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International Monetary Fund. Communications Department

the mandate of the Fed is essentially domestic even if the spillover effects of its decisions are global. It’s also a fact that the dollar remains the currency of the world. So to what extent does the Fed take into account international spillovers when it is considering its monetary policy decisions? Well, this is a subject that Stan has chosen for his lecture, and I think that everybody would agree with me that it’s an extremely important topic. Stan Fischer has had an exemplary career. He’s currently the Vice Chairman of the Board of Governors of the Federal

International Monetary Fund. Communications Department

Abstract

As the Federal Reserve’s statutory objectives are defined as specific goals for the U.S. economy—to pursue maximum sustainable employment and price stability—and its policy decisions are targeted to achieve these dual objectives, there might seem to be little need for its policymakers to pay attention to developments outside the United States. But such an inference would be incorrect: the state of the U.S. economy is significantly affected by the state of the world economy, and of course, actions taken by the Federal Reserve influence economic conditions abroad, which in turn spill back on the evolution of the U.S. economy and therefore must be taken into account in the Federal Reserve’s monetary policy choices. This Per Jacobsson Lecture first reviews the effect of the Federal Reserve’s monetary policies on the rest of the global economy, particularly emerging market economies. It then addresses prospective outcomes and possible risks associated with the normalization of the Federal Reserve’s policies. Finally, it discusses the Federal Reserve’s responsibilities in the world economy.

International Monetary Fund. Communications Department

Abstract

It is a great honor to deliver the Per Jacobsson Foundation Lecture, and I thank the organizers for inviting me. Per Jacobsson, a Swede, was the third Managing Director of the International Monetary Fund (IMF), serving from 1956 to 1963. During his tenure, the Fund supported the return to convertibility of the major European currencies, increased its resources by securing the General Arrangements to Borrow, and established the Compensatory Financing Facility to help member countries cope with temporary fluctuations in international payments.

Vincent Belinga and Mr. Constant A Lonkeng Ngouana

Malikyar and Jeff Pichocki for editorial comments. The usual disclaimer applies. 1 Abenomics, the economic plan put forward by the Japanese Prime Minister, Shinzō Abe, since his re-election in December 2012, entails three (complementary) “arrows”: (i) fiscal expansion (in the short-run); (ii) monetary easing (QE); and (iii) structural reforms. 2 This is broadly consistent with the “dual mandateof the Fed, as articulated in Section 2A (on monetary policy objectives) of the 1977 amendment of the Federal Reserve Act: “The Board of Governors of the

Vincent Belinga and Mr. Constant A Lonkeng Ngouana
This paper provides estimates of the government spending multiplier over the monetary policy cycle. We identify government spending shocks as forecast errors of the growth rate of government spending from the Survey of Professional Forecasters (SPF) and from the Greenbook record. The state of monetary policy is inferred from the deviation of the U.S. Fed funds rate from the target rate, using a smooth transition function. Applying the local projections method to quarterly U.S. data, we find that the federal government spending multiplier is substantially higher under accommodative than non-accommodative monetary policy. Our estimations also suggest that federal government spending may crowd-in or crowd-out private consumption, depending on the extent of monetary policy accommodation. The latter result reconciles—in a unified framework—apparently contradictory findings in the literature. We discuss the implications of our findings for the ongoing normalization of monetary conditions in advanced economies.
International Monetary Fund

that, for major groups, it proved impossible to wall off the banks from risks posed by holding companies and/or other affiliates (which is inherent in the safety and soundness mandates of the Fed, the OCC and the FDIC, and in approaches of the OTS to holding companies versus savings associations). Particularly in groups where the insured depository is a material part of the overall group (and given the fact that risks and risk management in these groups does not line up with legal structure), the depository andthe group are crucially interdependent. Serious

International Monetary Fund
This paper presents Detailed Assessment of the United States’s observance of Basel Core Principles for Effective Banking Supervision. The U.S. financial system is large and highly diversified. At the end-2007, total U.S. financial assets amounted to almost four and a half times the size of GDP. Of this, however, less than a one-fourth quarter of total financial assets were accounted for by traditional depository institutions. The crisis has radically changed the shape of the U.S. financial system in a short timeframe.