Monetary policy, at least in part, operates through both an interest rate and credit channel. The question arises, therefore, whether monetary policy is a less potent a device in affecting output and inflation in countries that have low levels of credit and where investment and consumption are...

Over the past decade policy makers in Latin America have adopted a number of macroprudential instruments to manage the procyclicality of bank credit dynamics to the private sector and contain systemic risk. Reserve requirements, in particular, have been actively employed. Despite their...

Iceland’s 2005 Article IV Consultation reports that new projects have rekindled rapid growth and the economy is exhibiting signs of overheating, with imbalances evident in inflation, the current account, and external debt. GDP grew at an average rate of 3.8 percent between 1995 and 2004,...

This Selected Issues paper for Iceland reports that it faces a considerably less favorable inflation-output variability trade-off than do Canada or the United States. A number of measures should be considered that could help minimize the cost of inflation breaching the tolerance band and help to...

This paper examines the Republic of Moldova’s Fourth Review under the Poverty Reduction and Growth Facility and request for Waiver of Nonobservance of Performance Criterion. Investors have been attracted by Moldova’s low costs, and export prospects have improved with the resumption...

This Selected Issues paper on the Russian Federation underlies inflation persistence and evolution in response to structural shocks. Inflation in Russia has been characterized by a considerable degree of persistence. An explicit inflation-targeting framework may help reduce firms’...