Today’s record public debt levels in most advanced economies are not only a direct fall-out from the global crisis. Public debt had ratcheted up over many decades before, when it had been used, in most of the G-7 countries, as the ultimate shock absorber—rising in bad times but not...

Implementation of fiscal consolidation by advanced economies in coming years needs to take into account the short and long-run interactions between economic growth and fiscal policy. Many countries must reduce high public debt to GDP ratios that penalize longterm growth. However, fiscal...

The current crisis calls for two main sets of policy measures. First, measures to repair the financial system. Second, measures to increase demand and restore confidence. While some of these measures overlap, the focus of this note is on the second set of policies, and more specifically, given...

In response to the worst economic crisis since the 1930s, government budgets and central banks have provided substantial support for aggregate demand and for the financial sector. In the process, fiscal balances have deteriorated, government liabilities and central bank balance sheets have been...

During the last 25 years, monetary practice in most countries has increasingly been characterized by the attempt to achieve credibility of purpose while expanding the freedom of monetary authorities in controlling policy instruments. Thus, the world has moved toward monetary frameworks in which,...

This paper provides a framework for evaluating the decision to enter a currency area, including the best timing for entry, and uses it to evaluate the assessment of the five tests for euro entry published by the U.K. Treasury in June 2003. The breadth and depth of its assessment is impressive by...

Following a period of privatization and restructuring, commercial banks in Central and Eastern Europe and, more recently, in the Balkans have rapidly expanded their lending to the private sector. This paper describes the causes of this expansion, assesses future trends, and evaluates its policy...

During the 1990s, the concept of "catalytic official finance" (COF) gained prominence in policy debates. The concept revolves around the idea that the propensity of investors to lend to a country increases when the IMF provides its "seal of approval"-backed up by only limited official...

This paper reviews developments in pension systems in 11 transition economies during the 1990s, highlighting the forces behind their rapid weakening. It focuses on the challenges these systems face—including those arising from demographic factors—and discusses why most transition countries...