Edda Zoli's Books

Korea’s Challenges Ahead—Lessons from Japan’s Experience

By: Ms.Edda Zoli

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Korea’s Challenges Ahead—Lessons from Japan’s Experience

By: Ms.Edda Zoli

This paper draws out the parallels between Korea and Japan in terms of demographics, potential growth, balance sheets, asset prices and inflation. Korea’s demographic trends seem to track Japan’s with a lag of about 20 years. Low productivity in the service sector and labor market duality are common to both countries and need to be addressed with structural reforms. While Korea’s corporate balance sheets are stronger than Japan’s in the early 1990s, Korea needs to progress with the restructuring of nonviable firms to avoid the adverse consequences of delayed balance-sheet repair that Japan experienced. Given its strong fiscal balance sheet position, Korea can afford using fiscal policy actively to incentivize corporate restructuring and structural reforms and cushion their possible short-term adverse impact. Korea can prevent bubbles in asset prices that were at the origin of Japan’s initial crisis with the continued use of macroprudential policies. Although Korea does not appear to be headed toward deflation, new econometric analysis presented in the paper suggests that aging will exert a downward drag on its inflation going forward.

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International Monetary Fund

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ISBN 10

1475568894

ISBN 13

9781475568899

Leaning Against the Wind

Macroprudential Policy in Asia

By: Ms.Longmei Zhang,Ms.Edda Zoli

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Leaning Against the Wind

Macroprudential Policy in Asia

By: Ms.Longmei Zhang,Ms.Edda Zoli

In recent years, macroprudential policy has become an increasingly active policy area. Many countries have adopted it as a tool to safeguard financial stability, in particular to deal with the credit and asset price cycles driven by global capital flows. This paper reviews the use of key macroprudential instruments and capital flow measures in 13 Asian economies and 33 economies in other regions since 2000, and constructs various macroprudential policy indices, aggregating sub-indices on key instruments. Asian economies appear to have made greater use of macroprudential tools, especially housing-related measures, than their counterparts in other regions. The effects of macroprudential policy are then assessed through an event study, cross-country macro panel regressions and bank-level micro panel regressions. The analysis suggests that macroprudential policy and capital flow measures have helped curb housing price growth, equity flows, credit growth, and bank leverage. The instruments that have been particularly effective in this regard include loan-to-value ratio caps, housing tax measures, and foreign currency-related measures.

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International Monetary Fund

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ISBN 10

1475552432

ISBN 13

9781475552430

A New Strategy for Korea’s Fiscal Policy in a Low Growth Environment

By: Ms.Edda Zoli,Hou Wang,Mr.Douglas Laxton

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A New Strategy for Korea’s Fiscal Policy in a Low Growth Environment

By: Ms.Edda Zoli,Hou Wang,Mr.Douglas Laxton

Adverse demographics and other structural weaknesses impinge on Korea’s long-term fiscal outlook and potential growth. Moreover, inadequate social protection is creating poverty and dampening consumption. The paper presents projections of Korea’s fiscal outlook, using new estimates of potential growth obtained with a novel multivariate filter. It shows that keeping fiscal revenues-to-GDP constant would result in an explosive public debt dynamic in the long term. Then, through simulations of the Flexible System of Global Models, the paper analyzes policies to preserve fiscal sustainability, while boosting potential growth and social protection. It concludes that with greater revenue mobilization, Korea can stabilize debt-to-GDP well below “dangerous” levels. Policies to address Korea’s challenges include higher targeted transfers to the most vulnerable and fiscal measures to support female labor force participation and employment, accompanied by product and labor market reforms.

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International Monetary Fund

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ISBN 10

1484353986

ISBN 13

9781484353981

Italian Sovereign Spreads

Their Determinants and Pass-through to Bank Funding Costs and Lending Conditions

By: Ms.Edda Zoli

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Italian Sovereign Spreads

Their Determinants and Pass-through to Bank Funding Costs and Lending Conditions

By: Ms.Edda Zoli

Volatility in Italian sovereign spreads has increased since mid-2011. This paper finds that news on the euro area debt crisis and country specific events were important drivers of sovereign spreads. Movements in sovereign spreads affect CDS spreads and bond yields of Italian banks, and are transmitted rapidly to firm lending rates. Banks with lower capital ratios and higher nonperforming loans were found to be more sensitive to swings in sovereign spreads. Credit supply constraints due to bank funding shortages from the sovereign debt crisis were a major factor behind the lending slowdown in late 2011, while in 2012 weak demand appears to have been driving changes in credit more than supply.

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International Monetary Fund

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ISBN 10

1484351169

ISBN 13

9781484351161

Drivers of Financial Integration – Implications for Asia

By: Nasha Ananchotikul,Shi Piao,Ms.Edda Zoli

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Drivers of Financial Integration – Implications for Asia

By: Nasha Ananchotikul,Shi Piao,Ms.Edda Zoli

Deeper intraregional financial integration is prominent on Asian policymakers’ agenda. This paper takes stock of Asia’s progress toward that objective, analyzing recent trends in cross-border portfolio investment and bank claims. Then, it investigates the drivers of financial integration by estimating a gravity model of bilateral financial asset holdings on a large sample of source and destination countries worldwide, focusing in particular on the role of regulation and institutions. The paper concludes that financial integration in Asia could be enhanced through policies that lower informational frictions, continue to buttress trade integration and capital market development, remove restrictions to foreign flows and bank penetration, and promote a common regulatory framework.

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International Monetary Fund

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ISBN 10

1513554816

ISBN 13

9781513554815

Euro Area Sovereign Risk During the Crisis

By: Ms.Silvia Sgherri,Ms.Edda Zoli

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Euro Area Sovereign Risk During the Crisis

By: Ms.Silvia Sgherri,Ms.Edda Zoli

While the use of public resources is critical to cushion the impact of the financial crisis on the euro-area economy, it is key that the entailed fiscal costs not be seen by markets as undermining fiscal sustainability. From this perspective, to what extent do movements in euro area sovereign spreads reflect country-specific solvency concerns? In line with previous studies, the paper suggests that euro area sovereign risk premium differentials tend to comove over time and are mainly driven by a common time-varying factor, mimicking global risk repricing. Since October 2008, however, there is evidence that markets have become progressively more concerned about the potential fiscal implications of national financial sectors' frailty and future debt dynamics. The liquidity of sovereign bond markets still seems to play a significant (albeit fairly limited) role in explaining changes in euro area spreads.

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International Monetary Fund

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ISBN 10

1451873697

ISBN 13

9781451873696

Modis

A Market-Oriented Deposit Insurance Scheme

By: Ms.Edda Zoli,Reza Vaez-Zadeh,Danyang Xie

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Modis

A Market-Oriented Deposit Insurance Scheme

By: Ms.Edda Zoli,Reza Vaez-Zadeh,Danyang Xie

This paper argues that an optimal deposit insurance scheme would allow the level of insurance coverage to be determined by the market. Based on this principle, the paper proposes an insurance scheme that minimizes distortions and embodies fairness and credibility, two essential characteristics of a viable and effective deposit insurance scheme. Using a simple model for the determination of the optimal level of insurance coverage, it is shown that the optimal coverage is higher for developing compared to developed countries; a condition that is broadly satisfied by prevailing deposit insurance practices around the world.

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International Monetary Fund

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ISBN 10

1451874669

ISBN 13

9781451874662

Gender Equality: Which Policies Have the Biggest Bang for the Buck?

By: Ms.Sonali Jain-Chandra,Ms.Kalpana Kochhar,Ms.Monique Newiak,Yang Yang,Ms.Edda Zoli

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Gender Equality: Which Policies Have the Biggest Bang for the Buck?

By: Ms.Sonali Jain-Chandra,Ms.Kalpana Kochhar,Ms.Monique Newiak,Yang Yang,Ms.Edda Zoli

This paper analyzes the relationship between fiscal and structural policies and gender inequality in education and labor force participation for countries at different stages of development. Due to the substantial number of possible factors that link with gender inequality previously highlighted in the literature, we pay particular attention to addressing model uncertainty and using various statistical methods to find the variables with the strongest links to gender gaps. We find that higher public spending on education, better sanitation facilities, low adolescent fertility, and narrower marriage age gaps are significantly related to narrower gender gaps in education. We also find that better infrastructure, a stronger institutional environment, more equal legal rights, and low adolescent fertility rates are strongly associated with higher female labor force participation. When labor market protection is low, an increase in protection is associated with a narrowing of labor force participation gaps between men and women. But when labor market protection levels are high, an increase in protection is associated with a widening in labor force participation gaps.

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International Monetary Fund

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ISBN 10

1484356268

ISBN 13

9781484356265

Euro Area Sovereign Risk During the Crisis

By: Ms.Silvia Sgherri,Ms.Edda Zoli

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Euro Area Sovereign Risk During the Crisis

By: Ms.Silvia Sgherri,Ms.Edda Zoli

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International Monetary Fund

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ISBN 10

1451873697

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9781451873696

Modis

A Market-Oriented Deposit Insurance Scheme

By: Ms.Edda Zoli,Reza Vaez-Zadeh,Danyang Xie

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Modis

A Market-Oriented Deposit Insurance Scheme

By: Ms.Edda Zoli,Reza Vaez-Zadeh,Danyang Xie

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International Monetary Fund

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ISBN 10

1451874669

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9781451874662

Korea’s Challenges Ahead—Lessons from Japan’s Experience

By: Ms.Edda Zoli

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Korea’s Challenges Ahead—Lessons from Japan’s Experience

By: Ms.Edda Zoli

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International Monetary Fund

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ISBN 10

1475568894

ISBN 13

9781475568899

Leaning Against the Wind

Macroprudential Policy in Asia

By: Ms.Longmei Zhang,Ms.Edda Zoli

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Leaning Against the Wind

Macroprudential Policy in Asia

By: Ms.Longmei Zhang,Ms.Edda Zoli

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International Monetary Fund

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ISBN 10

1475552432

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9781475552430

Italian Sovereign Spreads

Their Determinants and Pass-through to Bank Funding Costs and Lending Conditions

By: Ms.Edda Zoli

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Italian Sovereign Spreads

Their Determinants and Pass-through to Bank Funding Costs and Lending Conditions

By: Ms.Edda Zoli

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International Monetary Fund

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ISBN 10

1484357701

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9781484357705

A New Strategy for Korea’s Fiscal Policy in a Low Growth Environment

By: Ms.Edda Zoli,Hou Wang,Mr.Douglas Laxton

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A New Strategy for Korea’s Fiscal Policy in a Low Growth Environment

By: Ms.Edda Zoli,Hou Wang,Mr.Douglas Laxton

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International Monetary Fund

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ISBN 10

1484353986

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9781484353981

Drivers of Financial Integration – Implications for Asia

By: Nasha Ananchotikul,Shi Piao,Ms.Edda Zoli

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Drivers of Financial Integration – Implications for Asia

By: Nasha Ananchotikul,Shi Piao,Ms.Edda Zoli

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International Monetary Fund

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ISBN 10

1513532820

ISBN 13

9781513532820

Credit Rationing in Emerging Economies' Access to Global Capital Markets

By: Ms.Edda Zoli

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Credit Rationing in Emerging Economies' Access to Global Capital Markets

By: Ms.Edda Zoli

This paper tests empirically the theoretical prediction that the country premium paid by emerging economies on sovereign debt increases with the amount of debt up to a certain critical level, above which the supply of foreign funds becomes fixed. The results confirm this theoretical prediction. The approach developed in the paper is also used to test for the presence of moral hazard in international lending. The results indicate significant changes in the supply of funds curve consistent with the presence of moral hazard in the period immediately following the Mexican rescue operation, but not after the Russian non-bailout.

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INTERNATIONAL MONETARY FUND

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ISBN 10

1451849184

ISBN 13

9781451849189

Drivers of Financial Integration

Implications for Asia

By: Nasha Ananchotikul,Shi Piao,Edda Zoli

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Drivers of Financial Integration

Implications for Asia

By: Nasha Ananchotikul,Shi Piao,Edda Zoli

Deeper intraregional financial integration is prominent on Asian policymakers' agenda. This paper takes stock of Asia's progress toward that objective, analyzing recent trends in cross-border portfolio investment and bank claims. Then, it investigates the drivers of financial integration by estimating a gravity model of bilateral financial asset holdings on a large sample of source and destination countries worldwide, focusing in particular on the role of regulation and institutions. The paper concludes that financial integration in Asia could be enhanced through policies that lower informatio.

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