A Few White Papers
you are currently viewing::IMF Working Paper-Optimal Exchange Rate Policy with Oil ShocksFebruary 20, 2026--Summary We study optimal monetary and exchange rate policy in a small open economy facing oil price shocks. In a model with segmented financial markets that generate endogenous UIP deviations, the first-best allocation is achieved through a combination of interest rate policy and foreign exchange intervention (FXI). Monetary policy stabilizes domestic inflation and the output gap, while FXI targets the UIP wedge to offset financial frictions. Oil price shocks endogenously move the net foreign asset position, giving rise to financial imbalances that make FXI essential-a mechanism distinct from exogenous financial shocks highlighted in the literature. Quantitatively, for a calibrated oil exporter, suboptimal regimes such as a free float or a simple peg entail sizable welfare losses of around 2% in consumption-equivalent terms, though peg, and especially peg with fuel subsidies, can outperform free floats. Overall, FXI is crucial to break the destabilizing link between real commodity shocks and financial risk premia. Source: imf.org |
Four Futures for the New Economy: Geoeconomics and Technology in 2030
January 12, 2025-Four Futures for the New Economy: Geoeconomics and Technology in 2030 explores how the powerful interplay between geopolitical shifts and rapid technological change is reshaping the global economic landscape.
The Multi-Trillion Dollar Growth Opportunity: New Report Shows Green Economy Expected to Surpass $7 Trillion in Annual Value by 2030
December 2, 2025-New report reveals that green revenues are growing twice as fast as conventional revenues on average, while companies involved in green markets often secure cheaper capital and typically enjoy valuation premiums.
Yet green markets are moving at different speeds, with mature solutions such as solar, wind, batteries and electric vehicles achieving cost competitiveness at the global level, while costly technologies such as low-carbon hydrogen and carbon capture, utilization and storage (CCUS) require substantial support to bend the cost curve.
