Iceland: Recent Economic Developments

International Monetary Fund

No 1997/015, IMF Staff Country Reports from International Monetary Fund

Abstract: This paper reviews economic developments in Iceland during 1990–96. It analyzes the origins of the current economic expansion associated with a swing in the current account and in emerging inflation pressure. Three driving forces are emphasized: the positive supply shock affecting the fisheries; the expansion of the power intensive industry; and brisk increases in real wages over the past two years (1995–96). The paper highlights that the main sources of upside risks comprise the likely construction of a new aluminum smelter.

Keywords: ISCR; CR; demand; market; investment goods; consumer price inflation; HP filter; current account sustainability; asset price development; saving rate; tax system; saving-investment imbalance; Current account; Output gap; Personal income tax; Current account imbalances; Europe; Global (search for similar items in EconPapers)
Pages: 139
Date: 1997-04-08
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