Iceland: Selected Issues
This paper examines Iceland’s expenditure policy, especially five expenditure pressure points, as well as capital flows and monetary policy effectiveness in small open economies. The postcrisis fiscal adjustment demanded painful choices, with spending on healthcare, education, and investment sufferi...
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ftrepec:oai:RePEc:imf:imfscr:2016/180 2024-04-14T08:13:40+00:00 Iceland: Selected Issues International Monetary Fund http://www.imf.org/external/pubs/cat/longres.aspx?sk=43997 unknown http://www.imf.org/external/pubs/cat/longres.aspx?sk=43997 preprint ftrepec 2024-03-19T10:41:22Z This paper examines Iceland’s expenditure policy, especially five expenditure pressure points, as well as capital flows and monetary policy effectiveness in small open economies. The postcrisis fiscal adjustment demanded painful choices, with spending on healthcare, education, and investment suffering cuts in real terms. While expenditures in these areas have rebounded more recently, there is a room for further decompression. Using quarterly panel data for 18 advanced and emerging small open economies during 2002–15, it finds that monetary policy is focused on inflation developments, but also that domestic interest rates affect capital flows, raising concerns about a reinforcing loop between monetary policy and capital flows. ISCR;CR;monetary policy;cost;GDP; monetary policy effectiveness; health expenditure; expenditure pressure points; monetary policy independence; monetary policy stance; interest cost; Capital flows; Capital inflows; Macroprudential policy instruments; Macroprudential policy; Global; Europe Report Iceland RePEc (Research Papers in Economics) |
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Open Polar |
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RePEc (Research Papers in Economics) |
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This paper examines Iceland’s expenditure policy, especially five expenditure pressure points, as well as capital flows and monetary policy effectiveness in small open economies. The postcrisis fiscal adjustment demanded painful choices, with spending on healthcare, education, and investment suffering cuts in real terms. While expenditures in these areas have rebounded more recently, there is a room for further decompression. Using quarterly panel data for 18 advanced and emerging small open economies during 2002–15, it finds that monetary policy is focused on inflation developments, but also that domestic interest rates affect capital flows, raising concerns about a reinforcing loop between monetary policy and capital flows. ISCR;CR;monetary policy;cost;GDP; monetary policy effectiveness; health expenditure; expenditure pressure points; monetary policy independence; monetary policy stance; interest cost; Capital flows; Capital inflows; Macroprudential policy instruments; Macroprudential policy; Global; Europe |
format |
Report |
author |
International Monetary Fund |
spellingShingle |
International Monetary Fund Iceland: Selected Issues |
author_facet |
International Monetary Fund |
author_sort |
International Monetary Fund |
title |
Iceland: Selected Issues |
title_short |
Iceland: Selected Issues |
title_full |
Iceland: Selected Issues |
title_fullStr |
Iceland: Selected Issues |
title_full_unstemmed |
Iceland: Selected Issues |
title_sort |
iceland: selected issues |
url |
http://www.imf.org/external/pubs/cat/longres.aspx?sk=43997 |
genre |
Iceland |
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Iceland |
op_relation |
http://www.imf.org/external/pubs/cat/longres.aspx?sk=43997 |
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1796311702320447488 |