A Few White Papers
you are currently viewing::IMF Working Paper-Optimal Exchange Rate Policy with Oil ShocksFebruary 20, 2026--Summary We study optimal monetary and exchange rate policy in a small open economy facing oil price shocks. In a model with segmented financial markets that generate endogenous UIP deviations, the first-best allocation is achieved through a combination of interest rate policy and foreign exchange intervention (FXI). Monetary policy stabilizes domestic inflation and the output gap, while FXI targets the UIP wedge to offset financial frictions. Oil price shocks endogenously move the net foreign asset position, giving rise to financial imbalances that make FXI essential-a mechanism distinct from exogenous financial shocks highlighted in the literature. Quantitatively, for a calibrated oil exporter, suboptimal regimes such as a free float or a simple peg entail sizable welfare losses of around 2% in consumption-equivalent terms, though peg, and especially peg with fuel subsidies, can outperform free floats. Overall, FXI is crucial to break the destabilizing link between real commodity shocks and financial risk premia. Source: imf.org |
IMF Working Paper: Market Access and High Spread Issuances
January 16, 2026-Summary
We investigate the factors determining emerging markets' likelihood to access international capital markets. First, we develop a simple model to outline the theoretical foundations of market access, highlighting the role of risk, spreads, net worth, and the cost of repaying debt. The model also shows a trade-off between risk insurance and moral hazard and underscores the relevance of unconventional instruments such as guarantees and macro-contingent debt.
IMF Working Paper The Economic Implications of the Energy Transition in Asia-Pacific
January 9, 2026--Summary
This paper examines the economic effects of the global energy transition and the large uncertainty surrounding future fossil fuel demand on countries in the Asia-Pacific region. Under the paper's baseline, coal demand is expected to shrink by 15 percent by 2035, although depending on global policy ambition and technological uptake, the decline could be as large as 45 percent.
Four Futures for the New Economy: Geoeconomics and Technology in 2030
January 12, 2025-Four Futures for the New Economy: Geoeconomics and Technology in 2030 explores how the powerful interplay between geopolitical shifts and rapid technological change is reshaping the global economic landscape.
