Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This study investigates how government ideology matters for the success of World Bank economic policy loans, which typically support market-liberalizing reforms. A simple model predicts that World Bank staff will invest more effort in designing an economic policy loan when faced with a left-wing government. Empirically, estimates from a Heckman selection model show that the quality at entry of an economic policy loan is significantly higher for governments with a left-wing party orientation. This result is robust to changes in the sample, alternative measures of ideology, different estimation techniques and the inclusion of additional control variables. Next, robust findings from estimating a recursive triangular system of equations indicate that leftist governments comply more fully with loan agreements. Results also suggest that World Bank resources are more productive-in terms of reform success-in the design of policy operations than in their supervision. Anecdotal evidence from several country cases is consistent with the finding that left-wing governments receive higher quality loans.

Banks & Banking Reform --- Debt Markets --- Development policy lending --- Economic Adjustment and Lending --- Economic Theory & Research --- Heckman selection model --- Political ideology --- Public Sector Corruption & Anticorruption Measures --- Public Sector Development --- Social Development --- Triangular system of equations --- World Bank

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This paper analyzes the impact of strained government finances on macroeconomic stability and the transmission of fiscal policy. Using a variant of the model by Curdia and Woodford (2009), we study a "sovereign risk channel" through which sovereign default risk raises funding costs in the private sector. If monetary policy is constrained, the sovereign risk channel exacerbates indeterminacy problems: private-sector beliefs of a weakening economy may become self-fulfilling. In addition, sovereign risk amplifies the effects of negative cyclical shocks. Under those conditions, fiscal retrenchment can help curtail the risk of macroeconomic instability and, in extreme cases, even stimulate economic activity.

Country risk --- Economic stabilization --- Fiscal policy --- Monetary policy --- Tax policy --- Taxation --- Economic policy --- Finance, Public --- Adjustment, Economic --- Business stabilization --- Economic adjustment --- Stabilization, Economic --- Country risk, Political --- Political risk (Foreign investments) --- Risk --- Econometric models. --- Government policy --- Banks and Banking --- Investments: General --- Public Finance --- Business Fluctuations --- Cycles --- Monetary Policy --- Fiscal Policy --- Interest Rates: Determination, Term Structure, and Effects --- Investment --- Capital --- Intangible Capital --- Capacity --- National Government Expenditures and Related Policies: General --- Debt --- Debt Management --- Sovereign Debt --- Public finance & taxation --- Finance --- Macroeconomics --- Zero lower bound --- Return on investment --- Expenditure --- Public debt --- Real interest rates --- Financial services --- National accounts --- Interest rates --- Saving and investment --- Expenditures, Public --- Debts, Public --- United States

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

The April 2012 Global Financial Stability Report assesses changes in risks to financial stability over the past six months, focusing on sovereign vulnerabilities, risks stemming from private sector deleveraging, and assessing the continued resilience of emerging markets. The report probes the implications of recent reforms in the financial system for market perception of safe assets, and investigates the growing public and private costs of increased longevity risk from aging populations.

Capital market --- International finance --- Economic stabilization --- Adjustment, Economic --- Business stabilization --- Economic adjustment --- Stabilization, Economic --- Economic policy --- International monetary system --- International money --- Finance --- International economic relations --- E-books --- Financial statements. --- Banks and Banking --- Investments: General --- Labor --- Public Finance --- Demography --- Money and Monetary Policy --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Nonwage Labor Costs and Benefits --- Private Pensions --- General Financial Markets: General (includes Measurement and Data) --- Economics of the Elderly --- Economics of the Handicapped --- Non-labor Market Discrimination --- Social Security and Public Pensions --- Health: General --- Debt --- Debt Management --- Sovereign Debt --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Pensions --- Banking --- Population & demography --- Investment & securities --- Health economics --- Public finance & taxation --- Monetary economics --- Aging --- Pension spending --- Health --- Public debt --- Emerging and frontier financial markets --- Financial markets --- Credit --- Money --- Banks and banking --- Population aging --- Debts, Public --- Financial services industry --- United States