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Jelle Barkema, Mr. Mico Mrkaic, and Yuanchen Yang
This paper dives into the Fund’s historical coverage of cross-border spillovers in its surveillance. We use a state-of-the-art deep learning model to analyze the discussion of spillovers in all IMF Article IV staff reports between 2010 and 2019. We find that overall, while the discussion of spillovers decreased over time, it was pronounced in the staff reports of some systemically important economies and during periods of global spillover events. Spillover discussions were more prominent in staff reports covering advanced and emerging market economies, possibly reflecting their role as sources of global spillovers. The coverage of spillovers was higher in the context of the real, financial, and external sectors. Also, countries with larger economies, higher trade and capital account openess and lower inflation are more likely to discuss spillovers in their Article IV staff reports.
International Monetary Fund. Strategy, Policy, & Review Department
The Fund has a range of modalities and tools to cover spillovers. However, there remains scope to enhance synergies between global and country-specific spillover coverage and to foster cross-country dialogue. Practical guidance and enhanced information-sharing would also allow for more systematic surveillance of spillovers. Furthermore, the COVID-19 pandemic has underscored the need to continue expanding the research frontier covering new spillovers and channels and developing new tools and data sets. Therefore, filling these remaining gaps in the Fund’s spillover work would allow for a more coordinated and evenhanded surveillance of spillovers.
Jelle Barkema, Mr. Mico Mrkaic, and Yuanchen Yang

induced spillovers dominated the discussions on the global platform as well. For example, Brexit related concerns and global trade tensions heightened concerns about spillovers during 2018 and 2019. Indeed, spillovers from global trade tensions were discussed extensively in Chapter 4 of the April 2018 WEO as well as in the 2018 and 2019 Article IV consultation staff reports for China and the United States (US). We next zoom in on the 2010–2019 time period for the systemic economies (US, euro area, China) and compare spillover discussions in these reports relative to

Jelle Barkema, Mr. Mico Mrkaic, and Yuanchen Yang

represent the views of the IMF, its Executive Board, or IMF management. Abstract This paper dives into the Fund’s historical coverage of cross-border spillovers in its surveillance. We use a state-of-the-art deep learning model to analyze the discussion of spillovers in all IMF Article IV staff reports between 2010 and 2019. We find that overall, while the discussion of spillovers decreased over time, it was pronounced in the staff reports of some systemically important economies and during periods of global spillover events. Spillover discussions were more prominent

International Monetary Fund. Strategy, Policy, & Review Department

'S SPILLOVER COVERAGE IN A RAPIDLY EVOLVING LANDSCAPE A. Developments in the Spillover Landscape B. Goal and Scope of the Fund’s Spillover Coverage C. Previous and Ongoing Fund Work OPERATIONAL CONSIDERATIONS BOXES 1. Spillovers: Key Concepts 2. Network Analysis of Global Integration 3. Chronology of the Fund's Spillover Work 4. WEO Spillover Chapters 5. Coverage of Spillovers in 2018–19 Staff Reports for Systemic Countries 6. Spillover Discussion in Article IV Staff Reports Since the Start of the COVID-19 Pandemic FIGURES 1. Current Fund Modalities

International Monetary Fund. Asia and Pacific Dept

uncertain net effects—higher exports and capital outflows—in the short term. As long as Japan continues to proceed with its reforms, incomes will rise and fiscal risks decline, which will be positive for the global economy. Approved By Jerry Schiff and Tamim Bayoumi Discussions took place in Tokyo from May 19–30, 2014. The staff team comprised J. Schiff (head), S. Danninger, D. Botman, M. Nabar, J. Kang, I. Saito (all APD), S. Arslanalp (MCM), R. de Mooij (FAD), and G. Ganelli and C. Aoyagi (OAP). Mr. Faruqee (RES) join for spillover discussions. Messrs. Momma

International Monetary Fund. Strategy, Policy, & Review Department

reports, recent reports have discussed outward spillovers from various policies and in some cases considerations for spillovers also factor into policy recommendations (see Box 6 ). In addition, to achieve more external prominence on spillover topics, workshops on the Institutional View (IV) in Practice were held with country authorities at the 2020 Spring and Annual Meetings. Box 6. Spillover Discussion in Article IV Staff Reports Since the Start of the COVID-19 Pandemic United States 2020 Article IV Consultation Staff Report In response to the pandemic, the

International Monetary Fund

of some of the inflows to emerging markets if markets were to suddenly bring forward expectations of monetary tightening, suggesting a premium on clear communication of monetary policy. 18. The broader country case study also shows that the analysis and coverage of inward and outward spillovers, as well as cross-country analysis was mixed . Only a few case study countries had substantive analysis of inward spillovers. Discussion of outward spillovers was also mixed. Where spillover analysis was done, these were mainly in the form of qualitative descriptions of

Martín Saldías

,” Open Economies Review , Vol. 20 , No. 5 , pp. 683 – 716 . Metiu , Norbert , Björn Hilberg and Michael Grill , 2015 , “ Financial Frictions and Global Spillovers ,” Discussion Papers 04/2015 , Deutsche Bundesbank Research Centre . Peek , Joe and Eric Rosengren , 2013 , “ The Role of Banks in the Transmission of Monetary Policy ,” Research in Economics , Vol. 70 , No. 3 , pp. 262 – 280 . Pesaran , Hashem and Ron Smith , 2016 , “ Counterfactual Analysis in Macroeconometrics: An Empirical Investigation into the Effects of

International Monetary Fund

. Nevertheless, some reports flexibly combined results from different results and applied judgment on the effects of other channels to produce a richer analysis of the impact of spillovers. C. Integration and Traction The outward spillover discussion was well integrated into most reports . They varied, however, in the weight they attached to spillovers, and only a minority of the reports alluded to outward spillovers in the staff appraisal. The authorities’ reactions to the spillover work (including alternative policies) were not recorded in half of the reports, which