In response to the worldwide financial crisis, many countries have put together fiscal stimulus packages of substantial size comprising increases in public spending, tax cuts, and transfers to the private sector. These packages vary considerably in respect to size, composition, and timing....

Financial crises can have a severe impact on the real side of the economy with countries losing up to 20 percent of GDP. The paper studies rules that prevent financial instability and currency crises. These include institutional arrangements for a solid banking system, prudent regulations and...

The IMF must change its sanction and incentive systems so that the next crisis is more likely to be prevented. It should concentrate more on ex ante prevention, which can be done by clearly specifying the rules that will be applied ex post. It should also rely more on automatic mechanisms that...