Steven Symansky

Fiscal Policy for the Crisis

Spilimbergo, Antonio; Symansky, Steve Symansky; Blanchar, Olivier; Cottarelli, Carlo.December, 2008.Fiscal policy for the crisis,Reports,Washingot,D.CIMF,IMF staff position note,37

Robustness of Equilibrium Exchange Rate Calculations to Alternative Assumptions and Methodologies

This paper explores a number of methodological issues that arise in the calculation of equilibrium exchange rates, which are identified in this paper as those real effective exchange rates consistent with macroeconomic equilibrium, i.e., internal and external balance. A partial equilibrium, comparative static analysis is presented and the methodology is applied to the break-up of the Bretton Woods exchange rate system. Then the dynamic interaction between the current account and the stock of net foreign assets is examined. Finally, the analysis uses a more general equilibrium approach by relying on simulations using MULTIMOD, a multicountry econometric model. The paper demonstrates the extent to which the equilibrium exchange rate calculations depend upon alternative assumptions regarding factors that affect internal and external balance. In addition, results obtained using the comparative static and dynamic macroeconomic approaches are compared.

Exchange rates and economic fundamentals : a framework for analysis

This paper summarizes the methods and types of indicators that are often employed, both insid and outside the IMF, to assess whether exchange rates are broadly in line with economic fundamentals.

Government Debt, Life-Cycle Income and Liquidity Constraints: Beyond Approximate Ricardian Equivalence

Evans (1991) has demonstrated that Blanchards (1985) finite-horizon model obeys approximate Ricardian equivalence. This paper shows that this result is determined largely by an unrealistic assumption that labor income grows monotonically over the consumers entire lifetime. With more realistic lifetime earnings profiles, the effects of government debt on the real interest rate and the capital stock are considerably larger. In particular, leaving aside the effects of distortionary capital taxation, the extended model with liquidity constraints predicts that real interest rates would decline by about 150-200 basis points if government debt were eliminated completely in all countries of the Organization for Economic Cooperation and Development (OECD).

Exchange Rate Movements and Their Impact on Trade and Investment in the APEC Region

The 18 members of the Asia-Pacific Economic Cooperation Council (APEC) encompass not only a wide geographic area but also broad differences in stages of economic development, including among them some of the fastest- growing economies in the world. Such rapid growth has been ficilitated by high levels of investment and trade, international linkages, and, in most APEC economies, macroeconomic policies that have sustained growth while not sparking excessive inflation. This study offers insights about how medium and long-term changes in real exchange rates have affected international (and intra-APEC) trade and investment in the region.

Evaluating the EMS and EMU Using Stochastic Simulations: Some Issues

Evaluations of European monetary integration using model simulations have given conflicting results, and the paper attempts to elucidate the reasons for the differences. Several features stand out: how to model realignments; how monetary policy is set for individual countries or for Europe; and how large are risk premium shocks in exchange markets. We quantify the effects of different assumptions relating to these features using MULTIMOD.

Implications for Savings of Aging in the Asian 'Tigers'

Significant aging is projected for many high-saving emerging economies of East and Southeast Asia. By 2025, the share of the elderly in their populations will at least double in most of these countries. The share of the young will fall. Aging populations could adversely affect saving rates in these economies, particularly after 2025. For the world, one may observe that, initially, the Asian Tigers could become increasingly important for world savings, reflecting their increased weight in the world economy, their high saving and growth rates, and the aging of the industrial countries. After 2025, the aging of the Tigers may reinforce the tendency toward a declining world saving rate.

The Impact of Worldwide Military Spending Cuts on Developing Countries

This paper investigates the economic impact of a coordinated reduction in military expenditures of 20 percent using a specially modified version of the MULTIMOD world economic model. Simulation results indicate that in developing countries the present value of consumption increases by 46 percent of 1992 GDP, compared to military expenditures cuts, in present value terms, of 33 percent of 1992 GDP. The gains reflect both the release of domestic resources and a positive international economic externality due to enhanced trade and lower world interest rates. Accordingly, the net debtor developing country gains exceed those of industrial countries. Examination of individual developing country economies confirms the significance of the external trade effect on the pattern and level of gains.

A Forward-Looking Macroeconomic Simulation Model for a Developing Country

The paper develops a small dynamic macroeconomic simulation model for a representative developing country which relies on familiar macroeconomic theory and in which expectations are formed rationally. The model is useful for the analysis and simulation of important policy questions in a general-equilibrium setting. Several policy experiments are conducted which illustrate the workings of the model and yield fresh insights into the effects of standard macroeconomic policies in developing countries.

A Note on Burden Sharing among Creditors

This paper presents a framework for evaluating the relative contributions of different creditors in cases where only partial payments can be made by the debtor country. A methodology is developed to calculate partial payments--or, alternatively put, to determine residual financing. By focusing on the relative seniority of creditors and expectations of the debtors ability to repay, alternative sharing rules are quantified. The measure is based on the expected present value of payments. Creditors earning a below-market rate of return suffer a burden; creditors earning the same rate of return are said to share the burden equally.