van Doorn, RalphSuri, VivekGooptu, Sudarshan2012-03-192012-03-192010-07-01https://hdl.handle.net/10986/3865This paper introduces an "index of macroeconomic space" -- demonstrating the ability of a country to run a countercyclical fiscal policy or a fiscal stimulus at any point in time -- to show how a sample of 20 mostly middle-income countries had entered the 2008 global financial crisis with different initial conditions that, in turn, determined their ability to respond to this crisis. Since 2008, many have implemented expansionary fiscal policies and have used up available macroeconomic space. Most have had to resort to increased borrowing by the public sector, both externally and domestically. Can the middle-income countries restore their pre-2008 macroeconomic space (to the level given by historical averages of key macroeconomic variables) or contain it from further deterioration in the medium term? In an endeavor to address this question, this paper shows, through illustrative scenarios, that the room to maneuver for some countries is somewhat limited unless they embark on severe, unprecedented fiscal adjustments or they may need more time to do so than current projections seem to suggest.CC BY 3.0 IGOAGGREGATE DEMANDASSETSBALANCE OF PAYMENTSBANK CREDITBANK LENDINGBASIS POINTSBILATERAL CREDITORSBOND INDEXBOND ISSUANCESBONDSBORROWING COSTSCAPITAL FLOWCAPITAL FLOWSCAPITAL MARKETCAPITAL MARKETSCENTRAL BANKSCOMMERCIAL BANKSCOMMODITIESCOMMODITYCOMMODITY PRICECOMMODITY PRICESCONTINGENT LIABILITIESCONTINGENT LIABILITYCREDIBILITYCREDIT EXPANSIONCREDIT GROWTHCREDIT LINECREDIT MARKETSCREDITORSCURRENT ACCOUNTCURRENT ACCOUNT BALANCESCURRENT ACCOUNT DEFICITCURRENT ACCOUNT DEFICITSCURRENT ACCOUNT SURPLUSESDEBTDEBT ACCUMULATIONDEBT BURDENSDEBT CRISISDEBT DYNAMICSDEBT INSTRUMENTSDEBT LEVELDEBT LEVELSDEBT MANAGEMENTDEBT MANAGEMENT CAPACITYDEBT PORTFOLIOSDEBT RATIODEBT REDUCTIONDEBT RELIEFDEBT SOURCEDEBT STOCKSDEBT SUSTAINABILITYDEBT SUSTAINABILITY ANALYSESDEVALUATIONDEVELOPING COUNTRIESDEVELOPING COUNTRYDOMESTIC CREDITDOMESTIC CURRENCYDOMESTIC DEBTDOMESTIC INTEREST RATEECONOMIC DOWNTURNECONOMIC OUTLOOKEMERGING MARKETEMERGING MARKET BONDEMERGING MARKETSEXCHANGE RATEEXCHANGE RATE MOVEMENTSEXCHANGE RATESEXPANSIONARY FISCAL POLICIESEXPANSIONARY POLICIESEXPENDITUREEXPENDITURESEXPORTEREXPORTERSEXPORTSEXTERNAL DEBTEXTERNAL DEBT BURDENSEXTERNAL DEBT SUSTAINABILITYEXTERNAL FINANCINGEXTERNAL PUBLIC DEBTFEDERAL RESERVEFINANCIAL CRISISFINANCIAL MARKETFINANCIAL MARKETSFINANCIAL POSITIONFINANCIAL SECTORFINANCIAL SECTOR DEVELOPMENTFINANCIAL STRUCTUREFISCAL BALANCEFISCAL BALANCESFISCAL CONSOLIDATIONFISCAL DEFICITSFISCAL EXPENDITUREFISCAL POLICIESFISCAL POLICYFIXED EXCHANGE RATEFOREIGN DIRECT INVESTMENTFOREIGN EXCHANGEFOREIGN EXCHANGE RESERVESFOREIGN EXCHANGE RISKGDPGDP DEFLATORGDP PER CAPITAGLOBAL ECONOMIC PROSPECTSGOVERNMENT REVENUEGROSS DEBTGROWTH RATEGROWTH RATESHIGH DEBTINCOMEINDEBTEDNESSINFLATIONINFLATION TARGETINGINFLATIONARY PRESSUREINFLATIONARY PRESSURESINSTRUMENTINTEREST EXPENDITUREINTEREST RATESINTERNATIONAL BANKINTERNATIONAL CAPITALINTERNATIONAL CAPITAL FLOWSINTERNATIONAL CAPITAL MARKETSINTERNATIONAL CREDITINTERNATIONAL INTERESTINTERNATIONAL INTEREST RATESINTERNATIONAL MARKETINVENTORYLEVELS OF DEBTLIQUIDITYLIQUIDITY SUPPORTLOCAL CURRENCYLOW DEBTLOW-INCOME COUNTRIESMACROECONOMIC MANAGEMENTMACROECONOMIC POLICIESMACROECONOMIC STABILITYMACROECONOMIC VARIABLESMARKET ACCESSMARKET CONDITIONSMARKET PARTICIPANTSMATURITIESMIDDLE-INCOME COUNTRIESMIDDLE-INCOME COUNTRYMONETARY FUNDMONETARY POLICYNATIONAL INCOMENET DEBTNET EXTERNAL DEBTNOMINAL INTEREST RATENUMERICAL VALUEOUTPUTOUTSTANDING CLAIMSPOLICY RESPONSEPOLITICAL CYCLEPORTFOLIOPORTFOLIO CAPITALPORTFOLIO EQUITYPORTFOLIOSPOTENTIAL OUTPUTPRICE RISKSPRIVATE CREDITPRIVATE EXTERNAL DEBTPUBLIC DEBTPUBLIC DEBT STOCKPUBLIC FINANCESPUBLIC SPENDINGREAL GDPREMITTANCESRETURNSRISK ASSESSMENTSSAFETY NETSHARE OF INCOMESHORT-TERM DEBTSOCIAL SAFETY NETSOVEREIGN DEBTSOVEREIGN ENTITIESSTOCK OF DEBTSUB-NATIONAL ENTITIESSUSTAINABILITY ANALYSESSWAPSWAPSTOTAL DEBTTOTAL EXTERNAL DEBTTREASURIESTROUGHUNEMPLOYMENTWARRANTSDo Middle-Income Countries Continue to Have the Ability to Deal with the Global Financial Crisis?World Bank10.1596/1813-9450-5381