Crisis Shakes Europe
Losing Their Halo
Martin
Ĉihák and Srobona Mitra
The new central and eastern
European members of the European
Union had it very good for a
while. But the good times didn't
last. The new member states'
initial resilience to the global
financial turmoil has given way
to deep crisis in a few of them.
A Tale of Two Crises
Erik
Berglöf, Alexander Plekhanov,
and Alan Rousso
Russia has not done enough to
inoculate itself from recurring
crises that stem, in large part,
from a sharp drop in the price
of oil.
Also in This Issue
Out of the Ballpark
M. Ayhan
Kose, Prakash Loungani, and
Marco E. Terrones
The current recession is easily
the most severe of the postwar
period: output—depending on the
measure—is projected to fall
between four and six times as
much as it did on average in the
three other global recessions,
and unemployment is likely to
increase twice as much.
F&D on the Global Crisis
See coverage of the financial crisis, including:
- the March 2009 issue of F&D, which examines the multiple facets of the recession,
- the December 2008 issue of F&D, which looks at the impact of the economic crisis, and
- the June 2008 issue of F&D, which examines the origins of the crisis.
New Paths to Funding
Suhas
Ketkar and Dilip Ratha
When financing is scarce,
innovative financing approaches
are required to raise capital,
especially for private sector
borrowers in developing
countries, who face even harsher
credit rationing than public
sector borrowers.
A Hedge, Not a Bet
Herman
Kamil, Bennett W. Sutton, and
Chris Walker
Some Latin American companies
used financial derivative
contracts to place bets on
currency movements—and lost big
when the currencies depreciated
steeply. That not only led to
financial problems for the
companies, but presented
authorities with difficult
issues in foreign exchange
markets.
Latin America: When Is Fiscal Stimulus Right?
Nicolás
Eyzaguirre, Benedict Clements,
and Jorge Canales-Kriljenko
In several countries, the
slowdown in private sector
activity may provide room for a
temporary and well-designed
fiscal stimulus. In countries
with low credibility, however,
countercyclical fiscal policy
efforts may be
counterproductive.
Viewpoints
Stress Test for the Euro
Departments
People in Economics
Still the Bottom Billion
Glenn Gottselig
In an interview, Oxford economist Paul
Collier talks about how to help
low-income countries during the current
crisis.
Picture This
Uncharted Territory
Koshy Mathai and
Simon Willson
There is little doubt that the U.S.
Federal Reserve's dramatic expansion of
the monetary base has been justified
given the sharp economic downturn and
the risk of deflation. But the exit
strategy could be difficult.
Back to Basics
What Is Fiscal Policy?
Mark Horton and
Asmaa El-Ganainy
Fiscal policy is the use of government
spending and taxation to influence the
economy. Governments typically use
fiscal policy to promote strong and
sustainable growth and reduce poverty.
Straight Talk
Data Spotlight
Roller Coaster
Thomas Helbling,
Nese Erbil, and Marina Rousset
The latest sharp rise and fall in
commodity prices is not the first nor
the last. Historically, prices of
commodities have been volatile and
subject to large swings.