Growth at Risk: Concept and Application in IMF Country Surveillance

40 Pages Posted: 8 Apr 2019

See all articles by A. Prasad

A. Prasad

International Monetary Fund (IMF)

Selim Elekdag

Johns Hopkins University - Department of Economics

Phakawa Jeasakul

International Monetary Fund (IMF)

Romain Lafarguette

International Monetary Fund; European Central Bank (ECB)

Adrian Alter

International Monetary Fund

Alan Feng

Princeton University - Department of Economics; International Monetary Fund (IMF)

Changchun Wang

International Monetary Fund (IMF)

Date Written: February 2019

Abstract

The growth-at-risk (GaR) framework links current macrofinancial conditions to the distribution of future growth. Its main strength is its ability to assess the entire distribution of future GDP growth (in contrast to point forecasts), quantify macrofinancial risks in terms of growth, and monitor the evolution of risks to economic activity over time. By using GaR analysis, policymakers can quantify the likelihood of risk scenarios, which would serve as a basis for preemptive action. This paper offers practical guidance on how to conduct GaR analysis and draws lessons from country case studies. It also discusses an Excel-based GaR tool developed to support the IMF's bilateral surveillance efforts.

Keywords: Interest rates on loans, Economic growth, Economic recovery, External sector, Real interest rates, downside risk, macrofinancial linkages, financial stability, Gar, financial condition, forecast horizon, article IV consultation, quantiles

JEL Classification: E10, E17, F44, G10, G1, E01, G21, E52, E63, F16

Suggested Citation

Prasad, Ananthakrishnan and Elekdag, Selim and Jeasakul, Phakawa and Lafarguette, Romain and Alter, Adrian and Feng, Alan and Wang, Changchun, Growth at Risk: Concept and Application in IMF Country Surveillance (February 2019). IMF Working Paper No. 19/36. Available at SSRN: https://ssrn.com/abstract=3367421

Ananthakrishnan Prasad (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Selim Elekdag

Johns Hopkins University - Department of Economics ( email )

3400 Charles Street
Baltimore, MD 21218-2685
United States
410-516-7601 (Phone)

Phakawa Jeasakul

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Romain Lafarguette

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Adrian Alter

International Monetary Fund ( email )

700 19th St NW
Washington, DC 20431
United States

Alan Feng

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Changchun Wang

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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