Over the last two decades, cash holdings in nonfinancial firms around the world have increased. This phenomenon is particularly concerning in Japan, where the success of Abenomics depends on a transition from stimulus-driven to self-sustaining growth based on private consumption and investment....

Climate change is one of the greatest challenges of this century. Mitigation requires a large-scaletransition to a low-carbon economy. This paper provides an overview of the rapidlygrowing literature on the role of macroeconomic and financial policy tools in enabling thistransition. The...

We argue that in an economy with downward nominal wage rigidity, the output gap is negative on average. Because it is more difficult to cut wages than to increase them, firms reduce employment more during downturns than they increase employment during expansions. This is demonstrated in a simple...

While China's growth gathered momentum in 2017, rebalancing was uneven anddecelerated along many dimensions reflecting the temporary factors behind the growthpickup. Going forward, rebalancing is expected to proceed as these temporary factorsrecede, but elevated income inequality and leverage...

The legacy of non-performing loans and high opportunity cost of government financing ofbank recapitalization impeded the efficiency of financial intermediation and are an importantpolicy issue in Vietnam. This paper presents a theoretical and empirical analysis of the issue.An empirical analysis...

Labor markets in Latin America and the Caribbean (LAC) are characterized by high levels of informality and relatively rigid regulation. This paper shows that these two features are related and together make the speed of adjustment of employment to shocks slower, especially when regulations are...

We quantify the macroeconomic effects of COVID-19 for a small open economy by calibrating a SIR-multi-sector-macro model. We measure sectoral supply shocks utilizing teleworking and physical job proximity, and demand shocks with credit card purchases. Both shocks are also affected from changing...

Over the past seven years, the DIG and DIGNAR models have complemented the IMF and World Bank debt sustainability framework (DSF) analysis, over 65 country applications. They have provided useful insights in the context of program and surveillance work, based on qualitative and quantitative...