The current financial market meltdown being witnessed in the United States and other advanced economies will likely lead to longer and deeper economic downturns in some of these countries, according to new IMF research.
An analytic chapter published in the October 2008 World Economic Outlook (WEO) examines the impact of the financial shocks on the world economy.

"Economies like the United States, with more arms-length or market-based financial systems, seem to be particularly vulnerable to sharp contractions in activity in the face of financial stress," Charles Collyns, Deputy Director in the IMF's Research Department, said at a press briefing today. Citing the chapter, "Financial Stress and Economic Downturns," he added that "this is because leverage tends to be more procyclical in these economies, which means that when a shock hits the financial system, the process of deleveraging can be more severe, and the risks of a credit crunch are greater."

However, other factors also play a role in determining the impact of financial stress on the economy. In the case of the United States, the research notes, the health of the nonfinancial corporate sector and the timely and decisive reaction of the Federal Reserve in lowering interest rates have so far helped the country avoid slipping into a recession.

Main WEO forecast

The main forecasting chapters of the World Economic Outlook (WEO) will be released on October 8, two days prior to the IMF-World Bank Annual Meetings in Washington, D.C. The meetings, which bring together finance ministers and other leading economic and financial experts from all over the world, will take on a special significance this year—being conducted amid a global financial crisis of unprecedented scale and depth.

WEO analytic chapters

In addition to the chapter on financial stress and economic downturns, the other WEO analytic chapters examine the question of whether inflation continues to be a threat at a time when commodity prices have seen declines from their historical peaks; the value of fiscal policy as a countercyclical tool; and the divergent patterns of current account balances across a sample of emerging economies in Asia and Europe.

Click here to read short accounts of all four analytic chapters:

Chapter 3: Inflation Risks Remain Despite Slowing Growth
Commodity prices will likely remain high and volatile, contributing to risks of second-round effects—such as wage hikes—across a range of emerging and developing economies, and further monetary policy tightening may be still relevant to contain these inflationary pressures, according to new IMF research.

Chapter 4: Financial Stress Likely to Hit Real Economy Hard
Episodes of financial turmoil that are characterized by stress in commercial and investment banks are more likely to be associated with severe and protracted economic downturns, according to new IMF research.

Chapter 5: Making Fiscal Stimulus Effective during Downturns
A new IMF study finds that although fiscal policy is a potentially valuable tool for stimulating growth, it can easily do more harm than good if it is not implemented well. Tax cuts or spending increases that make debt unsustainable are likely to cause output to fall, not rise.

Chapter 6: Lessons from Cross-Regional Analysis
A new IMF study explores the patterns of current account balances of emerging economies—especially in emerging Asia and emerging Europe—and asks why they have become much more diverse in recent years and what those differences mean for external vulnerability in these regions.

good ,very good! 听说过人种文化经济学吗？那可是边缘科学，我就是这个专业还没毕业的学生，可能永远也无法毕业了 ，狮子不吃肉会饿死，猴子不吃肉还有水果树皮，西方哪些权威在计算中国抗经济危机能力时总是设想肉没了，能把中国饿死。

对不起，说走了我

你应该去学比较政治经济学。。呵呵，说什么，你都要说到西方和中国。

编辑：加一句：不过这也是对的，我们身处这个中英文化的交错地带，是应该带着这样的比较眼光看身边发生的一切。否则就辜负了我们的环境。

比较政治经济学的主攻是比较国家政体集团经济运作的特性，如果不结合文化民族特性，得出的研究结果也可能是和实际不附的，所以我才临时瞎编了种族文化经济学，经策爷提醒，应该变成比较文化政治经济学？哈哈哈。