Title Global and regional spillovers to Pacific Island countries / prepared by Niamh Sheridan, Patrizia Tumbarello, and Yiqun Wu

Published [Washington, D.C.] : International Monetary Fund, ©2012

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Description 1 online resource (41 pages) Series IMF working paper ; WP/12/154 IMF working paper ; WP/12/154. Contents Cover; Contents; Executive Summary; I. Introduction; II. PICs Before and After the Global Crisis; III. Channels of Spillover: A Qualitative Analysis; IV. Assessing Growth Spillovers; A. Stylized Facts; B. Econometric Analysis; (1) Baseline scenario; (2) Downside scenarios; V. Assessing Spillovers to the Financial Sector; A. Stylized Facts; B. Spillovers from a Downside scenario; VI. What Role for Policies? Rebuilding Policy Buffers and Implementing Structural Reforms; References; Appendix: Technical Summary of Econometric Methodology and Results Summary Regional integration of Pacific Island countries (PICs) with Australia, New Zealand, and emerging Asia has increased over the last two decades. PICs have become more exposed to the region's business cycles, and spillovers from regional economies are more important for PICs than from advanced economies outside the region. While strong linkages with Asia would help in the event of a global downturn, PICs remain particularly vulnerable to global commodity price shocks. In this paper, we use a Vector Error Correction Model (VECM) for each PIC to gauge the impact of global and regional growth spillovers. The analysis reveals that the impact on PICs' growth from an adverse oil shock would be substantial, and in some cases even larger than from a negative global demand shock. We also assess the spillovers to the financial sector from the deterioration of the global outlook. PICs should continue to rebuild policy buffers and implement growth-oriented structural reforms to ensure sustained and inclusive growth Bibliography Includes bibliographical references Subject Economic development -- Islands of the Pacific Economic forecasting -- Islands of the Pacific Economic development Economic forecasting Economic history International economic integration SUBJECT Islands of the Pacific -- Economic integration Islands of the Pacific -- Economic conditions Subject Pacific Ocean -- Islands of the Pacific Form Electronic book Author Tumbarello, Patrizia, author. Wu, Yiqun, 1976- author. International Monetary Fund. Asia and Pacific Department, issuing body. ISBN 9781475504491 1475504497 9781475533316 1475533314

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