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Isabel Rial

By | January 13th, 2014|

Isabel RialIsabel Rial is a senior economist for the Expenditure Policy Division in the Fiscal Affairs Department. Besides contributing to the Fund’s regular surveillance of the Turkish economy, Ms. Rial works on a range of cross country fiscal policy issues. In her 10 years of experience in the Fund, Ms. Rial has lead several technical assistance missions to both surveillance and program countries, particularly focusing on fiscal risks management, public-private partnerships, as well as the estimation and use of structural fiscal balances. Prior to joining the Fund, she was chief of the Fiscal Policy Division at the Central Bank of Uruguay and taught at the University of Uruguay. She has a MA in applied macroeconomics from the Pontific Catholic University in Chile.

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Fiscal Policy in Latin America: Prudence Today Means Prosperity Tomorrow

By | December 11th, 2013|Economic research, Emerging Markets, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund, Latin America, Public debt, Uncategorized|

Alejandro WernerBy Alejandro Werner

(Versions Español and Português)

Public finances in most Latin American countries strengthened significantly before the global financial crisis. Since 2009, countries have generally increased public deficits, drawing down on their fiscal coffers.

These expansionary policies continue and are yet to be reversed. With further pressures likely to build over the period ahead—as economic growth has slowed, commodity prices have softened, and external funding costs are bound to rise—now is the right time to rethink fiscal policies across the region.

Continue reading “Fiscal Policy in Latin America: Prudence Today Means Prosperity Tomorrow” »

Japan’s Abenomics: Time to Take Stock

By | October 21st, 2013|Asia, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Finance, growth, IMF, International Monetary Fund, Uncategorized|

ASinghBy Anoop Singh

Almost one year ago, the term Abenomics first surfaced in Japan. The idea of a coordinated policy effort to revive Japan’s economy and end deflation seemed a bold idea, but also a long-shot. Back in February, several young investment bankers told me that ending deflation within the next few years stood at most, a 20 percent chance.  They noted that they had never experienced rising prices in their lifetimes. By June they had upped the chances of success to 40 percent. With Abenomics approaching the one-year mark, is the new strategy working?

Lot of policy action

The year started with a flurry of new policy initiatives: in January, the Bank of Japan (BoJ) adopted a 2 percent inflation target, followed by new fiscal stimulus, and a decision to join  negotiations over the  Trans-Pacific Partnership (TPP), a proposal for a free trade agreement spanning countries from Australia, Brunei, to Chile, Canada, and the U.S.  Shortly after,  Haruhiko Kuroda took the helm at the Bank of Japan and introduced  Quantitative and Qualitative Monetary Easing—an aggressive plan to reach 2 percent inflation in about 2 years mainly through large-scale bond purchases. Just, a few days ago, the government agreed to go ahead with the consumption tax increase in 2014 and announced further fiscal stimulus to soften the growth impact. Discussions on growth reforms are next on the agenda, with a special Diet session starting this month. Plenty of action, but has this whirlwind of activity paid off?
Continue reading “Japan’s Abenomics: Time to Take Stock” »

Martine Guerguil

By | October 8th, 2013|

Martine GuerguilMartine Guerguil, a French national, oversees, among her others tasks, the preparation of the flagship Fiscal Monitor. In her previous positions in the IMF, Ms. Guerguil led work on debt sustainability and debt relief and on macroeconomic policy design in Latin America and Africa. Before joining the IMF in 1994, Ms. Guerguil worked for the United Nations Economic Commission for Latin America and the Caribbean in Santiago, Chile. Ms. Guerguil studied at the Institut d’Etudes Politiques de Paris and at the University of Paris, Panthéon-Sorbonne.

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Bending with the Winds of International Capital Flows

By | September 30th, 2013|Advanced Economies, Economic research, Emerging Markets, Finance, growth, IMF, International Monetary Fund, Public debt, Uncategorized|

John_SimonBy: John Simon

The winds may fell the massive oak, but bamboo, bent even to the ground, will spring upright after the passage of the storm.
Japanese Proverb

Capital flows to emerging market economies are a source of particular and enduring concern to many policymakers. As seen in the 1997-98 Asian crisis, surging inflows can fuel excessive credit growth, expanded current account deficits, appreciated exchange rates and a loss of competitiveness—followed by painful adjustment when the inflows reverse. Countries often fight these buffeting winds with tight controls on exchange rates, capital flow management and aggressive interest rate movements. While these sometimes work, and are sometimes the best response to a crisis, all too often countries can find themselves felled by the wind like the massive oak.

In the most recent World Economic Outlook we discuss an approach to dealing with volatile international capital flows that emphasizes the soft and flexible response to capital flows rather than the hard and oak-like. Instead of trying to resist foreign inflows, countries can bend. We find that the countries that proved to be more resilient to the turbulent gusts of international capital flows were not necessarily those that controlled the inflows, but those where foreign inflows were balanced by offsetting resident outflows.

Continue reading “Bending with the Winds of International Capital Flows” »

Saving Latin America’s Unprecedented Income Windfall

By | May 20th, 2013|Economic Crisis, Emerging Markets, Fiscal policy, growth, IMF, International Monetary Fund|

by Gustavo Adler and Nicolás Magud

(Versions in Español and Português)

Commodity exporting countries in Latin America have benefited strongly from the commodity price boom that began around 2002. And the accompanying improvements in public and external balance sheets have fed a sense that this time the macroeconomic response to the terms-of-trade boom has been different (and more prudent) than in past episodes. But, has it?

In our recent work, we analyze the history of Latin America’s terms-of-trade booms during 1970–2012 and quantify the associated income windfall (i.e., the extra income arising from improved terms-of-trade). We also document saving patterns during these episodes and assess the extent of the “effort” to save the income windfall.

Our findings suggest that, although the additional income shock associated to the recent terms-of-trade boom is unprecedented in magnitude, the effort to save it has been lower than in past episodes.

Continue reading “Saving Latin America’s Unprecedented Income Windfall” »

Latin American Firms: Keeping Corporate Vulnerabilities in Check

By | December 17th, 2012|Asia, Economic Crisis, Emerging Markets, Finance, growth, IMF, International Monetary Fund|

Four years after the Lehman Brothers crisis, private companies in the largest and most financially integrated Latin American countries are doing relatively well, despite continuous bouts of global uncertainty. Like firms in other high-performing emerging markets in Asia, companies in Brazil, Chile, Colombia, Mexico, and Peru (the “LA5”) have benefited from abundant external financing, strong domestic credit, and generally robust demand growth.

Policy Interest Rates in Latin America: Moving to Neutral?

By | November 19th, 2012|Economic research, Emerging Markets, Employment, Finance, growth, Inequality, Latin America, Low-income countries, Politics, Public debt|

Using our estimated neutral interest rates we find that current policy rates are close to their neutral level in several countries (Chile, Colombia, and Peru). For Brazil and Mexico we find that monetary policies remain stimulative (with actual interest rates below neutral). For other countries in the region our analysis suggests that Costa Rica, the Dominican Republic, Guatemala, Paraguay, and Uruguay have lower interest rates than their neutral level. However, these results should be viewed with caution given data limitations and weaker monetary policy transmissions.

Regional Spillovers in South America: How “Systemic” is Brazil?

By | May 29th, 2012|Economic outlook, Economic research, Emerging Markets, Employment, Finance, Globalization, growth, IMF, Inequality, International Monetary Fund, Investment, Latin America, Politics|

We quantify the spillovers from Brazil to other countries in South America. The results confirm that Brazil has a significant influence on Southern Cone countries, particularly on Mercosur partners (Argentina, Paraguay, and Uruguay), but not on the Andean economies. For the Southern Cone countries, spillovers from Brazil can take two forms: the transmission of shocks originating in Brazil and the amplification (through Brazil) of global shocks. These two factors explain an important share of the fluctuations in economy activity in the Southern Cone countries.

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