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Mr. Antonio David and Can Sever
We examine electoral cycles in tax reforms using monthly data over the period of 1990-2018 for 22 advanced economies and emerging markets. We show that governments tend to avoid announcing tax reforms during the months running up to elections. In addition, they become more likely to announce those reforms in the first few months following elections, indicating that “political capital” plays a role in the timing of reforms. These patterns are broad-based regarding the changes in tax base and rate, and for various types of taxes. We also find that the pre-election decrease in the likelihood of tax reform announcements is stronger in emerging markets, and weaker in the countries with relatively better institutional quality. Finally, our results indicate that neither fiscal rules nor IMF programs appear to have differential effects on electoral cycles in tax reforms.
International Monetary Fund
This paper provides background information to the main Board paper, “The Role and Limits of Unconventional Monetary Policy.” This paper is divided in five distinct sections, each focused on a different topic covered in the main paper, though most relate to bond purchase programs. As a result, this paper centers on the experience of the United States Federal Reserve (Fed), the Bank of England (BOE) and the Bank of Japan (BOJ), mostly leaving the European Central Bank (ECB) aside given its focus on restoring the functioning of financial markets and intermediation. Section A explores whether bond purchase programs were effective at decreasing bond yields and, if so, through which channels. Section B goes one step further in evaluating whether bond purchase programs had—or can be expected to have—significant effects on real growth and inflation. Section C studies the spillover effects of bond purchases on both advanced and emerging market economies, using very similar methods as introduced in the first section. Section D breaks from the immediate focus on bond purchases to discuss how inflation might decrease the debt burden in advanced economies, in light of possible pressures that could fall (or be perceived to fall) on central banks. Finally, Section E discusses the possible risks of exiting given the very large central bank balance sheets.
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper on the Philippines explores export performance in the context of global trade tensions. Unlike many Asian countries, the Philippines’ exports of goods have remained stable through the ongoing period of global trade tensions. Its low participation in global trade as well as in global value chains relative-to-peers seems to explain why the Philippines has not yet been negatively impacted by the trade tensions. On the other hand, despite its close trade ties with the United States, the Philippines has not benefitted much from trade diversion originated from the US–China bilateral tariffs, unlike Vietnam and Mexico. Philippines’ exports have slightly increased in dollar terms since 2017, but they have remained broadly stable in GDP terms. The Philippines does not appear to have benefitted much from the US–China trade tensions, but it has performed better than many of its peers at the aggregate level. The comparative advantages of the Philippines in terms of exports reside in high tech industries, which constitute its main exports. The Philippines has a revealed comparative advantage in exporting from high technology industries. In sum, the disaggregated trade data evidence suggests that the Philippines was not able to scale-up its exports to the United States as much as Vietnam and Mexico in many high- to medium-tech goods included in the US tariff lists.
International Monetary Fund. Monetary and Capital Markets Department
The Bangko Sentral Ng Pilipinas (BSP), together with the other financial sector regulators and the Department of Finance (DoF), made significant progress in developing a framework for macroprudential supervision. The BSP plays a central role as the bank and payment system supervisor, as well as macroprudential authority with with its financial stability mandate obtained in 2019, and the chair of inter-agency coordination mechanisms (Financial Stability Coordination Council, FSCC). The FSCC was established in 2011 as a voluntary interagency body (without decision-making powers) to coordinate macroprudential policies and crisis management and include the BSP, Securities Exchange Commission (SEC), Insurance Commission (IC), Philippine Deposit Insurance Commission (PDIC) and the DoF. Within the BSP, a financial stability “unit” (OSRM, established in 2017) works on macroprudential analysis and policy preparation. BSP’s Financial Stability Policy Committee (FSPC), a Monetary Board (MB) subcommittee established in 2020, decides on macroprudential issues, while policy decision making on monetary policy and financial sector supervision takes place in the MB.
International Monetary Fund. Asia and Pacific Dept

.5%). Any increase in the CCyB rate shall be effective 12 months after its announcement. Decreases shall be effective immediately. The mechanism to operationalize the CCyB, including the decision-making framework, is not yet in place. BSP Circular No. 1024 of December 06, 2019 Capital conservation buffer Yes A capital conservation buffer (CCB) of 2.5% composed of Common Equity Tier 1 (CET1) capital has been effective since January 1, 2014. BSP Circular No. 781 of January 15, 2013 Limit on leverage ratio Yes A 5.0% minimum leverage ratio was

Mr. Antonio David and Can Sever

during the months running up to elections. The estimates suggest that probability of tax reform announcements decreases cumulatively by around 17 percentage points (pp) over the six-month window before elections, and becomes an additional 4.7 pp lower in the months of elections. The size of the impact is economically large, considering that the average monthly probability of tax reform announcements in the sample is 5.2 percent. The results also indicate that governments become more likely to announce tax reforms in the months following elections, but only within a

International Monetary Fund

bond purchase programs . Figure 5 in Appendix I shows that bond purchase announcements had similar effects on long-term yields through time, when normalizing the effect by the surprise factor. In other words, the “bang for the buck” of announcements seems to have remained relatively constant. In addition, in the U.S. where sufficient data is available, the role played by the signaling versus the portfolio rebalancing channel seems to have been relatively constant over time. Yet, the surprise of subsequent announcements decreased notably over time. One

International Monetary Fund. Monetary and Capital Markets Department

The Countercyclical Capital Buffer framework is applied on top of the capital conservation buffer with size from 0 percent to 2.5 percent. The buffer rate is at 0 percent since it was introduced in 2018. Any increase in the CCyB rate shall be effective 12 months after its announcement. Decreases shall be effective immediately. Capital conservation buffer Capital conservation buffer was introduced in 2013 by the issuance of Circular No. 781 dated 15 January 2013. Under this Circular, UBs/KBs, as well as their subsidiary banks and QBs, are mandated to raise

Mr. Geremia Palomba

search expenses. This assumption captures the idea of a quality sequential search approach adopted by the firm, the first effort of which is supposed to be the most productive. For example, let us consider the firm that promotes new bonds issues by a sequence of advertisements. We would expect that the number of answers to successive announcements decreases, so that decreasing returns characterize these expenses. Put the other way around, the firm is facing uprising costs of issuing new bonds. 3 Armed with this information, we can draw the matching cost function