Targeting inflation – a monetary policy strategy that has been successfully used in several developed countries – has become an increasingly attractive alternative to nominal exchange rate targeting in emerging economies. This column compares recent experiences with the two policy regimes in Egypt, Jordan, Lebanon, Morocco, Tunisia and Turkey – and outlines the key requirements for the effective adoption of inflation targeting.
Emerging economies are often subject to currency crises and foreign debt crises around the same time. This column explores the links between these phenomena in five MENA economies – Egypt, Jordan, Morocco, Tunisia and Turkey – and the current sustainability of fiscal and exchange rate policies in these countries.
Economic relations between the European Union and their partner countries in the Southern Mediterranean are being reshaped by the New European Neighbourhood Policy and related trade negotiations. This column reports research on the likely impact of greater trade and financial integration on macroeconomic stability and income convergence between the two regions – and the implications for economic policy-makers in the MED countries.
Policy-makers in the European Union and its partners in the Southern Mediterranean have introduced austerity measures to limit further deteriorations in countries’ fiscal and macroeconomic positions. This column reports research on the issues of debt sustainability and the ‘twin deficit hypothesis’ – the idea that there is a strong link between the budget balance and the current account balance. Traditional macroeconomic policies seem largely ineffective for promoting sustainable growth and averting future financial crises.
Are programmes aimed at promoting financial inclusion in the countries of the Middle East and North Africa (MENA) leading to less poverty and income inequality and more financial stability? This column outlines the evidence from a study of eight MENA countries.
New legislation by the Lebanese government, which provides a big boost to the salaries of public sector employees, puts considerable pressure on the country’s public finances. This column outlines the potential impact on inflation, interest rates, the balance of payments and the exchange rate – and the kind of austerity measures that are needed to restore fiscal sustainability without too much damage to potential economic growth.