Thomas Helbling

International Business Cycle Synchronization in Historical Perspective

In this paper, we review and attempt to explain the changes in business cycle synchronization among 16 industrial countries and the over the past century and a quarter, demarcated into four exchange rate regimes. We find that there is a secular trend towards increased synchronization for much of the twentieth century and that it occurs across diverse exchange rate regimes. This finding is in marked contrast to much of the recent literature, which has focused primarily on the evidence for the past 20 or 30 years and which has produced mixed results. We then examine the role of global shocks and shock transmission in the trend toward synchronization. Our key finding here is that global (common) shocks generally are the dominant influence.

Fiscal Policy and Growth in the Middle East and North Africa Region

Establishing a policy framework to sustain high rates of growth is a major challenge facing the economies of the Middle East and North Africa. Given the strikingly dominant role of governments in these economies, this paper focuses on the contribution of fiscal consolidation and reform toward addressing this challenge. On the basis of an examination of fiscal structures, reform and adjustment efforts, and their growth implications during 1980-95, it concludes that the ongoing process of fiscal reform—aimed at reducing budget deficits, improving the budgetary structure, and enhancing the effectiveness of government interventions—is key to ensuring macroeconomic stability and fostering growth.

Debt Accumulation in the CIS-7 Countries; Bad Luck, Bad Policies, or Bad Advice?

Following the breakup of the Soviet Union in 1992, several low-income countries in the Commonwealth of Independent States (CIS) accumulated substantial external debt in a short time span, about half of which is owed to multilateral financial institutions. Three factors contributed to the current debt burden. First, the initial years of transition brought large systemic economic disruptions, loss of transfers from the center and collapse of trade relations among Council for Mutual Economic Assistance (CMEA) countries, and negative terms of trade shocks. Second, fiscal and other reforms, and consequently, growth revival, took longer than expected. Third, overoptimism by multilaterals contributed to the high debt levels. If external financial assistance, which was needed because of high social costs of the transition, had come in the form of grants in the first two or three years of the transition, the debt burden would have been lower and sustainable.

Back to the Future; Postwar Reconstruction and Stabilization in Lebanon

Following the 15-year civil war that started in 1975, Lebanons government began the difficult task of economic stabilization and confidence building, on the one hand, and postwar reconstruction and development, on the other. The government led the reconstruction effort by formulating programs that aimed to rapidly rehabilitate the countrys severly damaged infrastructure in preparation for private-sector-led growth over the medium term. At the same time, Lebanon introduced an exchange-rate-based nominal anchor policy to stabilize expectations and cut inflation. This paper analyzes the governments progress with the policies adopted.

INTERNATIONAL BUSINESS CYCLE SYNCHRONIZATION IN HISTORICAL PERSPECTIVE

In this paper, we review and attempt to explain the changes in business cycle synchronization among 16 industrial countries and the over the past century and a quarter, demarcated into four exchange rate regimes. We find that there is a secular trend towards increased synchronization for much of the twentieth century and that it occurs across diverse exchange rate regimes. This finding is in marked contrast to much of the recent literature, which has focused primarily on the evidence for the past 20 or 30 years and which has produced mixed results. We then examine the role of global shocks and shock transmission in the trend toward synchronization. Our key finding here is that global (common) shocks generally are the dominant influence.

The low-income countries of the Commonwealth of Independent States : progress and challenges in transition

After the breakup of the Soviet Union, the commonwealth of independent states (CIS-7) faced exceptional challenges in building new states, democratic institutions, and market economies. All of the CIS-7 started from a situation of complex dependency on the Soviet Union, including massive transfers and subsidies and the trade arrangements of the council for mutual economic assistance (CMEA). Creating new states and achieving macroeconomic stabilization have been major successes of the reforms in the CIS-7, while building democratic societies, achieving fiscal and external adjustments, and implementing structural changes have proved to be more challenging. The international community provided substantial assistance to the CIS-7 during the l990s - assistance that helped keep living standards from falling catastrophically. This report presents a synthesis of the papers, presentations, and discussions at Lucerne and is organized around two key objectives of the conference. The first objective is to help bring about a common understanding among CIS-7 governments, civil society, and external partners about the transition experience of the 1990s and the key features of the CIS-7 that conditioned the transition process and can influence future progress. The second objective is to clarify common aspects of the agendas for growth and poverty reduction in the CIS-7, and areas in which the countries and their external partners can work together to achieve faster progress.

Do Credit Shocks Matter? A Global Perspective

This paper examines the importance of credit market shocks in driving global business cycles over the period 1988:1-2009:4. We first estimate common components in various macroeconomic and financial variables of the G-7 countries. We then evaluate the role played by credit market shocks using a series of VAR models. Our findings suggest that these shocks have been influential in driving global activity during the latest global recession. Credit shocks originating in the United States also have a significant impact on the evolution of world growth during global recessions.