The Case for Fiscal Policy to Support Structural Reforms

By Angana Banerji, Era Dabla-Norris, Romain Duval, and Davide Furceri

Versions in 中文 (Chinese), Français (French),Deutsch (German), Русский (Russian), and Español (Spanish)

Many advanced countries need  structural reforms to make their economies more productive and raise long-term living standards.  Our new research shows that provided countries can afford it, fiscal policy, through spending or tax incentives, can help governments overcome some obstacles to the reforms, particularly in the early stages.   (more…)

Sluggish Business Investment in the Euro Area: The Roles of Small and Medium Enterprises and Debt

By John C. Bluedorn and Christian Ebeke

Small businesses could be the lifeblood of Europe’s economy, but their size and high debt are two of the factors holding back the investment recovery in the euro area. The solution partly lies in policies to help firms grow and reduce debt.

Our new study, part of the IMF’s annual economic health check of the euro area, takes a novel bottom-up look at the problem. We analyze the drivers of investment using a large dataset of over six million observations in eight euro area countries, from 2003 to 2013: Austria, Belgium, Germany, France, Finland, Italy, Portugal, and Spain. (more…)

The Ties That Bond Us: What Demand For Government Debt Can Tell Us About the Risks Ahead

It has become apparent in recent years is that advanced economy government bond markets can also experience investor outflows, and associated runs. Our new research shows that advanced economies’ exposure to refinancing risk and changes in government borrowing costs depend mainly on who is holding the bonds— the demand side for government debt. Tracking who owns what, when and for how long can shed some light on potential risks in advanced economies’ government debt markets.

How to Get the Balance Right: Fiscal Policy At a Time of Crisis

The crisis has harmed growth, increased unemployment, and left a large number of people less protected. We are now seeing some signs of stabilization. Most countries are reducing their deficits and even if debt ratios are still rising, the return back to fiscal health has begun.

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