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There is a case, but there are also counter-arguments. With sufficient forward-looking behaviour among firms and households, price-level targeting can act as a powerful built-in stabiliser through automatic shifts in inflation expectations.
High public debt leaves virtually no room for fiscal manoeuvre to limit the impact of the crisis in Greece. The close trade and banking links established with the Balkan countries might be a risk in the near future.
Despite improved fundamentals, Mexico is hit hard by the financial crisis, being exposed to several simultaneous external shocks. A welcome, but weak, stimulus was passed for 2009, and policy will likely need to be supportive also in 2010.
This paper reviews the supervisory and regulatory framework and the many reforms that have already been adopted to remedy these weaknesses. It also provides recommendations for further reforms.
After a decade of rapid growth, Russia has fallen into recession. The near term challenge is to limit the extent of the downturn, while beyond the crisis, a sounder growth model should be put in place.
Despite improvements, the banking system remains underdeveloped and crisis-prone. The current crisis, albeit painful, may yield restructuring and new regulatory approaches that will be positive in the long run.
Russia should aim for a gradual switch from a quasi-fixed exchange rate policy to inflation targeting. Not all conditions for adopting inflation targeting are yet in place, but preparations should be accelerated.
This paper tests for the existence of a bank lending channel in the transmission of monetary policy in Brazil using monthly aggregate data for the period 1995:12 through 2008:6.
Austria entered the most severe recession in decades. This triggered prompt policy measures to stabilise the real economy and financial markets, which will deteriorate significantly the fiscal position.
The United Kingdom, like many OECD economies, is experiencing a severe recession as a consequence of a series of global shocks and any recovery in 2010 is likely to be slow. The financial crisis has severely impaired the supply of credit and house prices have fallen sharply. Unemployment is expected to increase significantly. The large rise in the government deficit is providing support to demand, but the debt-to-GDP ratio will