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Iceland: Staff Report for the 2006 Article IV Consultation

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  • International Monetary Fund

Abstract

Over the last three years, a rapid expansion in domestic demand has dramatically widened the current account deficit in Iceland. Demand expanded faster than supply, and evidence of overheating is widespread. Monetary policy has tightened, but, until recently, the impact has been channeled primarily through the exchange rate. Despite hikes in the policy rate, increased competition in the mortgage market eased household credit conditions, and household indebtedness has surged. The financial market turbulence early in the year ended the favorable conditions that had allowed banks to fund rapid balance sheet growth.

Suggested Citation

  • International Monetary Fund, 2006. "Iceland: Staff Report for the 2006 Article IV Consultation," IMF Staff Country Reports 2006/296, International Monetary Fund.
    • Handle: RePEc:imf:imfscr:2006/296
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    3. Robert M Stern, 2009. "Trade in Financial Services--Has the IMF Been Involved Constructively?," Working Papers 587, Research Seminar in International Economics, University of Michigan.
    4. Marinheiro, Carlos Fonseca, 2008. "Ricardian equivalence, twin deficits, and the Feldstein-Horioka puzzle in Egypt," Journal of Policy Modeling, Elsevier, vol. 30(6), pages 1041-1056.
    5. Robert M. Stern, 2011. "Trade in Financial Services—Has the IMF been Involved Constructively?," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 5(1), pages 65-92, February.
    6. Al-Mashat Rania & Billmeier Andreas, 2008. "The Monetary Transmission Mechanism in Egypt," Review of Middle East Economics and Finance, De Gruyter, vol. 4(3), pages 32-82, September.
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    11. Mr. Manmohan S. Kumar & Mr. Dennis P Botman, 2007. "Global Aging Pressures: Impact of Fiscal Adjustment, Policy Cooperation, and Structural Reforms," IMF Working Papers 2007/196, International Monetary Fund.
    12. World Bank, 2010. "Baltic States and Poland Trade Logistics Review," World Bank Publications - Reports 22292, The World Bank Group.
    13. Calmfors, Lars, 2011. "The Swedish Fiscal Policy Council," Seminar Papers 769, Stockholm University, Institute for International Economic Studies.
    14. Honohan, Patrick & Donovan, Donal & Gorecki, Paul & Mottiar, Rafique, 2010. "The Irish Banking Crisis: Regulatory and Financial Stability Policy," MPRA Paper 24896, University Library of Munich, Germany.
    15. Mr. Mark J Flanagan, 2008. "Resolving a Large Contingent Fiscal Liability: Eastern European Experiences," IMF Working Papers 2008/159, International Monetary Fund.
    16. Martin Gould, 2010. "Managing manna from below: sovereign wealth funds and extractive industries in the Pacific," Economic Roundup, The Treasury, Australian Government, issue 1, pages 63-86, April.
    17. Richter, Kaspar, 2009. "Changes in Subjective Well-Being in Timor-Leste on the Path to Independence," World Development, Elsevier, vol. 37(2), pages 371-384, February.
    18. Tommaso Nannicini & Andreas Billmeier, 2011. "Economies in Transition: How Important Is Trade Openness for Growth?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 73(3), pages 287-314, June.
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    20. Nguyen Tra Ngoc Vy, 2016. "Does Profitability affect Debt Ratio? Evidence from Vietnam Listed Firms," Journal of Finance and Economics Research, Geist Science, Iqra University, Faculty of Business Administration, vol. 1(2), pages 87-100, October.
    21. Luke McInerney & Chris Nadarajah & Frances Perkins, 2007. "Australia’s infrastructure policy and the COAG National Reform Agenda," Economic Roundup, The Treasury, Australian Government, issue 1, pages 17-49, February.

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