IMF World Economic Outlook (WEO) October 2013

by Sabrina I. Pacifici on October 7, 2013

World Economic Outlook (WEO) Transitions and Tensions October 2013 – Chapters 3 and 4, October 2013.

Chapter 3 explores how output comovements have evolved in recent years and how they are influenced by various shocks and linkages. It assesses the possible output spillovers from those shocks that most concern policymakers, including policy shocks, such as unexpected monetary or fiscal tightening; financial shocks, such as a systemic banking crisis or renewed financial turmoil; and growth surprises (which could be driven by either real or financial shocks) in advanced economies or in large emerging markets.  Historically, surges in capital inflows to emerging market economies tended to lead to domestic booms and current account deficits and, when the flows reversed, painful adjustments and sometimes financial crisis. The global financial crisis, however, marked a change from the past. While some countries experienced the classical boom-and-bust cycle in response to volatile international capital flows, many did not. Instead, domestic residents stepped in to replace foreign capital by drawing down their own foreign assets. Chapter 4 examines whether it is possible to use policy to encourage such behavior.”

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