IMF Policy Discussion Papers
1994
March 1, 1994
Asset Prices, Monetary Policy, and the Business Cycle
Description: The business cycle in several industrial countries during the period 1989-1993 was different from previous post World War II business cycles in important ways. This paper describes the unique character of the recent cycle, examines important underlying structural and macroeconomic factors, and discusses why these unique features emerged. Although many of the structural changes were partly responsible for the overshooting of asset prices and private debt levels, the extreme overshooting could not have occurred without overexpansionary monetary and fiscal policies. The paper examines why inflationary pressures were allowed to accumulate and then discusses a number of lessons for conducting economic policy in the 1990s. This is a Paper on Policy Analysis and Assessment and the author(s) would welcome any comments on the present text. Citations should refer to a Paper on Policy Analysis and Assessment of the International Monetary Fund, mentioning the authors) and the date of issuance. The views expressed are those of the author(s) and do not necessarily represent those of the Fund.
February 1, 1994
The New Protectionism in Industrial Countries: Beyond the Uruguay Round
Description: This paper presents a broad overview of trade protection in industrial countries from the 1970s to the present. The emphasis of such measures has shifted from the protection of agriculture and basic manufacturing industries, where many industrial countries had lost (or never had) comparative advantage in the 1970s and 1980s, toward the protection and promotion of high-technology sectors in recent years. The new forms of protection--particularly subsidies and antidumping rules--have not necessarily contravened GATT rules, arid the Uruguay Round fell short of reigning in such interventions. While these more recent trade interventions might in principle have an economic justification under certain conditions, theoretical, empirical, and practical considerations call for great skepticism about the desirability and efficacy of such policies. The next challenge for world trade negotiators is to contain the pressures for intervention in these areas. This is a Paper on Policy Analysis and Assessment and the author(s) would welcome any comments on the present text. Citations should refer to a Paper on Policy Analysis and Assessment of the International Monetary Fund, mentioning the author(s) and the date of issuance. The views expressed are those of the author(s) and do not necessarily represent those of the Fund.
January 1, 1994
Budget Deficits and the Public Debt in Sweden - The Case for Fiscal Consolidation
Description: Budget Deficits and the Public Debt in Sweden - The Case for Fiscal Consolidation
Notes: Also published in Staff Papers, Vol. 41, No. 3, September 1994.
January 1, 1994
China's Foreign Currency Swap Market
Description: China's Foreign Currency Swap Market
January 1, 1994
On the Political Sustainability of Economic Reform
Description: On the Political Sustainability of Economic Reform
1993
December 1, 1993
International Capital Transactions: Should They Be Restricted?
Description: Some prominent economists and officials contend that government restrictions should be used to limit international capital movements that are considered destabilizing. This paper briefly summarizes the recent usage of such restrictions, discusses their international acceptance and their theoretical justification, reviews recent empirical studies of their efficacy, and examines their efficacy in Ireland, Spain, and Portugal during the latter part of 1992. The conclusion is that such restrictions typically have no more than fleeting and minor success in attaining their objectives.
December 1, 1993
The Structural Crisis in the Swedish Economy: Role of Labor Markets
Description: This paper focuses on the main institutional features of the Swedish labor market and analyzes the reasons for the high wage inflation and slow productivity growth. The so-called Swedish model, usually identified with an advanced welfare state, has attracted attention from many quarters for its apparent earlier success. One of the distinctive features of the Swedish model has been its unique labor market institution, which combines centralized bargaining with a policy of wage equalization, designed with a view to promoting a favorable macroeconomic performance. The concept of solidaristic wages was initially conceived as equal pay for equal work. Estimates provided by the Swedish Ministry of Finance, indicate that the wage spread for industrial workers, calculated as the difference between the highest and lowest deciles in 1984, was 34 percent for Sweden in contrast to 210 percent for the United Kingdom and 490 percent for the United States.
Notes: Also published in Staff Papers, Vol. 41, No. 2, June 1994.
December 1, 1993
The Taxation of High Income Earners
Description: The 1980s trends were to lower marginal personal income tax rates, scale down rate structures, and apply the highest rate at lower levels of per capita GDP. In the 1990s, driven by fiscal deficits and unemployment, and difficulty in linking high marginal rates to low incentives or revenue productivity, tax authorities are again demonstrating an interest in increasing marginal rates. This will burden those that are correctly paying the tax. Instead, equity and revenue productivity should be improved through minimum taxes, presumptive taxes, adequate inclusion of capital income in the tax base, revitalization of property taxes, and selected luxury taxes.
November 1, 1993
Selective Government Interventions and Economic Growth: A Survey of the Asian Experience and its Applicability to New Zealand
Description: Since the mid-1980s, New Zealand has been engaged in a broad-ranging economic reform program--involving liberalization of key sectors of the economy, reduction in trade protection, and trimming of the public sector--in order to restructure its economy and stimulate growth. With growth performance having been rather lackluster in recent years, questions have been raised as to whether a more interventionist approach--such as that followed by some Asian countries--might be warranted in order to place the economy on a higher growth path. A review of the empirical literature dealing with the experience of the dynamic Asian economies does not suggest that their success can be attributed to any significant degree to selective government interventions.