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Anecdotal evidence suggests that the economies of South Africa and its neighbors (Botswana, Lesotho, Mozambique, Namibia, Swaziland, and Zimbabwe) are tightly integrated with each other. There are important institutional linkages. Across the region there are also large flows of goods and capital, significant financial sector interconnections, as well as sizeable labor movements and associated remittance flows. These interconnections suggest that South Africa’s GDP growth rate should affect positively its neighbors’, a point we illustrate formally with the help of numerical simulations of the IMF’s GIMF model. However, our review and update of the available econometric evidence suggest that there is no strong evidence of real spillovers in the region after 1994, once global shocks are controlled for. More generally, we find no evidence of real spillovers from South Africa to the rest of the continent post-1994. We investigate the possible reasons for this lack of spillovers. Most importantly, the economies of South Africa and the rest of Sub-Saharan Africa might have de-coupled in the mid-1990s. That is when international sanctions on South Africa ended and the country re-integrated with the global economy, while growth in the rest of the continent accelerated due to a combination of domestic and external factors.

Exports and Imports --- Macroeconomics --- Externalities --- Trade: General --- Education: General --- Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data) --- International economics --- Education --- Economic growth --- Spillovers --- Exports --- Imports --- Business cycles --- Financial sector policy and analysis --- International trade --- International finance --- South Africa

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Shocks stemming from Brazil - the large neighbor in South America - have historically been a source of concern for policy-makers in other countries of the region. This paper studies the importance of Brazil’s influence on its neighboring economies, documenting trade linkages over the last two decades and quantifying spillover effects in a Vector Auto Regression setting. While trade linkages with Brazil are significant for the Southern Cone countries (Argentina, Bolivia, Chile, Paraguay, and Uruguay), they are very weak for others. Consistent with this evidence, econometric results show that, while the Southern Cone economies (especially Mercosur’s members) are vulnerable to output shocks from Brazil, the rest of South America is not. Spillovers can take two different forms: the transmission of Brazil-specific shocks and the amplification of global shocks—through their impact on Brazil’s output. Finally, we also find suggestive evidence that depreciations of Brazil’s currency may not have significant impact on output of its key trading partners.

Finance --- Business & Economics --- Investment & Speculation --- Investments, Foreign --- Brazil --- Foreign economic relations. --- Exports and Imports --- Foreign Exchange --- Investments: General --- Macroeconomics --- Externalities --- Trade: General --- Investment --- Capital --- Intangible Capital --- Capacity --- International economics --- Currency --- Foreign exchange --- Spillovers --- Exports --- Depreciation --- Real exchange rates --- Real effective exchange rates --- Financial sector policy and analysis --- International trade --- National accounts --- International finance --- Saving and investment

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Many official groups have endorsed the wider use by emerging market borrowers of contract clauses which allow for a qualified majority of bondholders to restructure repayment terms in the event of financial distress. Some have argued that such clauses will be associated with moral hazard and increased borrowing costs. This paper addresses this question empirically using primary and secondary market yields and finds no evidence that the presence of collective action clauses increases yields for either higher- or lower-rated issuers. By implication, the perceived benefits from easier restructuring are at least as large as any costs from increased moral hazard.

Finance: General --- Investments: Bonds --- International Lending and Debt Problems --- International Financial Markets --- General Financial Markets: General (includes Measurement and Data) --- General Financial Markets: Government Policy and Regulation --- Investment & securities --- Finance --- Bonds --- Emerging and frontier financial markets --- International bonds --- Moral hazard --- Bond yields --- Financial institutions --- Financial markets --- Financial sector policy and analysis --- Financial services industry --- Financial risk management --- United States

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This paper provides new empirical evidence on the impact of financial liberalization on the performance of Indian commercial banks. The analysis focuses on examining the behavior and determinants of bank intermediation costs and profitability during the liberalization period. The empirical results suggest that ownership type has a significant effect on some performance indicators and that the observed increase in competition during financial liberalization has been associated with lower intermediation costs and profitability of the Indian banks.

Banks and Banking --- Finance: General --- Industries: Financial Services --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- General Financial Markets: Government Policy and Regulation --- Banking --- Finance --- Commercial banks --- Bank soundness --- Foreign banks --- State-owned banks --- Financial institutions --- Financial sector policy and analysis --- Loans --- Banks and banking --- Banks and banking, Foreign --- India

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The paper assesses the impact of fiscal spillovers on growth in the context of a coordinated exit from crisis management policies. We find that despite potentially sizeable domestic effects from consolidation, aggregate negative spillovers to other countries are likely to be contained in 2011-2012 unless fiscal multipliers and/or imports elasticities are very large. Small and open European economies, however, will be substantially affected in any case. In contrast, the coordinated exit from fiscal stimulus will have limited direct effect on European peripheral countries since they are relatively closed, with the notable exception of Ireland.

Fiscal policy --- Economic development --- Tax policy --- Taxation --- Economic policy --- Finance, Public --- Econometric models. --- Government policy --- Exports and Imports --- Macroeconomics --- Public Finance --- Externalities --- Fiscal Policy --- National Government Expenditures and Related Policies: General --- Trade: General --- Public finance & taxation --- International economics --- Spillovers --- Expenditure --- Imports --- Fiscal consolidation --- Financial sector policy and analysis --- International trade --- International finance --- Expenditures, Public --- Germany