World Economic Outlook
Financial Crises: Causes and Indicators
May 1998
May 1998
A Survey by the Staff of the International Monetary Fund
©1998 International Monetary Fund
| The World Economic Outlook presents the IMF staff’s analysis and projections of economic developments at the global level, in major country groups (classified by region, stage of development, etc.), and in many individual countries. It focuses on major economic policy issues as well as on the analysis of economic developments and prospects. It is usually prepared twice a year, as documentation for meetings of the International Monetary and Financial Committee, and forms the main instrument of the IMF’s global surveillance activities. |
| Contents | ||
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| Assumptions and Conventions | ||
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| Preface | ||
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| Chapter I
198k pdf file |
Global Economic Prospects and Policy Considerations | |
| The Asian Crisis | ||
| Advanced Economies | ||
| Developing Countries | ||
| Countries in Transition | ||
| Appendix: Countdown to EMU--Progress Toward | ||
| Convergence and Challenges Remaining | ||
| Boxes | ||
| 1. | The Role of Hedge Funds in Financial Markets | |
| 2. | Moral Hazard and IMF Lending | |
| 3. | International Monetary System: Measures to Reduce the Risk of Crises | |
| Table | ||
| 1. | European Union: Convergence Indicators | |
| Figures | ||
| 1. | World Output and Inflation | |
| 2. | Nominal and Real Interest Rates in the Prospective Euro Area | |
| 3. | European Union: Average Inflation and General Government Balance | |
| 4. | European Union: General Government Budget Positions | |
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| Chapter II 314k pdf file |
Global Repercussions of the Asian Crisis | |
| and Other Issues in the Current Conjuncture | ||
| The Global Growth Outlook | ||
| Prospects for Global Inflation (or Deflation) | ||
| Implications of Recent Currency Realignments for | ||
| Countries' International Competitiveness | ||
| Prospects for Global Flows of Funds and Current | ||
| Account Balances | ||
| Outlook for Japan | ||
| Emerging Market Countries: Selected Issues | ||
| Box | ||
| 4. | Policy Assumptions Underlying the Projections for Selected Advanced Economies | |
| Tables | ||
| 2. | Overview of the World Economic Outlook Projections | |
| 3. | Advanced Economies: Real GDP, Consumer | |
| Prices, and Unemployment Rates | ||
| 4. | Major Industrial Countries: General Government Fiscal Balances and Debt | |
| 5. | Selected Developing Countries: Real GDP and Consumer Prices | |
| 6. | Countries in Transition: Real GDP and Consumer Prices | |
| 7. | Recent Exchange Rate Movements on Bilateral | |
| and Multilateral Bases | ||
| 8. | Developing Countries, Countries in Transition, | |
| and Newly Industrialized Economies: Net Capital Flows | ||
| 9. | Gross Private Financing to Emerging Market Economies | |
| 10. | Selected Economies: Current Account Positions | |
| 11. | Selected Latin American Economies: Macroeconomic Indicators | |
| 12. | Sub-Saharan Africa: Selected Economic Indicators | |
| Figures | ||
| 5. | Selected Asian Economies: Bilateral U.S. Dollar Exchange Rates and Equity Prices | |
| 6. | Major Industrial Countries: Output Gaps | |
| 7. | Major Industrial Countries: Indices of Monetary Conditions | |
| 8. | Selected European Union Countries and the United States: Indicators of Consumer and Business Confidence | |
| 9. | Selected European Countries: Real Total Domestic Demand | |
| 10. | Major Industrial Countries: Nominal Interest Rates | |
| 11. | Selected Advanced Economies: Inflation | |
| 12. | Advanced Economies: Inflation and Commodity Prices | |
| 13. | Major Industrial Countries: Effective Exchange Rates | |
| 14. | Japanese Banking Sector: Selected Indicators | |
| 15. | ASEAN-4 plus Korea: Aggregate Trade Balance | |
| 16. | Paths of Output Gaps in Cases of Financial Sector Shocks | |
| 17. | Selected Latin American Countries: Short-Term Interest Rates and Exchange Rates | |
| 18. | Egypt: Basic Macroeconomic Data | |
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| Chapter III 182k pdf file |
The Business Cycle, International Linkages, | |
| and Exchange Rates | ||
| Business Cycles | ||
| The Relationship Between Business Cycles and | ||
| Exchange Rates | ||
| Implications for Policy and Surveillance | ||
| Box | ||
| 5. | Evaluating Exchange Rates | |
| Table | ||
| 13. | Major Industrial Countries: Business Cycle Indicators | |
| Figures | ||
| 19. | Major Industrial Countries: Output Gaps | |
| 20. | Major Industrial Countries: Unemployment, Inflation, and Output Gaps | |
| 21. | Business Cycles and Output Gaps | |
| 22. | Three Major Industrial Countries: Real Effective Exchange Rates and Selected Relative Cyclical Variables | |
| 23. | Selected Major Industrial Countries: Temporary Dollar Appreciation Scenario | |
| 24. | Three Major Industrial Countries: Variability in Effective Exchange Rates | |
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| Chapter IV 215k pdf file |
Financial Crises: Characteristics and Indicators of | |
| Vulnerability | ||
| Types of Crises | ||
| Identifying Crises | ||
| Origins of Currency and Banking Crises | ||
| Currency Crises and Contagion | ||
| Indicators of Vulnerability | ||
| Stylized Behavior of Macroeconomic Variables Before | ||
| and After Crises | ||
| Early Warning Signals of Vulnerability to Currency Crises | ||
| Boxes | ||
| 6. | Resolving Banking Sector Problems | |
| 7. | Effective Banking Prudential Regulations and Requirements | |
| 8. | The Current Account and External Sustainability | |
| Tables | ||
| 14. | Selected Crises: Costs of Restructuring Financial | |
| Sectors and Nonperforming Loans | ||
| 15. | Costs of Crises in Lost Output Relative to Trend | |
| 16. | Significance of Early Warning Indicators of Vulnerability to Currency Crises | |
| Figures | ||
| 25. | Incidence of Currency and Banking Crises | |
| 26. | Macroeconomic Characteristics of Currency Crises | |
| 27. | Macroeconomic Characteristics of Banking Crises | |
| 28. | Asian Currency Crisis: Indicators of Vulnerability | |
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| Chapter V 165k pdf file |
Progress with Fiscal Reform in Countries in | |
| Transition | ||
| From Stabilization to Sustainability | ||
| Transition and Government Revenue | ||
| Transition and Government Expenditure | ||
| Intergovernmental Fiscal Relations | ||
| Legal Reform, Transparency, and Accountability | ||
| Boxes | ||
| 9. | Russia's Fiscal Challenges | |
| 10. | Pension Reform in Countries in Transition | |
| Tables | ||
| 17. | Countries in Transition: General Government Balance | |
| 18. | Countries in Transition: General Government Revenue | |
| 19. | Countries in Transition: General Government Expenditure | |
| 20. | Selected Countries in Transition: Scenarios for Fiscal Sustainability | |
| 21. | Selected Countries in Transition: Main Items in the | |
| General Government Revenue Structure, 1996 | ||
| 22. | Selected Countries in Transition: Registered Unemployment | |
| 23. | Selected Countries in Transition: Estimated Poverty | |
| Headcount and Poverty Deficit, in 1993–95 | ||
| 24. | Selected Countries in Transition: Main Items | |
| in the General Government Expenditure Structure, 1996 | ||
| 25. | Selected Countries in Transition: Life Expectancy at Birth | |
| 26. | Selected Countries in Transition: Shares of Education | |
| and Health in Total Employment | ||
| Box 9. Russian Federation: Summary Operations of the General Government | ||
| Box 10. Public Pension Systems in Countries in Transition | ||
| Box 10. Countries in Transition: Public Pension Expenditure, 1993 and 1996 | ||
| Figures | ||
| 29. | Countries in Transition: General Government Revenue and Expenditure, 1997 | |
| 30. | Countries in Transition: Government Revenue, 1997 | |
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| Annexes 99k pdf file |
I. | Transparency in Government Operations |
| Why Fiscal Transparency? | ||
| Institutions and Behavior | ||
| Government Accounts | ||
| Indicators and Projections | ||
| Overall Trends and Priorities | ||
| Role of the IMF in Promoting Fiscal Transparency | ||
| II. | Recent Developments in Primary Commodity Markets | |
| Effects of the Asian Crisis | ||
| Effects of Weather | ||
| Developments in Specific Markets | ||
| Near-Term Outlook | ||
| Table | ||
| 27. | Price Declines for Individual Commodities and Countries Most Affected in Foreign Exchange Earnings | |
| Figures | ||
| 31. | Selected Asian Countries' Shares in World Consumption of Primary Commodities | |
| 32. | Commercial Stocks of Petroleum in OECD Countries | |
| 33. | Real Commodity Prices and World Output | |
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| Statistical Appendix 380k pdf file |
Assumptions | |
| Data and Conventions | ||
| Classification of Countries | ||
| List of Tables | ||
| Output (Tables A1–A7) | ||
| Inflation (Tables A8–A13) | ||
| Financial Policies (Tables A14–A21) | ||
| Foreign Trade (Tables A22–A26) | ||
| Current Account Transactions (Tables A27–A32) | ||
| Balance of Payments and External Financing | ||
| (Tables A33–A37) | ||
| External Debt and Debt Service (Tables A38–A43) | ||
| Flow of Funds (Table A44) | ||
| Medium-Term Baseline Scenario (Tables A45–A46) | ||
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| Selected Topics 33k pdf file |
World Economic Outlook and Staff Studies for the World Economic Outlook, Selected Topics, 1992–98 | |
