Person:
Sugawara, Naotaka
Prospects Group, The World Bank
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Fields of Specialization
International economics,
International finance,
Fiscal policy,
Economic growth,
Financial sector development
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Prospects Group, The World Bank
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Last updated
January 31, 2023
Biography
Naotaka Sugawara is a Senior Economist in the Prospects Group at the World Bank. Previously, he was an economist in the Research Department of the International Monetary Fund and in the World Bank’s Office of the Chief Economist for Europe and Central Asia. He also worked in the Poverty Reduction and Economic Management Unit of Europe and Central Asia Region and in the Development Research Group at the World Bank.
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Publication
Fiscal Adjustment in Greece under the Financial Rescue Programme : The Distributional Effects on Greek Households
(Taylor and Francis, 2011-10-04) Sugawara, NaotakaThis article examines the distributional effects of the fiscal adjustment programme in Greece agreed with the European Commission (EC) and the International Monetary Fund (IMF) in 2010. It deals with adjustment measures that are front loaded and directly related to the household welfare: an increase in Value-Added Tax (VAT) and excise rates and a reduction in wages and pensions. Analysing these two effects reveals that the programme decreases the welfare of all households in Greece but that the adverse effects of the adjustment are mitigated in favour of the poor. -
Publication
Would Liberalization Lead to Epidemic Cocaine Consumption?
(Taylor and Francis, 2012-03-05) Loayza, Norman V. ; Sugawara, NaotakaThis article uses cross-country data to estimate the potential effect of drastic reductions in the price of cocaine on the share of the population that consumes this drug. In order to identify movements along the cocaine consumption/demand function, this article instruments for cocaine prices with variables that affect the supply of cocaine. Liberalization of drug policies would produce an increase in the prevalence of cocaine consumption. However, the quantitative evidence presented here suggests that, even if substantial, this increase would not amount to epidemic cocaine use. -
Publication
Bank Flows and Basel III—Determinants and Regional Differences in Emerging Markets
(World Bank, Washington, DC, 2011-04) Ghosh, Swati ; Sugawara, Naotaka ; Zalduendo, JuanThe global financial crisis has led to a range of reform proposals concerning the regulatory framework governing the banking sector collectively referred to as 'Basel III.' Although the proposed reforms are expected to generate substantial benefits by reducing the frequency and intensity of banking crises, concerns have been raised that, in the short term, the costs of moving to higher capital ratios may lead banks to raise their lending rates and reduce lending. This note explores the near-term implications of Basel III capital regulations on bank flows to emerging markets, based on an analysis of the key determinants of these flows. -
Publication
The Crisis Hits Home : Stress-Testing Households in Europe and Central Asia
(World Bank, Washington, DC, 2010-05) Sugawara, Naotaka ; Sulla, Victor ; Taylor, Ashley ; Tiongson, Erwin R.The financial crisis and economic downturn threatens the welfare of more than 160 million people who are poor or are just above the poverty line in the economies of Eastern and Central Europe, the former Soviet Union, and Turkey. This note concerns the findings of recent World Bank analysis (Tiongson et al. 2010) that uses precrisis household data and aggregate macroeconomic outcomes in these countries to simulate the impact of the crisis on households, transmitted via credit market shocks, price shocks, and income shocks. The adverse effects are widespread, with both poor and non-poor households being vulnerable. By 2010, for the region as a whole, it is estimated that some 11 million more people will be in poverty and more than 23 million additional people will find themselves just above the poverty line because of the crisis. -
Publication
Credit-less Recoveries : Neither a Rare nor an Insurmountable Challenge
(World Bank, Washington, DC, 2013-05) Sugawara, Naotaka ; Zalduendo, JuanThis paper examines why some countries experience economic recoveries without pick-up of bank credit (credit-less) and how different this recovery pattern is from the case where credit is increased as an economy recovers (credit-with). To answer these questions, the paper uses quarterly data covering 96 countries and identifies 272 recovery episodes. It finds that more than 25 percent of all recoveries are credit-less and around 45 percent of all credit-less recoveries occurred in 2009-10. It also finds that output and investment growth tends to be lower in credit-less events but, by eight quarters after the trough date, the gap between credit-less and credit-with episodes is mostly exhausted. Results of the probit estimations show that the size of the downturn and the extent of external adjustment are associated with the likelihood of credit-less recoveries. Moreover, fiscal loosening tends to be related to credit-less events while monetary easing and a country's decision to seek an International Monetary Fund-supported program reduce the probability of credit-less recoveries. Finally, the model suggests that many countries in the Europe and Central Asia region were likely to experience credit-less recoveries following the global financial crisis in 2008/09. What is more worrisome for them is the fact that they are facing another negative external shock. -
Publication
What Has Been the Impact of COVID-19 on Debt? Turning a Wave into a Tsunami
(World Bank, Washington, DC, 2021-11) Kose, M. Ayhan ; Nagle, Peter ; Ohnsorge, Franziska ; Sugawara, NaotakaThis paper presents a comprehensive analysis of the impact of COVID-19 on debt, puts recent debt developments and prospects in historical context, and analyzes new policy challenges associated with debt resolution. The paper reports three main results. First, even before the pandemic, a rapid buildup of debt in emerging market and developing economies—dubbed the “fourth wave” of debt—had been underway. Because of the sharp increase in debt during the pandemic-induced global recession of 2020, the fourth wave of debt has turned into a tsunami and become even more dangerous. Second, five years after past global recessions, global government debt continued to increase. In light of this historical record, and given large financing gaps and significant investment needs in many countries, debt levels will likely continue to rise in the near future. Third, debt resolution has become more complicated because of a highly fragmented creditor base, a lack of transparency in debt reporting, and a legacy stock of government debt without collective action clauses. National policy makers and the global community need to act rapidly and forcefully ensure that the fourth wave does not end with a string of debt crises in emerging market and developing economies as earlier debt waves did. -
Publication
Debt and Financial Crises
(World Bank, Washington, DC, 2020-01) Koh, Wee Chian ; Kose, M. Ayhan ; Nagle, Peter S. ; Ohnsorge, Franziska L. ; Sugawara, NaotakaEmerging market and developing economies have experienced recurrent episodes of rapid debt accumulation over the past fifty years. This paper examines the consequences of debt accumulation using a three-pronged approach: an event study of debt accumulation episodes in 100 emerging market and developing economies since 1970; a series of econometric models examining the linkages between debt and the probability of financial crises; and a set of case studies of rapid debt buildup that ended in crises. The paper reports four main results. First, episodes of debt accumulation are common, with more than 500 episodes occurring since 1970. Second, around half of these episodes were associated with financial crises which typically had worse economic outcomes than those without crises -- after 8 years output per capita was typically 6-10 percent lower and investment 15-22 percent weaker in crisis episodes. Third, a rapid buildup of debt, whether public or private, increased the likelihood of a financial crisis, as did a larger share of short-term external debt, higher debt service cover, and lower reserves cover. Fourth, countries that experienced financial crises frequently employed combinations of unsustainable fiscal, monetary and financial sector policies, and often suffered from structural and institutional weaknesses. -
Publication
Can This Time Be Different? Policy Options in Times of Rising Debt
(World Bank, Washington, DC, 2020-03) Kose, M. Ayhan ; Nagle, Peter S.O ; Ohnsorge, Franziska L. ; Sugawara, NaotakaEpisodes of debt accumulation have been a recurrent feature of the global economy over the past fifty years. Since 2010, emerging and developing economies have experienced another wave of historically large and rapid debt accumulation. Similar past debt buildups have often ended in widespread financial crises in these economies. This paper examines the factors that are likely to determine the outcome of the most recent debt wave, and considers policy options to help reduce the likelihood that it ends again in widespread crises. It reports two main results. First, the rapid increase in debt has made emerging and developing economies more vulnerable to shifts in market sentiment, notwithstanding historically low global interest rates. Second, policy options are available to lower the likelihood of financial crises, and to help manage the adverse impacts of crises when they do occur. These include sound debt management, strong monetary and fiscal frameworks, and robust bank supervision and regulation. The post-crisis debt buildup has coincided with a period of subdued growth as well as the emergence of non-traditional creditors. As a result, policy priorities also need to ensure that debt is spent on productive purposes to improve growth prospects and that all debt-related transactions are transparently reported. -
Publication
Stress-Testing Croatian Households with Debt : Implications for Financial Stability
( 2011-12-01) Zalduendo, Juan ; Sugawara, NaotakaThe purpose of this paper is to stress test the resilience of Croatian households with debt to economic shocks. The shocks not only impact a household's welfare, but also increase the probability of loan default. As a result, there is a direct link between these stress-testing exercises and financial stability risks. The authors find that very few households are at risk as a result of the shocks experienced over the past few years; new vulnerable households represent about 2 percent of all households, 6 percent of households with debt, and 2-3 percent of aggregate banking system assets. This suggests that household over-indebtedness in Croatia is unlikely to become a drag on aggregate economic activity and that financial stability risks remain manageable. One caveat should be noted. Some 27-31 percent of households with debt, representing 8-9 of banking system assets, are vulnerable even before being subjected to an economic shock. Since NPLs were low before the global financial crisis, it can be argued that banks knew something about some of these households that is not captured by household budget surveys. It follows that the calculations in this paper should primarily focus on the increased vulnerability of households as a result of shocks and are likely to represent an upper bound to the financial stability risks faced by Croatia on account of household indebtedness. -
Publication
Banking Flows and Financial Crisis : Financial Interconnectedness and Basel III Effects
( 2011-08-01) Ghosh, Swati R. ; Sugawara, Naotaka ; Zalduendo, JuanThis paper examines the factors that determine banking flows from advanced economies to emerging markets. In addition to the usual determinants of capital flows in terms of global push and local pull factors, it examines the role of bilateral factors, such as growth differentials and economic size, as well as contagion factors and measures of the depth in financial interconnectedness between lenders and borrowers. The analysis finds profound differences across regions. In particular, in spite of the severe impact of the global financial crisis, banking flows in emerging Europe stand out as a more stable region than is the case in other developing regions. Assuming that the determinants of banking flows remain unchanged in the presence of structural changes, the authors use these results to explore the short-term implications of Basel III capital regulations on banking flows to emerging markets.