Transcript P6.1

Measuring and Analyzing
Rapidly Changing Economic
Conditions
Rob Vos
United Nations
Seminar on Early Warning and Business Cycle
Indicators
Scheveningen, The Netherlands
14-16 December 2009
Outline
1. The global crisis and early warning
systems: what for? Do they help? What
exactly should we be monitoring?
2. What analytical frameworks do decide on
what to monitor?
3. How to bridge immediate and future data
gaps?
4. Moving forward and dissemination
•
Towards a new data template
1. Early warning systems
•
Global crisis: a story foretold…but:
–
–
•
Who listened to warnings?
We knew why, didn’t know when
Will better early warning systems help?
–
–
Lessons from Asia crisis and failure to identify systemic risks
Present policy questions: what do we know about
•
•
•
Persisting financial fragilities (e.g. interest rate spreads)
Need for early “exit” strategies (“counter-cyclical stance
measures”)
Impact on poverty and employment?
 Analytical purposes and measurement
issues need to go hand in hand
 Monitoring frameworks should facilitate
communications
Declining interest rate
spreads, but…
Corporate Spreads in Europe and US
(basis points)
Spreads in Emerging Economies
(basis points)
500
1200
Sovereign
Corporate
AAA
1000
400
800
300
600
200
400
100
200
0
0
00
02
04
06
08
Jan-02
Jan-04
Jan-06
Jan-08
… if your AAA, else tight credit
Private-Sector Borrowing Rate
and S-T Policy Rate
(percent)
Corporate Spreads
(basis points; averages of Europe and United
States)
1800
BB
1600
AAA
4
1400
1200
3
1000
800
2
600
Composite real
private
borrow ing rate
Real Short-term
Interest Rate
1
400
200
0
00
2000
0202 04
04
06
08 06
08
09 Q3
0
Jan- Jul- Jan- Jul- Jan07
07
08
08
09
Jul09
May-09
Apr-09
Mar-09
Feb-09
Jan-09
Dec-08
Nov-08
Oct-08
Sep-08
50
Aug-08
Jul-08
Jun-08
May-08
Apr-08
Mar-08
Feb-08
Jan-08
Dec-07
Bank lending also still tight in most
EME’s
60
Asia less China
Latin America
Emerging Europe
China
40
30
20
10
0
1. Early warning systems
•
Global crisis: a story foretold…but:
–
–
•
Who listened to warnings?
We knew why, didn’t know when
Will better early warning systems help?
–
–
Lessons from Asia crisis and failure to identify systemic risks
Present policy questions: what do we know about
•
•
•
Persisting financial fragilities (e.g. interest rate spreads)
Need for early “exit” strategies (“counter-cyclical stance measures”)
Impact on poverty and employment?
 Analytical purposes and measurement issues
need to go hand in hand
 Monitoring frameworks should facilitate better
communication with analysts and policy
makers
2. How to improve monitoring and
analytical frameworks?
•
G20 request for monitoring impact of this and future
crisis on the “vulnerable”
–
–
–
•
Financial surveillance (IMF)
Global Impact and Vulnerability Alert System (GIVAS)
(UN)
Integrated Monitoring and Analysis System (UN/DESA)
Challenges:
–
–
–
‘real-time’ measurements and ex-ante assessments
how to define and measure risks related to global shocks,
their transmissions, and likely effects on developing
countries and various population groups
how to transmit information and “alerts” to policy makers
for policy responses and monitoring of the effectiveness
of these
Integrated
Monitoring
and
Analysis
Framework
(IMAS)
“IMAS”
Example: Trade shocks
• Severe fall in global aggregate demand and its
impact on commodity prices
• Most developing countries severest hit through
trade channels (demand, terms of trade)
• How to measure the trade shocks “real time”?
– Only aggregate high-frequency global trade and
commodity price data
– Link global trends to country level past trends and
vulnerabilities to changes in external demand and
terms-of-trade
Monthly merchandise trade (volume)
Index, average 2000 = 100
300
Advanced Economies
Asia
Emerging Economies (except Asia)
250
200
150
100
09m1
08m1
07m1
06m1
05m1
04m1
03m1
02m1
01m1
00m1
99m1
98m1
97m1
96m1
95m1
50
(Trade shocks as per cent of GDP)
Most severely affected countries grouped by
sector of export specialization:
(Trade shocks as per cent of GDP)
Most severely affected countries grouped by
sector of export specialization:
Further elaboration analytical
framework and measurement
challenges
• Definition of vulnerability indicators (including
composite indicators)
• Incorporating distributional factors:
– Distribution of risks (both global and national level)
– Distribution of impacts (across and within countries)
• Linking better ‘real’ and financial data
• Linking “observed” trends to “confidence”
indicators and to “forward-looking” measures
Matching “observed” and forwardlooking measures
4. Moving forward and
dissemination
• Identify data gaps and development of
new data templates (12 categories)
 Comparative review of the analytical
frameworks used by international agencies
and a selected set of countries have been
undertaken by UNSD
 Use of existing platforms to review
4. Moving forward and
dissemination
• Using existing platforms to review
• Engage users (analysts and policy makers) and
allow flexibility to absorb feedback into data
templates
 Dissemination and reporting is essential
 Public website
http://financialdatalink.sharepointsite.net/default.aspx
 World Economic Vulnerability Monitoring reports (UNDESA) (www.un.org/esa/policy)
 Beyond G20: Country level reporting and dissemination