Prakash Loungani — Links

From a new paper past times Antonio Fatas:

“This newspaper studies the negative loop created past times the interaction betwixt pessimistic estimates of potential output as well as the effects of financial policy during the 2008-2014 menstruum inward Europe. The crisis of 2008 created an overly pessimistic sentiment on potential output with policy makers that led to a large adjustment inward financial policy during the years that followed. Contractionary financial policy, via hysteresis effects, caused a reduction inward potential output that non solely validated the master pessimistic forecasts, but also led to a minute circular of financial consolidation. This succession of contractionary financial policies was probable self-defeating for many European countries. The negative effects on gross domestic product caused to a greater extent than harm to the sustainability of debt than the benefits of the budgetary adjustments. The newspaper concludes past times discussing option frameworks for financial policy that could potentially avoid this negative loop inward hereafter crises.”

The Unassuming Economist
Fiscal Policy as well as the Shifting Goalposts

Prakash Loungani | Advisor as well as Senior Personnel & Budget Manager inward the IMF’s Independent Evaluation Office

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From a novel IMF working paper:

“This newspaper contributes to the opened upwardly economic scheme local financial multiplier literature past times estimating regional output as well as occupation responses to federal expenditure shocks inward the European Union. In particular, similarly to the literature on unusual aid as well as growth, I role shocks to the furnish of federal transfers (European Commission commitments) of structural fund spending past times subnational share every bit instruments for annual realized expenditure inward a panel from 2000-2013. I discovery a large, contemporaneous multiplier of 1.7 which translates into a cumulative multiplier of 4 3 years after the shock. Furthermore, using a novel dataset on bilateral merchandise betwixt European Union regions, I discovery show of demand-driven spillovers upwardly to 3 years after a shock.”

Fiscal Stimulus inward a Monetary Union: Evidence from Eurozone Regions

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From a novel IMF policy paper:

“This newspaper reviews the sense with the financial infinite assessment framework that was piloted during 2017–18. In 2016, staff proposed an operational Definition of financial infinite as well as a novel four-stage framework for its assessment. These were discussed informally past times the Board inward June, as well as a Board newspaper “Assessing Fiscal Space: An Initial Consistent Set of Considerations”incorporating Directors’ views was published inward December. Fiscal infinite was narrowly defined every bit the room for task discretionary financial policy relative to existing plans without endangering marketplace position access as well as debt sustainability. The framework was developed inward reply to the take away to provide a to a greater extent than systematic approach to assessing financial infinite inward the Fund’s surveillance. It was designed every bit a tool to inform the availability of financial infinite over a 3 to 4 twelvemonth horizon for discretionary action, every bit opposed to the optimality of its use. Indeed, it was stressed that the availability of infinite does non necessarily hateful that it should hold upwardly used or should non hold upwardly farther expanded. The framework was piloted inward the Article IV consultations of 34 advanced economies as well as emerging markets, comprising virtually fourscore pct of global gross domestic product inward PPP terms.”

Assessing Fiscal Space: An Update as well as Stocktaking