility, but may be contributing to weakening competitiveness. Improved performance under dollarization requires reduced fiscal imbalances and advancement of reforms that address structural bottlenecks that also undermine competitiveness.
Size and Resilience of the Blue Economy in Pacific Island Economies
December 20, 2024
Economic output and livelihoods in Pacific Island economies (PIEs) rely greatly on ocean-related sectors and products, known as the ”Blue Economy”. Yet, marine ecosystems are under mounting pressure of climate change and human degradation, exposing PIEs to very large risks, while they have only limited technical and financial capacity to mitigate them. This paper aims: first to estimate the size of the Blue Economy in PIEs, based on comprehensive international input-output tables; and second to simulate the impact of selected shocks in PIEs, so as to provide insights on the resilience of the Blue Economy to shocks, including from climate change.
A Confidence-Financial Inclusion Nexus in the Caucasus and Central Asia?
December 20, 2024
We document novel evidence that confidence in macrofinancial stability has a positive impact on financial inclusion in CCA countries and more broadly. This channel is particularly important for CCA countries, with confidence gains of 1 unit leading to 0.7 unit improvement in financial inclusion. Institutional factors such as level of governance and reliance on transparent policy rules and robust financial safety nets explain a large fraction of the variability in confidence in the region. We find that governance reforms are critical for deepening financial inclusion while the impact of inflation targeting, fiscal rules and deposit insurance schemes is positive and material only when governance levels exceed certain thresholds.
The Urgency of Conflict Prevention – A Macroeconomic Perspective
December 20, 2024
Can macroeconomic policy effectively help prevent armed conflicts? This paper contends that two key criteria need to be satisfied: the long-term benefits of prevention policies must exceed the costs associated with uncertain forecasts, and the policies themselves must be directly able to contribute to conflict prevention. This paper proposes policy simulations, based on a novel method of Mueller et al (2024a) that integrates machine learning and dynamic optimization, to show that investing in prevention can generate huge long-run benefits. Returns to prevention policies in countries that have not suffered recently from violence range from $26 to $75 per $1 spent on prevention, and for countries with recent violence, the rate of return could be as high as $103 per $1 spent on prevention. Furthermore, an analysis of the available data and results in the literature suggest that sound macroeconomic policies and international support for these policies can play key roles in conflict prevention. Based on these findings, this paper proposes actionable recommendations, for both global and domestic policymakers as well as international financial institutions and multilateral organizations, to promote peace and stability through macroeconomic policy.
Industrialization and the Big Push: Theory and Evidence from South Korea
December 20, 2024
We study how one-time subsidies for adoption of modern technology drove Korea's industrialization in the 1970s. Leveraging unique historical data, we provide causal evidence consistent with coordination failures: adoption improved adopters' performance and generated local spillovers, with firms more likely to adopt when other local firms had already adopted. We incorporate these findings into a quantitative model, where the potential for multiple steady states depends on parameters mapped to the causal estimates. In our calibrated model, Korea's one-time subsidies shifted its economy to a more industrialized steady state, increasing heavy manufacturing's GDP share by 8.6% and export intensity by 16.2%. Larger market access amplifies the effects of these subsidies, as the gains from adoption increase with firms' scale.
Chasing the Dream: Industry-Level Productivity Developments in Europe
December 20, 2024
European countries are lagging behind in productivity growth, with significant productivity gaps across industries. In this study, we use comparable industry-level data to explore the patterns and sources of total factor productivity (TFP) growth across 28 countries in Europe over the period 1995–2020. Our empirical results highlight four main points: (i) TFP growth is driven largely by the extent to which countries are involved in scientific and technological innovation as the leader country or benefiting from stronger knowledge spillovers; (ii) the technological gap is associated with TFP growth as countries move towards the technological frontier by adopting new innovations and technologies; (iii) increased investment in information and communications technology (ICT) capital and research and development (R&D) contributes significantly to higher TFP growth; and (iv)the impact of human capital tends to be stronger when a country is closer to the technological frontier. The core findings of this study call for policy measures and structural reforms to promote innovation and facilitate the diffusion of new and existing technologies across Europe.
Islamic Republic of Mauritania: Selected Issues
December 20, 2024
2024 Selected Issues