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Mr. Johannes Herderschee and Ms. Luisa Zanforlin
Whereas most of the literature related to the so-called “resource curse” tends to emphasize on institutional factors and public policies, in this research we focus on the role of the financial sector, which has been surprisingly overlooked. We find that countries that have financial systems with more depth, as well as those that actively manage their central banks’ balance sheets experience less exchange-rate appreciation than countries that do not. We analyze the relationship between these two findings and suggest that they appear to follow separate mechanisms.
Mr. Niels-Jakob H Hansen and Ms. Olga Sulla
Banking credit to the private sector in Latin America has on average increased by 7 percent of GDP from primo 2004 to ultimo 2011, with real credit in some countries growing by up to 20 percent per year. This paper documents and analyzes the patterns of credit growth in 18 countries in Latin America and uses econometric methods to determine whether it is indicative of financial deepening or poses risks of credit booms. The strongest credit growth occurred for consumption and mortgages within the household sector and for construction within the corporate sector. At the same time credit has de-dollarized in most countries and there are some signs of maturity lengthening. To assess whether the recent credit growth is excessive two different methods are applied. First, by application of HP-filters the paper finds that credit-to-GDP levels in a number of countries are above their long-term trend. Second, using a panel co-integration approach on 107 high and mid-income countries the paper estimates a model for the credit-to-GDP levels. Comparing the actual levels of credit with the ones predicted by the model we find that some countries in Latin America show significant and positive deviations. These results indicate the existence of a certain level of risk in the recent credit developments.
International Monetary Fund
This Selected Issues paper and Statistical Appendix highlights that the real GDP growth in Latvia accelerated in the second half of 1997, and is estimated at 6 percent for the year. Growth was broad-based, with particularly strong performance in the services sector and construction, and has been led by increased investment, with real capital formation rising by an estimated 10 percent, and enhanced efficiency. Reflecting the strong economic growth, official unemployment has begun to decline, falling from 7½ percent in mid-year to 6.7 percent at end-January 1998.
Mr. Johannes Herderschee and Ms. Luisa Zanforlin

off sterilization policies implemented. To this scope, beyond the broad range of standard indicators, we also analyze the effect of financial sector structure, in particular, the depth of private sector credit vis-à-vis credit to the public sector, as this has been found in literature as particularly sensitive to monetary policy interventions (Chen, Li, and Tillmann 2019) 9 and negatively associated with financial development more in general ( Humer 2009 , WB 2013 ). III. Data and Empirical Approach Data Sources and Definitions This study uses

Mr. Niels-Jakob H Hansen and Ms. Olga Sulla

to households have been most buoyant as witnessed by a stronger growth in consumption and mortgage credit vis-à-vis credit to the corporate sector. Within the latter sector credit has expanded the most in the construction sector. Foreign banks have posted the fastest credit growth, while domestic banks accounts for most of the credit growth owing to their larger market shares. Finally, credit in the region has become increasingly de-dollarized and for some countries we find signs of maturity lengthening. 49. An important question is whether the credit

International Monetary Fund

private sector (or to nongovernment) to total domestic credit 3. This measure looks at the magnitude of private sector credit vis-a-vis credit to the entire economy. The residual share of credit is assumed to be extended to government and from the central bank to commercial banks. As with the first measure, this ratio only concentrates on bank and perhaps non-bank intermediaries (leasing companies, for example) lending and does not provide an indication of the number and level of activities of other financial instruments. Ratio of liquid liabilities of the