Toward an Integrated Policy Framework

Policy Papers, October 8, 2020

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Toward an Integrated Policy Framework

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Bibliographic details

• Published: October 8, 2020
• Series: Policy Papers
• DOI: https://doi.org/10.5089/9781513558769.007

Summary

• Policymakers often face difficult tradeoffs in pursuing domestic and external stabilization objectives.
• The paper reflects staff’s work to advance the understanding of the policy options and tradeoffs available to policymakers in a systematic and analytical way.
• The paper recognizes that the optimal path of the IPF tools depends on structural characteristics and fiscal policies.
• The operational implications of IPF findings require careful consideration.
• Developing safeguards to minimize the risk of inappropriate use of IPF policies will be essential.
• Staff remains guided by the Fund’s Institutional View (IV) on the Liberalization and Management of Capital Flows.

Key findings and themes

• Tradeoffs between domestic and external stabilization objectives are central to the Integrated Policy Framework (IPF).
• The appropriate sequencing and design of IPF tools are contingent on:
  • structural characteristics of the economy, and
  • existing fiscal policies.
• Operational implications of analytical findings must be assessed carefully before implementation.
• Safeguards are necessary to reduce the risk of inappropriate use of IPF policies.

Policy implications and recommendations

• Advance systematic and analytical assessment of policy options and tradeoffs for informed policymaking.
• Tailor the optimal path of IPF tools to country-specific structural characteristics and fiscal settings.
• Carefully consider operational implications before deploying IPF-based policies.
• Develop and implement safeguards to minimize the risk of inappropriate use of IPF policies.
• Continue to align IPF-related staff work with the Fund’s Institutional View (IV) on the Liberalization and Management of Capital Flows.

Subject and keywords

• Subject: Balance of payments, Capital flows, Currency markets, Exchange rates, Financial markets, Financial sector policy and analysis, Financial sector stability, Foreign exchange, Integrated Policy Framework
• Keywords: analytical workstream, Capital flows, Currency markets, Exchange rates, Financial sector stability, fund policy advice, Global, IPF policy, IPF tool, PP, takeaways from the Integrated Policy Framework

Content in this bundle

• Policy Paper
  • Policy Paper (Markdown version)
  • Policy Paper (PDF)