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Tag Archives: Financial Markets

A Capital Market Union for Europe: Why it’s Needed and How to Get There

By Ashok Vir Bhatia, Srobona Mitra, and Anke Weber When savers and firms invest and borrow beyond their national borders, they enjoy opportunities to diversify their portfolios and lower their funding costs, respectively. In Europe, this idea—of an integrated financial system that offers a richness of financing choice—remains an elusive goal: capital markets are far from integrated. Our recent research finds that European finance is still sharply segmented along national lines, with...

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New Index Tracks Trade Uncertainty Across the Globe

By Hites Ahir, Nicholas Bloom, and Davide Furceri Español, Português Rising trade uncertainty is cited as a driving factor for “sluggish global growth” in the current issue of the IMF’s World Economic Outlook, which describes the state of the world economy. But how is trade uncertainty measured? How has it evolved over time? Are changes in trade uncertainty confined to specific countries and regions of the world? A new measure of trade uncertainty finds that by this measure of uncertainty...

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A Role for Financial and Monetary Policies in Climate Change Mitigation

By William Oman Español July 2019 was the hottest month ever recorded on earth, with countries across the world experiencing record-breaking temperatures. A prolonged drought is affecting millions of people in East Africa, and in August 2019 Greenland lost 12.5 billion tons of ice in one day. A review of the literature by IMF staff aims to spur discussion of what policies to mitigate climate change could or should include. The review suggests that, while fiscal tools are first in line,...

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Monitoring Global Financial Stability

By Tobias Adrian, Dong He, Nellie Liang, and Fabio Natalucci “It’s awful. Why did nobody see it coming?” asked Queen Elizabeth II in November 2008 during a visit to the London School of Economics, wondering why nobody had predicted the Global Financial Crisis. The bewilderment wasn’t unique to the British monarchy; across the world, many asked the same question. Ten years on, it remains difficult to forecast financial instability. However, progress is afoot to improve the understanding of...

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Taming the Currency Hype

By Gustavo Adler, Luis Cubeddu, and Gita Gopinath Escalating trade tensions are taking a toll on the global economy and are partly responsible for the recent downward revisions to our growth forecasts for 2019-20. Facing sluggish growth and below-target inflation, many advanced and emerging market economies have appropriately eased monetary policy, yet this has prompted concerns over so-called beggar-thy-neighbor policies and fears of a currency war. In this blog post, we discuss the...

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chart of the weekFuel for Thought: Ditch the Subsidies

By IMFBlog Pensions, education, healthcare, better infrastructure, technology, and climate change: fiscal policymakers have their work cut out for them on many fronts.  Whether you live in a rapidly aging advanced economy,  or a low-income or emerging market economy with a young, booming population, all these issues matter for you.  As the Fiscal Monitor in April 2019 shows, government policies on taxes and spending have to adapt and should shift to growth-enhancing investment.  This means,...

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US Business Investment: Rising Market Power Mutes Tax Cut Impact

By Emanuel Kopp, Daniel Leigh, and Suchanan Tambunlertchai US business investment has been on the rise. Since the passage of the Tax Cuts and Jobs Act at the end of 2017, US businesses have bought more machinery, developed software, and created new intellectual property. Some believe that the key to this growth in business investment has been the Act’s cut to the corporate tax rate from 35 percent to 21 percent, which lowered the cost of capital. Lower capital costs could, at least...

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Chart of the WeekCanada’s Housing Market Slowdown

By IMFBlog Following a period of escalating prices, Canada’s housing market is cooling. Measures designed to strengthen financial stability such as more stringent tests of borrowers’ ability to repay their loans, along with higher interest rates, combined to make mortgage financing more expensive. As a result, residential mortgage credit slowed to just 3.4 percent annual growth in December 2018. Nationwide, house prices are 2.5 percent lower than the peak in mid-2018. This week’s chart of...

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chart of the weekUS$100 Bill on the Rise

By IMFBlog A curious thing has happened in US currency: the $100 bill recently overtook the ubiquitous $1 bill in circulation volume, for the first time in history. In other words, the most valuable banknote in the United States became the most widely circulated. As we show in our chart of the week, based on an article in the IMF’s Finance & Development magazine, there are more $100 bills circulating now than ever before, roughly doubling in volume since the global financial crisis....

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Chart of the weekCorporate Tax Rates: How Low Can You Go

By IMFBlog In life, two things are certain: death and taxes, the saying goes. Unless you are a large multinational corporation, in which case, maybe not.  Over the past 30 years, corporate tax rates in all countries have fallen to very low levels, as we show in our chart of the week. This is a problem on several fronts and is one of the reasons why a new approach to international corporate taxation is urgent. First, the ease with which multinationals seem able to avoid tax, combined with...

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