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Mr. Juan S Corrales and Patrick A. Imam
Using a newly complied and extended database from International Financial Statistics, and applying different panel-regression techniques, this paper documents the evolution of households’ and firms’ dollarization over the past decade. We assess the macroeconomic determinants of dollarization for households and firms and explore differences between high and low-income countries. We find that households’ and firms’ dollarization in loans and deposits are weakly explained by the currency substitution model, except in low income countries, where inflation plays a significant role. Instead, market development variables such as financial deepening, access to external debt and FX finance as well as other market considerations are key to explain the dynamics of deposits and loans dollarization, regardless of the level of income.These factors can account for a significant fraction of the dollarization, but using a variance decomposition model, there is evidence that a non-negligible portion has yet to be explained. This suggests that there are key determinants for household and firm dollarization that are not fully captured by traditional macroeconomic explanatory variables.
Mr. Juan S Corrales and Patrick A. Imam

Deposits Dollarization. Average 2001-2016 3. Correlations: Firms Dollarization and Macroeconomic Variables. Avg. 2001-16 4. Correlations: Households Dollarization and Macroeconomic Variables. Avg. 5. Firms Dollarization. Pooled OLS. Contribution by Determinants 6. Households Dollarization. Pooled OLS. Contribution by Determinants TABLES 1. Financial Sector: Loans and Deposits by Sector for all countries 2. Financial Dollarization by Level of Income*. 2001-2016 3. Deposits Dollarization: Firms 4. Loans Dollarization: Firms 5. Deposits Dollarization

Mr. Juan S Corrales and Patrick A. Imam

are signs of financial deepening emerging. In other words, the macroeconomic foundations are strengthening, and policymakers have gained in credibility, reducing the attractiveness of dollarization in many cases (see Corrales et al. , 2015). However, while the literature has focused on explaining the causes of overall dollarization, it has paid scant attention to the differences in the determinants between household and firm dollarization. Does household dollarization differ from firm dollarization? Do households and firms hold deposits and assets differently in

International Monetary Fund

.3: Provisional Sector Shares, 2003/04 and 2013/14: Shs billions Table 8.4 Human resource expenditures in the development budget of core ministries (2003/4) Table 8.5: The wage bill in 2003/4 Table A 2.1: Average assets owned by households: dollar value Table A 2.2: Open unemployment, % of labour force Table A 2.3: Proportion of households with access to services at a community level Table A 2.4: Community projects implemented in last three years, and whether they met the needs of the community in households’ opinions Table A 4.1: The business environment in

International Monetary Fund
This Selected Issues paper on Azerbaijan highlights that rapid non-oil growth since the onset of the oil boom has contributed to substantial reduction in poverty and inequality. To keep growth inclusive, there is a need to accelerate economic diversification and make the nonhydrocarbon private sector a self-sustaining engine of growth. Policy priorities include strengthening governance and the business environment and improving human capital and productive infrastructure to enhance the productivity of private investment. Expanding the relatively well-targeted social safety net will ensure coverage of the vulnerable groups.
Mr. Christopher S Adam and Mr. David Bevan
Effective public investment requires governments to address the "recurrent cost problem" to ensure operations and maintenance (O&M) expenditures are sufficient to sustain the flow of productive public capital services to private factors of production. Building on the model of Buffie et al (2012), this paper explores the macroeconomic implications of this recurrent cost problem and its resolution in a context that recognizes that taxation is distortionary. The model is also used to examine stylized fiscal reforms including the replacement of a distortionary output tax with a uniform consumption tax and budgetary reforms that restore O&M expenditures to their efficient levels. These experiments are stylized but clearly demonstrate the material consequences of the tax and public expenditure structures for growth and debt sustainability in low-income countries.
Mr. Christopher S Adam and Mr. David Bevan

firms and households dollar-for-dollar into government revenue. An alternative, considered by Berg et al (2014) amongst others, is to assume some ‘transmission loss’ in the process of remitting tax collections to government, such that the MCF for distortionary taxes would increase for any given level of government revenue collection. This transmission loss could be treated as a pure loss (an ‘iceberg’ technology) or as a lump-sum transfer of rents back to households. This mechanism may be important for country-specific calibrations of the model but does not add

Mr. Mauro Mecagni, Juan Sebastian Corrales, Mr. Jemma Dridi, Mr. Rodrigo Garcia-Verdu, Patrick A. Imam, Mr. Justin Matz, Ms. Carla Macario, Mr. Rodolfo Maino, Mr. Yibin Mu, Ashwin Moheeput, Mr. Futoshi Narita, Mr. Marco Pani, Manuel Rosales, Mr. Sebastian Weber, and Mr. Etienne B Yehoue

Sudan … … … … … … … … … … −15.23 −14.45 Tanzania −30.41 −33.41 −33.63 −30.48 −30.65 −33.17 −28.70 −20.55 −19.68 −31.19 −35.13 −27.33 Uganda … … … … … … … … … −25.41 −22.43 −24.34 Zambia −34.21 −36.45 −32.09 −37.15 −31.11 −27.95 −38.99 −28.69 −26.81 −22.73 −22.11 −18.31 Figure A.1.1 . SSA: HouseholdsDollarization Source: International Financial Statistics (IFS) database, IMF. Figure A.1.2 . SSA: Firms’ Dollarization

Mr. Mauro Mecagni, Mr. Juan S Corrales, Mr. Jemma Dridi, Mr. Rodrigo Garcia-Verdu, Patrick A. Imam, Mr. Justin Matz, Ms. Carla Macario, Mr. Rodolfo Maino, Mr. Yibin Mu, Ashwin Moheeput, Mr. Futoshi Narita, Mr. Marco Pani, Mr. Manuel Rosales Torres, Mr. Sebastian Weber, and Mr. Etienne B Yehoue
Dollarization—the use of foreign currencies as a medium of exchange, store of value, or unit of account—is a notable feature of financial development under macroeconomically fragile conditions. It has emerged as a key factor explaining vulnerabilities and currency crises, which have long been observed in Latin America, parts of Asia, and Eastern Europe. Dollarization is also present, prominently, in sub-Saharan Africa (SSA) where it remains significant and persistent at over 30 percent rates for both bank loans and deposits—although it has not increased significantly since 2001. However, progress in reducing dollarization has lagged behind other regions and, in this regard, it is legitimate to ask whether this phenomenon is an important concern in SSA. This study fills a gap in the literature by analyzing these issues with specific reference to the SSA region on the basis of the evidence for the past decade.
International Monetary Fund
This paper discusses Uganda’s Poverty Eradication Action Plan (PEAP) 2004/05–2007/08. The PEAP provides an overarching framework to guide public action to eradicate poverty. It has been prepared through a consultative process involving central and local government, parliament, donors, and civil society. The PEAP aims at contributing toward transforming Uganda into a middle-income country. The government's strategy in the short term is aimed at strengthening both agriculture and manufacturing. For agriculture, critical interventions include infrastructure, information and support to farmers’ marketing. For manufacturing, the government will strengthen infrastructure, improve governance, and boost the education of the workforce.