World Economic Outlook

Growth and Institutions

April 2003

A Survey by the Staff of the International Monetary Fund

©2003 International Monetary Fund
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The World Economic Outlook presents the IMF staff's analysis and projections of economic developments at the global level, in major country groups (classified by region, stage of development, etc.), and in many individual countries. It focuses on major economic policy issues as well as on the analysis of economic developments and prospects. It is usually prepared twice a year, as documentation for meetings of the International Monetary and Financial Committee, and forms the main instrument of the IMF's global surveillance activities.


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Contents
772k pdf fileAssumptions and Conventions
 Preface
 Foreword
Chapter I. 
497k pdf file  		Economic Prospects and Policy Issues
North America: How Long Will the "Soft Spot" in the United States Last?
Western Europe: Weak Growth (Particularly in Germany) and Delayed Recovery
Japan: Weak Economy Underlines Need to End Deflation
Latin America: Spreads Declining But Significant Vulnerabilities Remain
Asia-Pacific Region: Has Growth Become Less Reliant on Global Developments?
European Union Candidates: Accession Underlines Fiscal Challenges That Lie Ahead
Commonwealth of Independent States: Oil Strength Masking Non-oil Weaknesses
Africa: Stability and Reforms Remain the Keys to Growth
Middle East: Managing the Demographic Transition
Appendix 1.1. Commodity Markets
Appendix 1.2. How Will the War in Iraq Affect the Global Economy?
References
Boxes
Figure Data 1.1 Could Deflation Become a Global Problem?
Figure Data1.2 Is the New Economy Dead?
Figure Data1.3 How Important Are Banking Weaknesses in Explaining Germany's Stagnation?
Tables
1.1 Overview of the World Economic Outlook Projections
1.2 Advanced Economies: Real GDP, Consumer Prices, and Unemployment
1.3 Emerging Market Economies: Net Capital Flows
1.4 Selected Economies: Current Account Positions
1.5 Major Advanced Economies: General Government Fiscal Balances and Debt
1.6 Selected Western Hemisphere Countries: Real GDP, Consumer Prices, and Current Account Balance
1.7 Selected Asian Countries: Real GDP, Consumer Prices, and Current Account Balance
1.8 European Union Candidates: Real GDP, Consumer Prices, and Current Account Balance
1.9 Commonwealth of Independent States: Real GDP, Consumer Prices, and Current Account Balance
1.10 Selected African Countries: Real GDP, Consumer Prices, and Current Account Balance
1.11 Selected Middle Eastern Countries: Real GDP, Consumer Prices, and Current Account Balance
1.12 Impact of a Permanent $5 a Barrel Increase in Oil Prices After One Year
1.13 Effects of Business Confidence on Economic Activity in Selected Industrial Countries
1.14 Stock Market Effects on Economic Activity in Selected Industrial Countries
Figures
Figure Data1.1 Global Indicators
Figure Data1.2 Current and Forward-Looking Indicators
Figure Data1.3 Developments in Mature Financial Markets
Figure Data1.4 Emerging Market Financial Conditions
Figure Data1.5 Fiscal and Monetary Easing in the Major Advanced Countries
Figure Data1.6 Global Outlook
Figure Data1.7 United States: Business Cycle
Figure Data1.8 Euro Area: Divergences in Cyclical Positions, Structural Fiscal Balances, and Real Interest Rates
Figure Data1.9 Japan: Deflationary Expectations Worsening
Figure Data1.10 Selected Western Hemisphere Countries: Economic Activity and Financial Indicators
Figure Data1.11 Asia: External Demand and Growth
Figure Data1.12 European Union Accession Countries: Accession Underlines Fiscal Challenges
Figure Data1.13 Russia: Oil Strength Masking Non-oil Weaknesses
Figure Data1.14 Africa: Growth Is Highly Influenced by Country-Specific Shocks
Figure Data1.15 Middle East and North Africa: Managing the Demographic Transition
Figure Data1.16 Oil Prices and Production
Figure Data1.17 Nonfuel Commodity Markets
Chapter II. 
352k pdf file 		When Bubbles Burst
Real and Financial Effects of Bursting Asset Price Bubbles
Corporate Fragility and Investment: What's Different About the Recent Bubble?
Appendix 2.1. Identifying Asset Price Booms and Busts
References
Boxes
2.1 A Historical Perspective on Booms, Busts, and Recessions
2.2 Corporate Financial Conditions and the Severity of U.S. Recessions
2.3 How Do Balance Sheet Vulnerabilities Affect Investment?
Tables
2.1 Equity and Housing Price Bear Markets in Industrial Countries
2.2 Relative Contributions to Output Growth Before and After Asset Price Busts
Figures
2.1 Equity and Housing Price Declines
2.2 Comparing Cross-Border Synchronization
2.3 Equity and Housing Price Busts: Macroeconomic Associations
2.4 Equity and Housing Price Busts: Financial Associations
2.5 Equity and Housing Price Busts: Implications for Banks
2.6 The Recent Equity Price Bust in Perspective
2.7 Corporate Financial Indicators Over the Bubble
2.8 Cross-Sectoral Dispersion of Market-to-Book-Value Ratio
2.9 Corporate Investment Over a Bubble
2.10 United States: Corporate Financial Indicators
2.11 Euro Area: Corporate Financial Indicators
2.12 Corporate Leverage in Advanced Countries
2.13 Selected Corporate Financial Indicators in Advanced Countries

See Also:
Video Webcast: The Real and Financial Effects of Bursting Asset Price Bubbles By Thomas Helbling and Marco Terrones Senior Economists, World Economic Studies Division (first essay in Chapter II)
Transcript

Video Webcast: Corporate Fragility and Investment: What's Different About the Recent Bubble? By Luis Catão (Senior Economist, World Economic Studies Division (second essay in Chapter II)
Transcript
Chapter III. 
348k pdf file  		Growth and Institutions
Some Background Considerations
Empirical Analysis and Assessment
Institutional Reform in Practice
Appendix 3.1. Do Institutions Drive Economic Performance?
References
Boxes
3.1 Institutional Development: The Influence of History and Geography
3.2 Have External Anchors Accelerated Institutional Reform in Practice?
3.3 Promoting Stronger Institutions and Growth: The New Partnership for Africa's Development
3.4 Institutional Development: The Role of the IMF
Tables
3.1 Economic Development
3.2 Correlation Between Institutions and Economic Performance
3.3 Effects of Institutions and Policy on Growth and Volatility
3.4 Selected Summary Statistics
3.5 GDP per Capita and Institutions: Regression Results
3.6 Growth, Institutions, and Policies: Regression Results
3.7 Volatility, Institutions, and Policies: Regression Results
Figures
3.1 Growth and Policies in Selected Advanced and Developing Economies
3.2 Relationship Between Income and Institutions
3.3 Income per Capita and Selected Institutions
3.4 Economic Outcome Measures and Aggregate Governance
3.5 Income per Capita and Improvements in Institutions
3.6 Growth and Improvements in Institutions and Policies
3.7 Growth Volatility and Improvements in Institutions and Policies
3.8 Income per Capita and Policies
3.9 Growth, Institutions, and Policies
3.10 Changes in the Rule of Law
See Also:
Video Webcast: Growth and Institutions Prepared by Maitland MacFarlan, Hali Edison, and Nicola Spatafora Deputy Division Chief, Senior Economist, and Economist, respectively; World Economic Studies Division (Chapter III)
Transcript
Chapter IV.
271k pdf file  		Unemployment and Labor Market Institutions: Why Reforms Pay Off?
Why Do We Need Labor Market Institutions?
Is High Unemployment a Structural Problem?
What Is the Effect of Labor Market Institutions on Unemployment?
What Are the Quantitative Benefits of Reforms?
Appendix 4.1. An Empirical Model of Unemployment
References
Boxes
4.1 Regional Disparities in Unemployment
4.2 Labor Market Reforms in the European Union
4.3 The Global Economy Model
Tables
4.1 Three Popular Measures and Their Estimated Effect on the Unemployment Rate
4.2 Long-Run Effects of More Competition-Friendly Policies in the Euro Area
4.3 Estimated Effects of Labor Market Institutions on Unemployment in a Panel of 20 OECD Countries, 1960–98
Figures
4.1 Actual and Structural Unemployment Rates
4.2 Unemployment and Participation Rates
4.3 Unemployment and Vacancy Rates
4.4 Institution-Adjusted Unemployment Rates
4.5 Changes in Labor Market Institutions and Unemployment Rates
4.6 More Employment-Friendly Labor Market Institutions and Unemployment
160k pdf file  Annex: Summing Up by the Chairman
602k pdf file  Statistical Appendix
Assumptions
What's New
Data and Conventions
Classification of Countries
General Features and Compositions of Groups in the World Economic Outlook Classification
Box
A.1  Economic Policy Assumptions Underlying the Projections for Selected Advanced Economies

See Also:
Video Webcast: Unemployment and Labor Market Institutions: Why Reforms Pay off, by Xavier Debrun, Economist, World Economic Studies Division (Chapter IV)
Transcript

World Economic Outlook and Staff Studies for the World Economic Outlook, Selected Topics