Romain Bouis's Books

Banks’ Holdings of Government Securities and Credit to the Private Sector in Emerging Market and Developing Economies

By: Romain Bouis

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Banks’ Holdings of Government Securities and Credit to the Private Sector in Emerging Market and Developing Economies

By: Romain Bouis

This paper studies the relationship between banks’ holdings of domestic sovereign securities and credit growth to the private sector in emerging market and developing economies. Higher banks’ holdings of government debt are associated with a lower credit growth to the private sector and with a higher return on assets of the banking sector. Analysis suggests that the negative relationship between banks’ claims on the government and private sector credit growth mainly reflects a portfolio rebalancing of banks towards safer, more liquid public assets in stress times and provides only limited evidence of a crowding-out effect due to financial repression.

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International Monetary Fund

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ISBN 10

1513512951

ISBN 13

9781513512952

Product Market Deregulation and Growth

New Country-Industry-Level Evidence

By: Romain Bouis,Mr.Romain A Duval,Johannes Eugster

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Product Market Deregulation and Growth

New Country-Industry-Level Evidence

By: Romain Bouis,Mr.Romain A Duval,Johannes Eugster

The paper investigates the economic effects of major product market reforms in some of the historically most protected non-manufacturing industries. It relies on a unique mapping between new annual data on reform shocks and sector-level outcomes for five network industries (electricity and gas, land transport, air transport, postal services, and telecommunications) in twenty-six countries spanning over three decades. The use of a threedimensional panel and careful instrumentation of reform shocks using external instruments enables us to control for economy-wide macroeconomic shocks and address possible sources of omitted variable bias more broadly. Using a local projection method, we find that major reductions in barriers to entry yield large increases in output and labor productivity over a five-year horizon, concomitant with a relative price decline. By contrast, there is only a weak positive effect on sectoral employment, and investment is essentially unaffected, suggesting that output gains from reform primarily reflect higher total factor productivity. It takes some time for these gains to materialize: effects become statistically significant two to three years after the reform, as prices start dropping, and productivity and output increase significantly. However, there is no evidence of any negative short-term cost from reform, including under weak macroeconomic conditions. These findings provide a clear case for intensifying product market reform efforts in advanced economies at the current juncture of weak growth.

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International Monetary Fund

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ISBN 10

1475540639

ISBN 13

9781475540635

Household Deleveraging and Saving Rates: A Cross-Country Analysis

By: Romain Bouis

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Household Deleveraging and Saving Rates: A Cross-Country Analysis

By: Romain Bouis

Historically high household debt in several economies is calling for a deleveraging, but according to some economists, this adjustment can slow GDP growth by weighing on consumption. Using a sample of advanced and emerging market economies, this paper finds evidence of a negative relationship between changes of household debt-to-income ratios and saving rates. This relationship is however asymmetric, being significant only for debt build-ups. Declining debt ratios and saving are significantly related in some economies, but the relationship is driven by consumer credit, not by mortgages. Results therefore suggest that the economic cost associated with household deleveraging may be overestimated and motivate a deleveraging via lower mortgages.

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ISBN 10

1589064070

ISBN 13

9781589064072

Do Capital Controls Limit Inflow Surges?

By: Apoorv Bhargava,Romain Bouis,Annamaria Kokenyne,Manuel Perez-Archila,Umang Rawat,Ms. Ratna Sahay

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Do Capital Controls Limit Inflow Surges?

By: Apoorv Bhargava,Romain Bouis,Annamaria Kokenyne,Manuel Perez-Archila,Umang Rawat,Ms. Ratna Sahay

With rising financial integration, the magnitude and swings in capital flows have increased in the past two decades, intensifying the policy debate on how best to deal with these flows. This paper assesses the use and effectiveness of capital controls in limiting inflow surges. Using a novel dataset on capital control changes across 40 advanced and emerging market and developing economies over 1995-2018, we find that the tightening of capital controls reduces the probability of future surges both at the aggregate and the asset flow levels. The results are robust to various definitions of surges and are stronger when controls are matched to the asset class they target. Finally, we also find significant multilateral spillovers from capital control actions, pointing towards the need for international cooperation in the use of these policies.

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ISBN 13

9798400235092

Capital Controls in Times of Crisis – Do They Work?

By: Apoorv Bhargava,Romain Bouis,Annamaria Kokenyne,Manuel Perez-Archila,Umang Rawat,Ms. Ratna Sahay

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Capital Controls in Times of Crisis – Do They Work?

By: Apoorv Bhargava,Romain Bouis,Annamaria Kokenyne,Manuel Perez-Archila,Umang Rawat,Ms. Ratna Sahay

This paper provides an analysis of the use and effects of capital controls in 27 AEs and EMDEs which experienced at least one financial crisis between 1995 and 2017. Countries often turn to using capital controls in crisis: some ease inflow controls while others tighten controls on outflows. A key finding is that countries with pervasive controls before the start of the crisis are shielded compared to countries with more open capital accounts, which see a significant decline in capital flows during crises. In contrast, the effectiveness of capital controls introduced during crises appears to be weak and difficult to identify. There is also some evidence that the introduction of outflow controls during crises is negatively associated with sovereign debt ratings, but that investors may actually forgive with time.

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ISBN 13

9798400236235

Labor and Product Market Reforms in Advanced Economies

Fiscal Costs, Gains, and Support

By: Angana Banerji,Mr.Valerio Crispolti,Ms.Era Dabla-Norris,Mr.Romain A Duval,Mr.Christian H Ebeke,Davide Furceri,Mr.Takuji Komatsuzaki,Mr.Tigran Poghosyan

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Labor and Product Market Reforms in Advanced Economies

Fiscal Costs, Gains, and Support

By: Angana Banerji,Mr.Valerio Crispolti,Ms.Era Dabla-Norris,Mr.Romain A Duval,Mr.Christian H Ebeke,Davide Furceri,Mr.Takuji Komatsuzaki,Mr.Tigran Poghosyan

Product and labor market reforms are needed to lift persistently sluggish growth in advanced economies. But reforms have progressed slowly because of concerns about their distributive and short-term economic effects. Our analysis, based on new empirical and numerical analysis and country case-studies shows that most labor and product market reforms can improve public debt dynamics over the medium-term. This because reforms raise output by boosting employment and/or labor productivity. But the effect of some labor market reforms on budgetary outcomes and fiscal sustainability depends critically on business cycle conditions. Our evidence also suggests that some temporary and well-designed up-front fiscal stimulus can help enhance the economic impact of reforms. In the past, countries have used fiscal incentives in the past to facilitate reforms by alleviating transition and social costs. But strong ownership of reforms was crucial for their successful implementation.

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120

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International Monetary Fund

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ISBN 10

1475583974

ISBN 13

9781475583977

A Narrative Database of Major Labor and Product Market Reforms in Advanced Economies

By: Mr.Romain A Duval,Davide Furceri,Bingjie Hu,João Tovar Jalles,Huy Nguyen

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A Narrative Database of Major Labor and Product Market Reforms in Advanced Economies

By: Mr.Romain A Duval,Davide Furceri,Bingjie Hu,João Tovar Jalles,Huy Nguyen

This paper describes a new database of major labor and product market reforms covering 26 advanced economies over the period 1970-2013. The focus is on large changes in product market regulation in seven individual network industries, employment protection legislation for regular and temporary workers, and the replacement rate and duration of unemployment benefits. The main advantage of this dataset is the precise identification of the nature and date of major reforms, which is valuable in many empirical applications. By contrast, the dataset does not attempt to measure and compare policy settings across countries, and as such is no substitute for other publicly available indicators produced, for example, by the ILO, the OECD or the World Bank. It should also be seen as work in progress, for researchers to build on and improve upon. Based on the dataset, major reforms appear to have been more frequent in product markets than in labor markets in the last decades, and were predominantly implemented during the 1990s and 2000s.

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ISBN 10

1484339290

ISBN 13

9781484339299

Gone with the Headwinds

Global Productivity

By: Gustavo Adler,Mr.Romain A Duval,Davide Furceri,Sinem Kiliç Çelik,Ksenia Koloskova,Marcos Poplawski-Ribeiro

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Gone with the Headwinds

Global Productivity

By: Gustavo Adler,Mr.Romain A Duval,Davide Furceri,Sinem Kiliç Çelik,Ksenia Koloskova,Marcos Poplawski-Ribeiro

to come

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ISBN 10

1475589824

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9781475589825

Labor and Product Market Reforms and External Imbalances: Evidence from Advanced Economies

By: Mr.Romain A Duval,Davide Furceri,João Tovar Jalles

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Labor and Product Market Reforms and External Imbalances: Evidence from Advanced Economies

By: Mr.Romain A Duval,Davide Furceri,João Tovar Jalles

We explore the impact of major labor and product market reforms on current account dynamics using a new “narrative” database of major changes in employment protection for regular workers and product market regulation for non-manufacturing industries covering 26 advanced economies over the past four decades. Our main finding is that product market deregulation is associated with a weakening of the current account, while labor market deregulation is associated with an improvement. These effects are transitory and driven by both saving and investment responses. Labor and product market reforms both have a more positive impact on the current account balance when implemented under weak macroeconomic conditions. Our results are broadly consistent with predictions from recent DSGE models with endogenous producer entry and labor market frictions.

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ISBN 10

1513570749

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9781513570747

The Needle in the Haystack: What Drives Labor and Product Market Reforms in Advanced Countries?

By: Mr.Romain A Duval,Davide Furceri,Jakob Miethe

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The Needle in the Haystack: What Drives Labor and Product Market Reforms in Advanced Countries?

By: Mr.Romain A Duval,Davide Furceri,Jakob Miethe

The political economy literature has put forward a multitude of hypotheses regarding the drivers of structural reforms, but few, if any, empirically robust findings have emerged thus far. To make progress, we draw a parallel with model uncertainty in the growth literature and provide a new version of the Bayesian averaging of maximum likelihood estimates (BAMLE) technique tailored to binary logit models. Relying on a new database of major past labor and product market reforms in advanced countries, we test a large set of variables for robust correlation with reform in each area. We find widespread support for the crisis-induces-reform hypothesis. Outside pressure increases the likelihood of reform in certain areas: reforms are more likely when other countries also undertake them and when there is formal pressure to implement them. Other robust correlates are more specific to certain areas—for example, international pressure and political factors are most relevant for product market and job protection reforms, respectively.

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1484355784

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9781484355787

Macroeconomic Management When Policy Space is Constrained

A Comprehensive, Consistent and Coordinated Approach to Economic Policy

By: Vitor Gaspar,Mr.Maurice Obstfeld,Ms.Ratna Sahay,Mr.Douglas Laxton,Mr.Dennis P Botman,Kevin Clinton,Mr.Romain A Duval,Kotaro Ishi,Zoltan Jakab,Laura Jaramillo,Mr.Constant A Lonkeng Ngouana,Mr.Tommaso Mancini Griffoli,Mr.Joannes Mongardini,Susanna Mursula,Erlend Nier,Ms.Yulia Ustyugova,Hou Wang,Mr.Oliver Wuensch

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Macroeconomic Management When Policy Space is Constrained

A Comprehensive, Consistent and Coordinated Approach to Economic Policy

The recovery in GDP growth since the global financial crisis has been halting and weak. Concern is widespread that countercyclical policies have run out of space or lack the power to raise growth or deal with the next negative shock. This note argues that room exists for effective policies and that it should be used if appropriate. The most promising route involves a comprehensive, consistent, and coordinated approach to policy making. Comprehensive policy actions within a country exploit synergies, making the whole greater than the sum of parts. Consistent policy frameworks anchor long-term expectations while allowing decisive short- to medium-term accommodation whenever necessary. Coordinated policies across major economies amplify the helpful effects of individual policy actions through positive cross-border spillovers. The findings of this paper indicate that policy coordination adds particular value if the current approach falls short of reviving growth, or in the event of a further downward shock.

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1475537549

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9781475537543

Labor Market Reform Options to Boost Employment in South Africa

By: Mr. Romain A Duval,Mr. Ippei Shibata

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Labor Market Reform Options to Boost Employment in South Africa

By: Mr. Romain A Duval,Mr. Ippei Shibata

Raising South Africa’s low employment rate to levels seen in emerging market or advanced economy peers could raise GDP per capita by 50 to 60 percent and reduce income inequality dramatically in the long term. By putting further strain on an already fragile labor market, Covid-19 has raised the urgency of action. This paper reviews labor market policy and other reform options to enhance South Africa’s job market performance, drawing from international evidence and new analysis. We find much scope for improving the design of key labor market institutions—including collective bargaining and employment protection legislation—and active labor market policies to improve job seekers’ prospects. These reforms should come hand-in-hand with others, such as in the areas of education or product market regulation, that may work pay. Labor market and other reforms would primarily benefit disadvantaged groups such as youth.

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1513584472

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9781513584478

Macroeconomic Policy, Product Market Competition, and Growth: The Intangible Investment Channel

By: Mr.JaeBin Ahn,Mr.Romain A Duval,Can Sever

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Macroeconomic Policy, Product Market Competition, and Growth: The Intangible Investment Channel

By: Mr.JaeBin Ahn,Mr.Romain A Duval,Can Sever

While there is growing evidence of persistent or even permanent output losses from financial crises, the causes remain unclear. One candidate is intangible capital – a rising driver of economic growth that, being non-pledgeable as collateral, is vulnerable to financial frictions. By sheltering intangible investment from financial shocks, counter-cyclical macroeconomic policy could strengthen longer-term growth, particularly so where strong product market competition prevents firms from self-financing their investments through rents. Using a rich cross-country firm-level dataset and exploiting heterogeneity in firm-level exposure to the sharp and unforeseen tightening of credit conditions around September 2008, we find strong support for these theoretical predictions. The quantitative implications are large, highlighting a powerful stabilizing role for macroeconomic policy through the intangible investment channel, and its complementarity with pro-competition product market deregulation.

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