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International Monetary Fund. Research Dept.

would constrain firms’ ability to issue new debt. Does the empirical evidence support the view that credit constraints arising from financial imperfections can account at least in part for GDP dynamics during booms, busts, and recoveries? Even though this question is still very much open, there is suggestive evidence that the answer might be positive, at least in situations when financial markets impairments are due to banking crises, as studied by Abiad, Dell’Ariccia, and Li (2011) , and Dell’Ariccia, Detragiache, and Rajan (2007) . Te theoretical literature

International Monetary Fund. Research Dept.
The Q&A in this issue features seven questions about Large Fiscal Consolidation Attempts in the Past and Implications for Policymakers Today (by Fuad Hasanov and Paolo Mauro). The research summaries are "Booms and Busts" (by Roberto Piazza) and " Did Export Diversification Soften the Impact of the Global Financial Crisis?" (by Rafael Romeu). The issue also provides details on visiting scholars at the IMF (mainly from September through December 2011), as well as recently published IMF Working Papers and Staff Discussion Notes.
International Monetary Fund
This paper identifies broad principles for exiting from extraordinary and unprecedented crisis-related intervention policies implemented by countries across the globe following the onset of the crisis in the summer of 2007. It responds to the requests of the IMFC and the Board to make Fund advice and views on exiting from crisis-related intervention measures more concrete. Drawing on previous and ongoing work by staff, it mostly focuses on medium and large advanced and emerging market economies, in which interventions have been more substantial.
The COVID-19 crisis induced an unprecedented launch of unconventional monetary policy through asset purchase programs (APPs) by emerging market and developing economies. This paper presents a new dataset of APP announcements and implementation from March until August 2020 for 27 emerging markets and 8 small advanced economies. APPs’ effects on bond yields, exchange rates, equities, and debt spreads are estimated using different methodologies. The results confirm that APPs were successful in significantly reducing bond yields in EMDEs, and these effects were stronger than those of policy rate cuts, suggesting that such UMP could be important tools for EMDEs during financial market stress.
International Monetary Fund. African Dept.

Liberian dollars, which threated financial and macroeconomic stability and spurred dollarization. 5. Low financial market depth is another obstacle for the efficient conduct of monetary policy . Liberia’s financial sector is small, financial intermediation is limited, and capital markets remain rudimentary ( Figure 1 ). Government securities are issued only occasionally and there is no active secondary market for trading them. Shallow financial markets impair the transmission channels of monetary policy. Thin money markets, especially the interbank market, weaken the

International Monetary Fund

transfers, whereas infrastructure investment is being implemented with longer lags. The majority of G20 central banks are maintaining loose monetary policy stances ( Appendix I , Figure 6 heat map). Their withdrawal of crisis-intervention measures, especially balance sheet policies, has been uneven, in line with the different paces of economic recovery and financial market impairment. The unwinding of financial sector measures is naturally taking place at a gradual pace ( Appendix I , Figure 6 heat map). Appendix Figure 5. Fiscal Impulse, Selected Countries 2007

premia or fled some markets altogether. This behavior impaired the normal functioning of markets and hindered the transmission mechanism of monetary policy, preventing CMP’s intended effect on the aggregate economy. Figure 3 offers an illustration of the theoretical transmission of CMP and UMP (in the form of APPs) on the aggregate economy. Figure 3. CMP and UMP Transmission to the Economy Source: Staff analysis. EMDEs introduced APPs to offset financial marketsimpairments and/or provide direct support to the economy. Based on the experience of AEs, the