The IMF has approved an exceptional access Stand-By Arrangement for Latvia. The program is part of a coordinated international effort that has improved financial and economic stability. By early 2008, the fast growth has leveled off but severe vulnerabilities turned the slowdown into a crisis....

This staff report on Iraq’s 2013 Article IV Consultation highlights economic policies and development. Risks to the macroeconomic outlook remain high. The risks can translate into lower oil revenues, deterioration in the fiscal position, pressures to use Central Bank of Iraq reserves for...

We study the role of the exchange rate regime, reserve accumulation, and sterilization policies in the macroeconomics of aid surges. Absent sterilization, a peg allows for almost full aid absorption — an increase in the current account deficit net of aid—delivering the same effects...

We study a wide range of hybrid inflation-targeting (IT) and managed exchange rate regimes, analyzing their implications for inflation, output and the exchange rate in the presence of various domestic and external shocks. To this end, we develop an open economy new-Keynesian model featuring...

This paper reviews monetary and exchange rate policies in Peru in 1930-80. The review covers major transformations to the world economy, including the post-1929 crash and WWII, and changing economic paradigms, such as the collapse of the gold standard and the rise and fall of the Bretton Woods...

This staff report discusses Seychelles 2013 Article IV Consultation, Seventh Review Under the Extended Arrangement and Request for Modification of Performance Criterion. The repayment of domestic debt, a preference for foreign financing, and shallow domestic financial markets have resulted in...

This paper presents the theoretical structure of MAPMOD, a new IMF model designed to study vulnerabilities associated with excessive credit expansions, and to support macroprudential policy analysis. In MAPMOD, bank loans create purchasing power that facilitates adjustments in the real economy....

This paper studies why currency and monetary shock hit Indonesia's economy and banking sector so severely and the measures that were taken to deal with the banking crisis, the lessons learned, and challenges faced in restructuring and strengthening the banking system. The vulnerable state of the...

This paper recounts Chile’s experience with capital account policies since the 1990s. We present how two external shocks were confronted under very different macroeconomic and capital account frameworks. We show that during the 1997-98 Asian-LTCM-Russia crisis, a closed capital account and...

We identify current challenges for creating stable, yet efficient financial systems using lessons from recent and past crises. Reforms need to start from three tenets: adopting a system-wide perspective explicitly aimed at addressing market failures; understanding and incorporating into...