text:
Play/Write: How Unconventional Problem Solving Makes Stories More Exciting
May 5, 2015 May 5, 2015 LaserTimeContributor
For someone who enjoys a great story, is there anything better than a narrative that engages you from the very start? Imagine a world so rich you can almost smell the scents in the air, a delivery so clever it forces you to think in a way you never thought you would. I'm Ryan J. Hodge, author, and I'd like to talk to you about…video games.
Yes, video games. Those series of 'bloops' and blinking lights that — at least a while ago — society had seemed to convince itself had no redeeming qualities whatsoever. In this article series, I'm going to discuss how Donkey Kong, Grand Theft Auto, Call of Duty and even Candy Crush can change the way we tell stories forever.
How Unconventional Problem Solving Makes Stories More Exciting
There's a certain habit one can get into while writing as well as playing video games; the habit of resolving problems in the most straight forward, obvious way possible. Be it with firearms or sharpened sticks, it is easy to think of conflict as an uncomplicated affair of each party dueling the other until one falls over. Unfortunately, this can lead to a bit of creative stagnation and, worse, make combat in a story outright boring.
Take Ultraviolet (2006, film) for example. In this movie, Milla Jovovich's character, Violet, lays waste to the enemy forces with such brutal efficiency that nothing the villains send against her can really be considered a threat. Though the number of enemies is scaled up with every encounter, because Violet's default problem solving mode is pure attack we, the audience, need not even ask ourselves How's she going to get out of this one?
Shoot some guys? Shoot some guys.
Such a modus operandi is more than applicable to a lot of modern video games. The worst offenders, in fact, are some of the most popular on the market; including Halo, Call of Duty, and Battlefield. Despite their financial successes, however, there tends to be little about these titles that players find memorable. However, the moments they do find memorable tend to have little to do with endlessly felling waves of enemies.
In Call of Duty 4: Modern Warfare (Infinity Ward, 2007), perhaps the most effecting moment in the game comes during the few minutes where the action lulls and constant orders are no longer being barked into your ear. A nuclear device has just been detonated and your helicopter was just at the edge of the blast radius. As the sole survivor, you do not find yourself taking pop-shots at inexplicably active enemies, or racing to a safe zone. Instead, you are allowed to wander aimlessly for a few minutes before the radioactive atmosphere claims you.
Curses and drat! The one opponent I couldn't shoot to death!
What might be most remarkable here is how the enemy has displayed his resolve in this scenario. Your opponent has realized that there is no way he can defeat the USMC through conventional means, and has thus deployed a more unconventional countermeasure. While any number of lucky shots may have killed your character more than once up to this point, those deaths are more mundane and circumstantial. Your adversaries' victory in such a scenario doesn't really feel earned. This death, and the totality of the enemy's victory, is all the more significant.
This shows that not all methods of resolving conflict are created equal and the best way to grab an audience's attention is for the hero or the villain to try something new (or, at the very least, something the audience isn't used to).
Early levels in Half-Life 2 (Valve Software, 2004), embrace this notion as players switch between dashing unarmed from rooftop to rooftop, trading fire with enemies in cramped sewage tunnels, and culminating in dodging a relentless attack helicopter in a weaponless hovercraft. Each segment demands something different from the player, and while the game becomes a bit more homogenous later on, these rapid changes in demands encourage greater 'on the fly' thinking.
In fact, Valve has stated in multiple commentaries on their games that they remain mindful of player 'combat fatigue' throughout the design process. Their understanding is that visceral, intense combat should be punctuated by puzzles or exploration. However, they will often blend these elements by creating 'puzzle enemies'. Rather than force the player into a static confrontation with these opponents where the outcome must be decided right then and there, puzzle enemies constantly hound the player; forcing him to exhaust his resources and act with increasing desperation.
Heroes finding themselves in desperate scenarios and improvising creative solutions are a staple of the adventure genre. The very first scene of Indiana Jones and the Temple of Doom (1984, film) has our hero skewering his first opponent with a flaming shish kebab.
Never bring a gun to a food fight.
The drama in such scenarios is created when the hero finds himself in a situation for which he was not prepared. 4A Games demonstrated a terrific understanding of this fact with their 2013 game, Metro: Last Light. In this title, maintenance of one's equipment is paramount. However, the most difficult equipment to keep functioning are its firearms. As such, players will be very used to prioritizing their guns above everything else; so when they come face-to-face with bulletproof spider creatures, they will quickly have to turn to solutions they may not have expected to employ.
No, the solution is not brown pants.
Instead, the player will have to rely on their flashlight to harm the photo-sensitive creatures. Keeping the flashlight charged and pointed in the right direction at all times marks a drastic change in demands from the player. While our hero could be a crack shot with a full pack of ammunition, it means nothing in the depths of those web infested tunnels as things skitter around in the dark.
However, not all unconventional resolutions must be borne from desperation. In fact, one oft-ignored item in the arsenal of problem solving is simple argument. The 2008 TV series Flashpoint focuses on Toronto's 'Special Response Unit'. While they are kitted with all sorts of high-end weapons and gadgets designed to kill a human being with ease; every time they are forced to use them, it is considered a failure on their part. Instead, they seek to understand what drives their dangerous suspects and talk them down into a peaceful solution.
Be it a group of common thugs or a confused teenager, there's no question as to whether the SRU is capable of dispatching their opponents. Rather, the tension arises in the question of whether they will have to dispatch their adversaries.
Long story short: he doesn't use his head, and someone loses theirs.
While many writers may not appreciate this, seeking to avoid a firefight can be just as tense as executing one. Tarantino's Inglorious Basterds (2009, film) features a remarkably dramatic scene wherein our heroes meet with a contact in a crowded pub in occupied France. While they are speaking in German, their accent seems strange to one of the Wehrmacht soldiers at the pub, and thus our heroes must quickly generate a lie about what region of Germany they hail from or stand revealed as infiltrators. This scene tortures the audience as the protagonists stand on the precipice of violence, knowing that a single seam in their story will mean their doom.
The narrative stakes may not reach the same heights in Eidos' Deus Ex: Human Revolution (2011), but there are multiple dialogue bosses sprinkled throughout. These encounters, though rarer than I'd personally like them, allow the player to defuse a scenario without violence or perfidy — but only if he can get a proper read on his opponent.
Even the climax to a story can be made much more interesting through an argument, even if it's relatively quiet when compared to the rest of the narrative. Meeting "The Master" in Interplay's 1997 post-apocalyptic RPG, Fallout can be resolved with a simple dialogue tree; despite the brutal combat present in the rest of the game. While the player may choose to simply attack The Master in an epic brawl, if he has instead sufficiently explored the wasteland; he has the option to not only talk to The Master, but convince him that the villain's entire plan is futile without further bloodshed at all.
The satisfaction to be found here is not in the player's own cleverness, but the fact that he went the extra mile to learn everything about his enemy. By considering the Master, and his army to be more than some nuisance to stamp out, he stumbled upon a solution that he, and ONLY he, could arrive at. Anyone with a machinegun could have stormed the Master's fortress, but only our hero could walk in armed with nothing but facts and walk back out again.
Remember, it never hurts to open with a compliment.
And so we see that being the most skilled fighter on the field still doesn't make a character all that special, but those who are most capable of adapting to their circumstances are. So put down the gun before you pick up the pen. Who knows? It just might make you a better writer.
Ryan J. Hodge is a science fiction author and is a Games Industry veteran (His opinions are his own). His latest book, Wounded Worlds: Nihil Novum, is available now for eBook & Paperback.
You can now follow Ryan on Twitter @RJHodgeAuthor
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I suppose almost all shooters have heard of cowboy action shooting by now. One of the fastest growing segments of the shooting sports. Cowboy Action Shooting continues to attract new shooters even though it has been around for a long time. It was inspired by the movie " The Wild Bunch"
The firearms used are limited to the kind that were produced before 1899.
Handguns are limited to single action revolvers.
Rifles can be lever action or slide action but most must have exposed hammers and must in "pistol calibers."
Shotguns can be either double barrel (external hammers or hammerless), or slide action (with a hammer) of the types made before 1899.
The rules are the shooters adopt a handle (cowboy name) and wear period clothing.
The matches are broken up into different western theme scenarious.
FOR MORE INFO. CHECK OUT THE SASS WEB SITE.
Knock the dirt off your spurs and oil up your hog leg, pilgrim. Cowboy Shooting is on the 4th Saturday of every month @ 10 am.


The word 'mandala' is loosely translated as 'circle'.
Mandala Gardens are round in design and are used on small plots of land, usually with shallow or compacted soil. They can be farmed intensively and most farmers can produce crops from them all year round when managed well. They are usually found on a slope and will capture rainwater runoff in the centre, which is especially useful in the dry season. Their circular design makes them easier to move through, with no danger of stepping on the precious crops. A mixture of different vegetables is recommended for planting.
As a fellow farmer, who appreciates soil, cares for cows and is lucky enough not to go to bed hungry, I just love Send a Cow gifts.


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Have fun at any age! Please contact us if you have any questions or would like to reserve a campsite.
Thank you for visiting & hope to see you soon!


This holiday season instead of getting your family more electronics or toys treat them to a family vacation next summer. It is the perfect gift to bring your family together and put down the distractions and spend some quality time together. With a ton of amenities at our Montana Dude Ranch, there will be something for everyone on your summer trip. It truly will be the ideal present for everyone.
Enjoy endless recreation at our Montana Dude Ranch. If one kid loves the water let them jump in and enjoy all the water sports such as sailing, stand-up paddle boarding, and kayaking. If another child loves sports set them loose and let them play basketball, volleyball, tennis, and so much more. During the summer there are friendly and trusted counselors to help guide your children and offer activities to entertain children of all ages, so you can take a moment for yourself and relax and enjoy your vacation too.
During your trip, you will be able to explore nature and spend your time outdoors. It can be hard in the summertime with sports and activities to make sure that you spend some quality time outdoors. At Averill's Flathead Lake Lodge we embrace the outdoors. Surrounded by Flathead Lake you will have endless water activities, but you can also explore the surrounding forests. Enjoy our 2,000-acre private ranch on horseback exploring mountain wilderness, lake views, and our secluded elk preserve. Our riding program allows you to choose how much or how little you would like to ride during your week at the Lodge.
Our Montana Dude Ranch offers a rustic ranch atmosphere, endless recreational activities, and unmatched hospitality by the Averill staff. You do not have to worry about cooking meals or cleaning because we take care of those details, so all you have to do is spend time with your family. Put down the phones and the ipads and this year gift your loved ones with quality time together.


text:
package net.kbrz.pokedroid.models.pokemon;

import com.google.gson.annotations.SerializedName;

import net.kbrz.pokedroid.models.PokeDroidModel;
import net.kbrz.pokedroid.models.commons.NamedApiResource;
import net.kbrz.pokedroid.models.commons.VersionGameIndex;

import java.util.List;

/**
 * @author Konrad Brzykcy.
 */

@SuppressWarnings("unused")
public class Pokemon extends PokeDroidModel {

    @SerializedName("id")
    private Integer id;
    @SerializedName("name")
    private String name;
    @SerializedName("base_experience")
    private Integer baseExperience;
    @SerializedName("height")
    private Integer height;
    @SerializedName("is_default")
    private Boolean isDefault;
    @SerializedName("order")
    private Integer order;
    @SerializedName("weight")
    private Integer weight;
    @SerializedName("abilities")
    private List<PokemonAbility> abilities;
    @SerializedName("forms")
    private List<NamedApiResource> forms;
    @SerializedName("game_indices")
    private List<VersionGameIndex> gameIndices;
    @SerializedName("held_items")
    private List<PokemonHeldItem> heldItems;
    @SerializedName("location_area_encounters")
    private String locationAreaEncounters;
    @SerializedName("moves")
    private List<PokemonMove> moves;
    @SerializedName("sprites")
    private PokemonSprites sprites;
    @SerializedName("species")
    private NamedApiResource species;
    @SerializedName("stats")
    private List<PokemonStat> stats;
    @SerializedName("types")
    private List<PokemonType> types;

    public Integer getId() {
        return id;
    }

    public void setId(Integer id) {
        this.id = id;
    }

    public String getName() {
        return name;
    }

    public void setName(String name) {
        this.name = name;
    }

    public Integer getBaseExperience() {
        return baseExperience;
    }

    public void setBaseExperience(Integer baseExperience) {
        this.baseExperience = baseExperience;
    }

    public Integer getHeight() {
        return height;
    }

    public void setHeight(Integer height) {
        this.height = height;
    }

    public Boolean getDefault() {
        return isDefault;
    }

    public void setDefault(Boolean aDefault) {
        isDefault = aDefault;
    }

    public Integer getOrder() {
        return order;
    }

    public void setOrder(Integer order) {
        this.order = order;
    }

    public Integer getWeight() {
        return weight;
    }

    public void setWeight(Integer weight) {
        this.weight = weight;
    }

    public List<PokemonAbility> getAbilities() {
        return abilities;
    }

    public void setAbilities(List<PokemonAbility> abilities) {
        this.abilities = abilities;
    }

    public List<NamedApiResource> getForms() {
        return forms;
    }

    public void setForms(List<NamedApiResource> forms) {
        this.forms = forms;
    }

    public List<VersionGameIndex> getGameIndices() {
        return gameIndices;
    }

    public void setGameIndices(List<VersionGameIndex> gameIndices) {
        this.gameIndices = gameIndices;
    }

    public List<PokemonHeldItem> getHeldItems() {
        return heldItems;
    }

    public void setHeldItems(List<PokemonHeldItem> heldItems) {
        this.heldItems = heldItems;
    }

    public String getLocationAreaEncounters() {
        return locationAreaEncounters;
    }

    public void setLocationAreaEncounters(String locationAreaEncounters) {
        this.locationAreaEncounters = locationAreaEncounters;
    }

    public List<PokemonMove> getMoves() {
        return moves;
    }

    public void setMoves(List<PokemonMove> moves) {
        this.moves = moves;
    }

    public PokemonSprites getSprites() {
        return sprites;
    }

    public void setSprites(PokemonSprites sprites) {
        this.sprites = sprites;
    }

    public NamedApiResource getSpecies() {
        return species;
    }

    public void setSpecies(NamedApiResource species) {
        this.species = species;
    }

    public List<PokemonStat> getStats() {
        return stats;
    }

    public void setStats(List<PokemonStat> stats) {
        this.stats = stats;
    }

    public List<PokemonType> getTypes() {
        return types;
    }

    public void setTypes(List<PokemonType> types) {
        this.types = types;
    }
}

redpajama_set_name: RedPajamaGithub


Religion and Characters in Marvel Team-Up (vol. 1) #10 (June 1973): "Time Bomb!"
This story was indexed from secondary sources only. The character list above is not necessarily comprehensive. Webpage for Marvel Team-Up #10 (June 1973) created 27 September 2010. Last modified 26 December 2013.


text:
Oct. 17, 2019 / 10:22 AM
'Peter Rabbit' runs away from home in first teaser for upcoming sequel
Wade Sheridan
Oct. 17 (UPI) -- James Corden's animated bunny Peter Rabbit leaves his home behind in the first teaser trailer for upcoming sequel, Peter Rabbit 2: The Runaway.
The clip, released Thursday, begins with Peter's human friend Bea (Rose Byrne) marrying his former rival Thomas (Domhnall Gleeson).
Peter, who has become somewhat of a celebrity due to the success of Bea's book about his life, still can't shake his reputation for being mischievous.
Peter then runs away from home and journeys far away by using a train. His new life becomes filled with trials, tribulations and new adventures.
"Adventuring out of the garden, Peter finds himself in a world where his mischief is appreciated, but when his family risks everything to come looking for him, Peter must figure out what kind of bunny he wants to be," reads the synopsis.
Peter Rabbit 2: The Runaway, is set to hit theaters next Easter. David Oyelowo, Elizabeth Debicki and Margot Robbie also provide voices.
Angelina Jolie relates to 'Maleficent' motherhood issues 'Holiday in the Wild': Kristin Davis falls for Rob Lowe in first trailer 'Lady and the Tramp' comes to life in new live-action trailer Josh Gad 'wept' at 'Frozen 2': 'Stunning and surprising'
Movies // 6 hours ago
Al Pacino answers fan questions on 'Kimmel'
Jan. 17 (UPI) -- Al Pacino took questions from fans walking on Hollywood Boulevard on "Jimmy Kimmel Live."
Movies // 2 days ago
Margot Robbie says pitching 'Birds of Prey' was 'uphill battle'
Jan. 15 (UPI) -- Margot Robbie, who will reprise Harley Quinn in "Birds of Prey," said she struggled to get a green light for the female-led project.
Jan. 15 (UPI) -- "No Time to Die" producer Barbara Broccoli said James Bond "can be of any color" but will stay male following Daniel Craig's departure.
'Peter Rabbit 2': Peter goes to save family in new trailer
Jan. 15 (UPI) -- James Corden, Margot Robbie, Domhnall Gleeson and Rose Byrne star in "Peter Rabbit 2: The Runaway."
Billie Eilish to perform theme song for James Bond film 'No Time To Die'
Jan. 14 (UPI) -- Billie Eilish has been selected to write and perform the theme song for upcoming James Bond film, "No Time To Die."
'Black Widow': Scarlett Johansson battles a new villain in latest trailer
Jan. 14 (UPI) -- Scarlett Johansson takes on a new threat in the latest trailer for her solo Marvel film, "Black Widow."
Kathy Bates reacts to Adam Sandler Oscar snub: 'You was robbed!'
Jan. 13 (UPI) -- Kathy Bates attempted to comfort her one-time "Waterboy" co-star Adam Sandler on Monday after she was nominated for an Oscar and he wasn't for their latest films.
'Morbius': Jared Leto craves blood in teaser trailer
Jan. 13 (UPI) -- Jared Leto plays the Marvel Comics character Morbius the Living Vampire in "Morbius," co-starring Matt Smith, Adria Arjona and Jared Harris.
'Joker' leads with 11 Oscar nods; Scarlett Johansson nominated in 2 categories
Jan. 13 (UPI) -- The crime drama "Joker" led the field with 11 nods when Oscar nominations were announced in Los Angeles on Monday morning.
'1917' tops the North American box office with $36.5M
Jan. 12 (UPI) -- World War I picture "1917" is the No. 1 movie in North America, earning $36.5 million in receipts this weekend, BoxOfficeMojo.com announced Sunday.
Nicolas Cage, Kesha attend the 'Color Out of Space' premiere in LA

redpajama_set_name: RedPajamaCommonCrawl


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text:
Major Asset Classes November 2022 Performance Review
By James Picerno of Capital Spectator
Thursday, December 1, 2022 9:03 AM EST
The rebound in global markets strengthened and broadened in November, building on October's rebound. Only commodities lost ground last month. Otherwise, all the major asset classes posted gains, based on a set of proxy ETFs.
Stocks in emerging markets led November's winners. Vanguard Emerging Markets Stock Index Fund (VWO) surged 14.3% last month, the ETF's first monthly gain since May. Despite an unusually strong rally in November, VWO remains deep in the red for the year to date via a loss of 16.1%.
Several other markets also posted strong returns last month, including foreign real estate (VNQI) and developed-markets stocks ex-US (VEA). Both funds enjoyed double-digit gains in November.
US stocks (VTI) and bonds (BND) also rose, although the rallies were relatively modest.
The only loser in November was commodities (GSG), which eased by 1.2%.
The Global Market Index recovered and continued to rebound, posting a second monthly gain. This unmanaged benchmark (maintained by CapitalSpectator.com), which holds all the major asset classes (except cash) in market-value weights, increased by a strong 6.8%–the benchmark's biggest monthly advance in two years. For the year to date, however, GMI is still nursing a steep loss of 14.5%.
Comparing GMI's performance to US stocks (VTI) and bonds (BND) over the past year shows that multi-asset-class portfolios continue to rally in line with the recent gains for equities and fixed-income securities.
Waiting (And Hoping) For A Bottom In Global Equity Markets
Is The Bond Market Pricing In The End Game For Rate Hikes?
Stocks In Developed Markets Ex-US Roared Higher Last Week
Disclosures: None.
James Picerno
Editor at The ETF Asset Class Performance Review
James Picerno is a veteran financial journalist and has been writing about portfolio strategies, investment products, and macroeconomics since the early 1990s at Bloomberg, Dow Jones and other ... more
James Picerno is a veteran financial journalist and has been writing about portfolio strategies, investment products, and macroeconomics since the early 1990s at Bloomberg, Dow Jones and other media groups before becoming an independent writer/analyst/consultant in 2008. He's currently working on a book about the linkage between the business cycle and asset pricing.
Picerno is the author of Dynamic Asset Allocation: Modern Portfolio Theory Updated for the Smart Investor (Bloomberg Press, 2010). His articles on finance and economics have appeared in a variety of publications and news outlets, including The Atlantic, Financial Advisor, BankRate.com, and HorsesMouth.com.
Picerno owns and edits The Capital Spectator (CapitalSpectator.com), a finance/investment/economics blog. The Capital Spectator has been quoted by a range of news organizations, including The Wall Street Journal, Reuters and others. In late-2009, the Eastern Economics Journal named Picerno as one of the nation's "top economics bloggers" and he's regularly polled by the Kauffman Foundation for its "Quarterly Survey Of Leading Economics Bloggers."
The Capital Spectator
In this article: BND, VEA, VNQI, GSG, VTI, VWO
BND $72.76
VEA $43.41
VNQI $42.30
GSG $21.59
VTI $204.06
VWO $40.52
Others who follow these stocks All BND VEA VNQI GSG VTI VWO


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text:
Helping Brazil's Poor Heal at Home
David Bornstein
Go to Original Story
Physical illnesses trigger and exacerbate poverty because costs are too high to treat them. The Associação Saúde Criança in Rio de Janeiro counsels helps by assisting families with services such as food, medicine, vocational training, housing, and legal aid, which helps mothers achieve their personal goals.
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Issue Areas:
Community health care
Health care management and administration
Success Factors:
Addressing underlying issues
Cultivating Collaborations
Expanding Access
Meeting people where they are at
Reaching across the aisle
Abortion and Birth, Together
A Buffalo, New York clinic provides a space for both abortions and natural births. In looking at the experiences as a continuum, rather than as juxtiposing sides, the hope is to change how people think about the birth experiences.
Journalist Alissa Quart
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Advancing TB Test Technology, Where It Matters Most
Tuberculosis is still a rampant problem in the developing world. Doctors are looking for even more advanced ways to test for TB beyond the GeneXpert tests.
Journalist Jens Erik Gould
A Housecall to Help With Doctor's Orders
The health problems of millions of Americans are directly related to patients' failure to follow doctors' orders. Community health workers are increasingly successful in New York and other American cities – not to substitute for doctors, but to help patients stick to their treatment plans.
Journalist Tina Rosenberg
An End to Polio in India?
India has, for years, been a hotbed of polio. Supported by the WHO as well as local health-care workers, immunizations have officially rid the country of the disease. There are still challenges in maintaining records and reaching everyone, but the message continously changes and adapts.
Journalist Esha Chhabra
A Racial Gap in Attitudes Toward Hospice Care
Despite years of change, African Americans feel ostracized from the medical care community that is dominated mainly by white people, especially when it comes to hospices. Some are trying to remove the stigma of hospice care as well as make health care systems more fair.
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A Trade Barrier to Defeating AIDS
One-pill-a-day generic AIDS drugs for poor countries are hard to make because each ingredient is patented by a different pharmaceutical company. The Patent Pool provides a way for companies to donate their intellectual property safely.
At a Big Church, a Small Group Health Solution
The best way to lose weight is to join a small group. This article looks at the case study of Saddleback Church in southern California that mixed faith and peer support to help congregates lose weight, including the pastor. Surveys found that 72% of participants lost weight as a result of the program.
At a YMCA Near You, a Course for a Diabetic Nation
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text:
// Copyright (c) Microsoft Corporation. All rights reserved.
// Licensed under the MIT License. See LICENSE in the project root for license information.

using System;
using Microsoft.Common.Core.Services;
using Microsoft.Common.Core.UI.Commands;
using Microsoft.Languages.Editor.Completions;
using Microsoft.Languages.Editor.Controllers;
using Microsoft.Languages.Editor.Text;
using Microsoft.R.Components.InteractiveWorkflow;
using Microsoft.R.Editor;
using Microsoft.R.Editor.Commands;
using Microsoft.R.Editor.Completions;
using Microsoft.R.Editor.Document;
using Microsoft.R.Editor.Formatting;
using Microsoft.VisualStudio.Language.Intellisense;
using Microsoft.VisualStudio.R.Package.Commands;
using Microsoft.VisualStudio.R.Package.Expansions;
using Microsoft.VisualStudio.R.Package.Shell;
using Microsoft.VisualStudio.R.Packages.R;
using Microsoft.VisualStudio.Text;
using Microsoft.VisualStudio.Text.Editor;
using Microsoft.VisualStudio.TextManager.Interop;

namespace Microsoft.VisualStudio.R.Package.Repl.Commands {
    /// <summary>
    /// Main interactive window command controller
    /// </summary>
    public class ReplCommandController : ViewController {
        private readonly ExpansionsController _snippetController;

        public ReplCommandController(ITextView textView, ITextBuffer textBuffer, IServiceContainer services) : base(textView, textBuffer, services) {
            textView.AddService(this);

            var textManager = Services.GetService<IVsTextManager2>(typeof(SVsTextManager));
             textManager.GetExpansionManager(out IVsExpansionManager expansionManager);

            // TODO: make this extensible via MEF like commands and controllers in the editor
            _snippetController = new ExpansionsController(textView, textBuffer, expansionManager, ExpansionsCache.Current, services);
        }

        public static ReplCommandController Attach(ITextView textView, ITextBuffer textBuffer, IServiceContainer services) {
            var controller = FromTextView(textView);
            return controller ?? new ReplCommandController(textView, textBuffer, services);
        }

        public new static ReplCommandController FromTextView(ITextView textView) => textView.GetService<ReplCommandController>();

        public override void BuildCommandSet() {
            var factory = new ReplCommandFactory(Services);
            var commands = factory.GetCommands(TextView, TextBuffer);
            AddCommandSet(commands);
        }

        public override CommandStatus Status(Guid group, int id) {
            if ((NonRoutedStatus(group, id, null) & CommandStatus.SupportedAndEnabled) == CommandStatus.SupportedAndEnabled
                && !IsCompletionCommand(group, id)) {
                return CommandStatus.SupportedAndEnabled;
            }

            var status = _snippetController.Status(group, id);
            if (status != CommandStatus.NotSupported) {
                return status;
            }

            return base.Status(group, id);
        }

        public override CommandResult Invoke(Guid group, int id, object inputArg, ref object outputArg) {
            if (group == VSConstants.VSStd2K) {
                var controller = CompletionController.FromTextView<RCompletionController>(TextView);
                if (controller != null) {
                    if (id == (int)VSConstants.VSStd2KCmdID.RETURN) {
                        return HandleEnter(controller);
                    }

                    if (id == (int) VSConstants.VSStd2KCmdID.SCROLLUP) {
                        return HandleCtrlUp(controller);
                    }

                    if (id == (int)VSConstants.VSStd2KCmdID.CANCEL) {
                        if(HandleCancel(controller)) {
                            return CommandResult.Executed;
                        }
                    }
                }
            } else if (group == VSConstants.GUID_VSStandardCommandSet97) {
                if (id == (int)VSConstants.VSStd97CmdID.F1Help) {
                    var controller = CompletionController.FromTextView<RCompletionController>(TextView);
                    if (controller != null) {
                        // Translate to R help
                        HandleF1Help(controller);
                        return CommandResult.Executed;
                    }
                }
            }

            var status = _snippetController.Status(group, id);
            if (status != CommandStatus.NotSupported) {
                var result = _snippetController.Invoke(group, id, inputArg, ref outputArg);
                if (result.Status != CommandStatus.NotSupported) {
                    return result;
                }
            }

            return base.Invoke(group, id, inputArg, ref outputArg);
        }

        private CommandResult HandleEnter(RCompletionController controller) {
            // If completion is up, commit it
            if (controller.HasActiveCompletionSession) {
                // Check for exact match. If applicable span is 'x' and completion is 'x'
                // then we don't complete and rather execute. If span is 'x' while
                // current completion entry is 'X11' then we complete depending on
                // the 'complete on enter' setting.
                try {
                    var session = controller.CompletionSession;
                    var set = session.SelectedCompletionSet;
                    var span = set.ApplicableTo;
                    var snapshot = span.TextBuffer.CurrentSnapshot;
                    string spanText = snapshot.GetText(span.GetSpan(snapshot));
                    if (spanText != set.SelectionStatus.Completion.InsertionText) {
                        // If selection is does not match typed text,
                        // control completion depending on the editor setting.
                        if (set.SelectionStatus.IsSelected && Services.GetService<IREditorSettings>().CommitOnEnter) {
                            controller.CommitCompletionSession();
                            controller.DismissAllSessions();
                            return CommandResult.Executed;
                        }
                    }
                } catch (Exception) { }
            }

            controller.DismissAllSessions();
            var broker = Services.GetService<ICompletionBroker>();
            broker.DismissAllSessions(TextView);

            var interactiveWorkflowProvider = Services.GetService<IRInteractiveWorkflowProvider>();
            var ops = interactiveWorkflowProvider.GetOrCreate().Operations as IRInteractiveWorkflowOperationsEx;
            ops.ExecuteCurrentExpression(TextView, FormatReplDocument);
            return CommandResult.Executed;
        }

        private CommandResult HandleCtrlUp(RCompletionController controller) {
            TextView.Properties.AddProperty(RCompletionController.IsRHistoryRequest, true);
            controller.DismissAllSessions();
            controller.ShowCompletion(false);
            return CommandResult.Executed;
        }

        private void FormatReplDocument(ITextView textView, ITextBuffer textBuffer, int position) {
            var document = textBuffer.GetEditorDocument<IREditorDocument>();
            if (document != null) {
                var tree = document.EditorTree;
                tree.EnsureTreeReady();
                var fo = new FormatOperations(Services, textView.ToEditorView(), textBuffer.ToEditorBuffer());
                fo.FormatCurrentStatement();
            }
        }

        private bool HandleCancel(RCompletionController controller) {
            if (controller.HasActiveCompletionSession || controller.HasActiveSignatureSession(TextView)) {
                controller.DismissAllSessions();
                return true;
            }

            // If session is reading user input, do not terminate it
            if (!Workflow.RSession.IsReadingUserInput) {
                Workflow.Operations.ClearPendingInputs();
                Workflow.Services.PostCommand(RGuidList.RCmdSetGuid, RPackageCommandId.icmdInterruptR);
            }

            return false;
        }

        private void HandleF1Help(RCompletionController controller)
            => Workflow.Services.PostCommand(RGuidList.RCmdSetGuid, RPackageCommandId.icmdHelpOnCurrent);

        /// <summary>
        /// Determines if command is one of the completion commands
        /// </summary>
        private bool IsCompletionCommand(Guid group, int id) => Find(group, id) is RCompletionCommandHandler;

        /// <summary>
        /// Disposes main controller and removes it from service manager.
        /// </summary>
        protected override void Dispose(bool disposing) {
            TextView?.RemoveService(this);
            base.Dispose(disposing);
        }

        private IRInteractiveWorkflow Workflow {
            get {
                var interactiveWorkflowProvider = Services.GetService<IRInteractiveWorkflowProvider>();
                return interactiveWorkflowProvider.GetOrCreate();
            }
        }
    }
}


In May 2013, financial shock waves hit many emerging markets (EMs). The shock waves came on the heels of testimony to Congress by the chairman of the U.S. Federal Reserve (henceforth "the Fed") that raised the possibility of the Fed tapering its purchase of treasury and agency bonds. This signal followed several years of U.S. monetary easing prior to the global financial crisis, and unconventional monetary policies (UMP) in the United States and other advanced economies (AEs) after the crisis. During this period, EMs generally experienced capital inflows.
However, starting in May 2013 and through early 2014 there was a marked rise in financial market volatility, with sharp corrections in EM asset prices and exchange rates, and a reversal in capital flows. Amid significant concerns about a shifting external environment and slowing domestic economic activity in EMs, experiences and policy responses in EM countries varied.
This paper examines the impact of the Fed's policy announcements on asset prices and capital flows into and out of EMs, with a view to explaining the different reactions across countries by looking at domestic and external factors, and to drawing broad policy lessons. Key findings of this study are that (i) the Fed's monetary policy announcements were correlated with movements in asset prices and capital inflows in EMs; (ii) the effects were greatest during the UMP phase (post-2008) and especially during the period when tapering was first discussed (summer of 2013); (iii) during initial periods of acute and systemic market volatility, asset prices and capital flows were hit more indiscriminately across countries, but over time there was greater differentiation among EMs; (iv) good macroeconomic fundamentals in EMs matter and helped dampen market reactions to U.S. monetary policy shocks; (v) where vulnerabilities existed, emerging markets that acted early and decisively generally fared better; (vi) clear and effective communication by AE central banks concerning exit from unconventional monetary support is important to reduce the risk of excessive market volatility; and (vii) enhanced global cooperation, including a strong global financial safety net, may offer EMs effective protection against market volatility as the global economy transitions away from large-scale liquidity support.
This Staff Discussion Note is structured as follows: Section II recounts the developments in EMs prior to the taper talk in May 2013; Section III discusses markets' reaction during the taper talk and EMs' policy responses; and Section IV concludes with key lessons going forward.
While the impact of QE on stabilizing global economic and financial conditions is beyond the scope of this paper and has been examined elsewhere, recent analysis suggests that it contributed to significant capital flows to EMs, especially to Latin America and Asia (IMF, 2013a). In fact, starting in 2010, there was a marked shift in the flow of capital to EMs, driven by accommodative monetary policy in AEs, a global search for yield, and stronger growth prospects in EMs. During 2010–13, EMs received close to half of all global flows, while capital flows to AEs, particularly to the euro area, declined substantially (Figure 2). This reorientation of flows was most pronounced in Latin America and emerging Asia. In contrast, emerging Europe received substantially fewer flows, as most countries went through a period of deleveraging to reduce high debt built up in the precrisis years.
Portfolio flows, particularly debt, played an increasingly important role in capital flows to EMs (Figure 3). In the precrisis period, foreign direct investment (FDI) was the predominant type of inflow into EMs, with portfolio and other flows being relatively modest. Following the global financial crisis, portfolio flows grew to one in every four dollars entering EMs. Excluding China, which is open mainly to FDI flows, the trend is even more pronounced. In contrast, "other flows" (notably trade credits and bank loans) declined in most regions, reflecting cross-border bank deleveraging. This evidence is consistent with recent literature on the role of UMP in changes in the composition of flows towards portfolio flows (Ahmed and Zlate, 2013).
The changing composition of flows to EMs was accompanied by a shift toward local currency sovereign and corporate bond markets. Foreign holdings of local currency sovereign debt and nonfinancial corporate bond financing rose markedly. In particular, EM corporate bond issuance reached US$630 billion in 2013, or about 2½ percent of EM GDP, compared with only US$13 billion in early 2000. At the same time, the share of EM debt issued in local currency expanded from close to zero in 2000 to more than half the total by 2013.
The relative importance of external factors relative to domestic factors increase somewhat in 2008–12 compared with 2002–07. Based on model estimates of the drivers of capital flows, over half of cumulative flows to EMs during 2008–12 were related to external factors (Figure 4), including AEs' weak growth and expansionary monetary policy, and a global search for yield. But the relative importance of external and domestic factors in explaining capital inflows changed, with external factors driving capital inflows during 2008–11 and domestic factors becoming increasingly more important in driving capital inflows during 2011–12.
The total inflows into these EMs were larger than their fundamentals would suggest (Figure 6). Model estimates suggest an "overflow" (i.e., the amount in excess of what is explained by fundamentals) of about US$500 billion.4 This overflow was highly concentrated, with six of the large EMs (China, Brazil, Mexico, Turkey, Indonesia, and India) receiving 80 percent of the overflow. Several smaller EMs, however, also received significant inflows relative to the size of their economy.5 In particular, bond flows increased more compared with other flows (Figures 6 and 7).
Note: Blue shaded areas represent episodes of surges in bond flows.
Strong credit growth accompanied the surge in capital flows in many countries. While banks continued to channel the bulk of the inflows, the shadow banking sector also grew rapidly in some EMs. At the same time, EM corporates took advantage of the strong appetite for EM debt and favorable financing conditions, including for first-time issuers and lower-rated borrowers (Figure 8). Between 2010 and 2013, EM issuance of below-investment-grade debt jumped from 15 to 35 percent of total debt issuance. India and Turkey experienced particularly large increases. However, elevated corporate leverage increased these countries' sensitivity to slowing economic growth and earnings, tighter financial conditions and higher interest rates, and more depreciated exchange rates.
While private inflows and debt increased in many EMs, policy buffers initially increased as well. Having experienced or observed several EM crises during 1980–2000, EMs in Asia and Latin America had learned some important lessons—namely, the value of strong public finances, low inflation, sustainable current account deficits, and building buffers to cushion against negative shocks. The advent of the early 2000s witnessed, by and large, a period of continued fiscal consolidation and relative tranquility. In general, foreign exchange reserves remained comfortable in most EMs, and some countries built reserve positions beyond what could be necessary for precautionary purposes.6 The Eastern European countries were an exception, accumulating significant imbalances prior to 2008, and going through a painful boom and bust.
Note: GIR stands for Gross International Reserves.
Some countries introduced capital flow management measures and intervened in the foreign exchange market to limit appreciation pressure. However, owing in part to the comfortable reserve position built in earlier years and to perceptions regarding the persistence of capital flows, foreign exchange intervention was more limited (in relation to inflows). The resistance index, which measures the share of exchange rate pressures that was met by a change in reserves, fell in 2010–12 and was lower for countries that received the largest share of capital flows (see the top right panel of Figure 11).
Over time, stronger exchange rates and domestic demand led to a gradual widening of current account deficits or narrowing of surpluses in most countries (Figures 10 and 11).8 Short-term external debt became a more significant part of financing, rising considerably in some countries (bottom left panel of Figure 11).
Fiscal and monetary policy was initially loosened in EMs to counter the negative impact of the global financial crisis on domestic economic activity in 2008–09. But macroeconomic policies remained accommodative even as output gaps closed, equity prices rose, and bond yields fell markedly (Figure 12). This fueled domestic demand, widening current account deficits, and led to an erosion of policy buffers in some countries, reducing the room for maneuver going forward. Higher external financing needs than before the global financial crisis left many EMs more vulnerable to changes in expectations of global financial conditions.
The decline in policy buffers occurred amid a synchronized slowdown in EMs (Figure 13). In around 90 percent of the 25 largest EMs, growth in 2013 was weaker than the average of 2003–07. This slowdown was driven by both cyclical and structural factors, as well as supply-side and structural constraints on investment and potential output. A recent IMF Staff Discussion Note shows that the slowdown in EMs also reflected less favorable external conditions and weaker terms of trade for many commodity exporters, and tighter financial conditions (Cubeddu and others, 2014). These factors continue to weigh on medium-term growth prospects. Indeed, growth projections in the IMF's October 2014 World Economic Outlook envisage EM medium-term growth at 3 percentage points below where it was predicted to be when the forecast was made in 2010 (Figure 14). The IMF's medium-term outlook for EMs was progressively marked down by more than a half percentage point per year between 2010 and 2013, suggesting continued deterioration in sentiment toward EMs growth prospects.
Sources: IMF, World Economic Outlook; and staff calculations.
1/ More than 70% of sample countries with real GDP growth below the 2003–2007 average.
Against the backdrop of stronger U.S. recovery prospects, the Fed began speaking about prospects for gradually unwinding its unconventional monetary policy in May and June of 2013. This phase—referred to as "taper talk"—and the months that followed saw significant volatility in capital flows into EMs and asset prices globally, particularly in EMs. While unconventional monetary policies by the Fed were not expected to last forever, talk of reducing (or "tapering") the quantity of its asset purchases surprised markets, which responded by significantly revising their expectations of future rate hikes. Sharp market corrections ensued in EMs, including rapid currency depreciations, increases in external financing premia, declines in equity prices, and a slowing in capital flows. These episodes were unusual, and different from the typical market reaction to Fed monetary policy actions.
Why did markets react in the way they did? From the adjustment in long-term and short-term yields, it appears that market participants struggled to read the Fed's policy intentions and perceived the Fed pre-announcement about tapering asset purchases as a signal of an earlier-than-intended tightening of interest rates (Figure 15).9 The correction in short-term rate expectations after the Fed postponed tapering in September 2013 suggests that market participants eventually learned to better read the Fed's policy intentions.
Three broad stylized facts can be drawn from the recent experience.
First, Fed announcements did not always surprise markets equally over time. To single out the channels through which announcements affect markets, it us useful to distinguish between "signaling shocks," which capture information about short- to medium-term intentions to move the policy rate, and "market shocks," which affect term premia and longer-term bonds with information about the degree of policy or macroeconomic uncertainty and the future supply of government bonds.10 The distinction is important, as central banks can more easily mitigate signaling shocks through standard communication. While signaling and market shocks were of roughly equal size during the conventional phase of monetary policy (2000-November 2008), during the taper talk phase, U.S. monetary policy shocks were mostly perceived as market shocks.11 This is similar to the impact of monetary policy announcements in the earlier phase of unconventional monetary policy—from November 2008-May 2013, when bond purchase programs were announced and expanded—when, again, "market" shocks dominated.
Second, the size of EM asset price and capital flow movements on days of U.S. monetary policy announcements were markedly higher during the taper talk phase, especially for bond yields and exchange rates.
Third, the differentiation in market movements widened across countries on days of U.S. monetary policy announcements. This is true of all phases of U.S. monetary policy, though it is most visible during the unconventional monetary policy phases. This differentiation is illustrated in Figure 16, which plot movements in capital flows, exchange rates, equity prices, and bond yields (normalized by historical variances, yielding so-called Z-scores) over the initial months of the taper talk phase.
As noted above, changes in asset prices and capital flows were largest and most significant during the tapering talk phase.12 In fact, these changes were hardly significant during the conventional monetary policy phase. Their significance grew in the initial part of the unconventional monetary policy period, mostly in response to signaling shocks, although signaling shocks themselves were smaller than market shocks. During the tapering phase, signaling shocks generally had larger effects, although by then market shocks also induced significant movements in EM asset prices and capital inflows (Figure 17).
Note: The figure depicts the estimated impact of one unit increase in both the market and signal factors on equity prices (red bars), bond yields (green bars) and exchange rates (blue bars) over 3 different phases of US monetary policy. For each asset type in a given phase, the bar on the left corresponds to the average impact of market shocks and the bar on the right correspond to signal shocks. CMP = conventional monetary policy, UMP = unconventional monetary policy.
External conditions played an important role in the transmission of U.S. monetary policy shocks during the tapering phase. During periods of higher VIX or lower growth in China, the effects of U.S. tapering shocks were amplified. If growth expectations in China during the tapering episode had been as high as during previous years, the average response of equity prices in EMs to a U.S. monetary policy shock would have been 20 percent lower (bond yields would have responded 5 percent less, and exchange rates about as much). Conversely, when it is high, China's growth has served as a cushioning factor for many EMs, particularly those that have close trade links with China.
Eventual differentiation in market pressure during the taper talk phase was mostly based on fundamentals in EMs. Although market reaction was indiscriminate during the initial bout of volatility in May-June 2013, these reactions were shortlived. Market differentiation occurred during the subsequent bouts of volatility. Investors focused particularly on countries with larger external financing needs and macroeconomic imbalances, exerting severe pressure on countries like Brazil, India, Indonesia, Turkey, and South Africa. These five countries saw, on average, bond yields rise by 2½ percentage points, equity markets fall by 13¾ percent, exchange rates depreciate by 13½ percent, and reserves declined by about 4 percent between May 22 and end-August 2013. Since end-2013, there have been additional bursts of market pressure related in part, but not exclusively, to the Fed's decision to taper.13 During these episodes, countries that had taken policy action since May 2013 (e.g., made progress in reducing their macroeconomic imbalances) showed more resilience (e.g., India and Indonesia in early 2014).
MaPP stands for macro-prudential policies.
Note: Green denotes the macro factors that dampen US monetary policy shocks during the UMP phase, and red corresponds to macro factors that amplify the shocks. Striped cells denote coefficients significant at the 10 percent level, and solid cells denote coefficients significant above the 5 percent level.
Countries that in the face of large capital inflows following the global financial crisis had tightened restrictions on those inflows also experienced more muted market reactions, suggesting that these tighter capital flow management measures may have influenced the composition of flows toward less volatile flows. Similarly, countries with a tighter macroprudential policy stance in the run-up to the volatile episodes of 2013 fared better. Exposure to China provides some buffers when the market volatility stems from Federal Open Market Committee announcements. However, when the negative news also emanates from China, then exposure to China does not serve as a buffer. Finally, signaling shocks seem to induce greater differentiation across countries, whereas market shocks seem to affect all countries similarly. This might be because market shocks affect investors' overall risk assessment and thus lead to more widespread portfolio reallocations.
Country-specific shocks in January-February 2014, including a surprise devaluation in Argentina, deterioration in the political situation in Russia and Ukraine, and weaker-than-expected Purchasing Managers Index (PMI) data in China, were the main reasons for volatility in global markets. Compared with May 2013-January 2014, when markets focused on countries with large current account deficits (Brazil, India, Indonesia, South Africa, and Turkey), the focus of markets shifted to countries that experienced relatively large declines in reserves and sizable exchange rate pressures—Ukraine, Argentina, and Kazakhstan (Figure 20).
EMs deployed a range of policy tools to address market volatility (Figure 21). These included monetary policy, fiscal policy, macroprudential policy, capital flow management measures (CFMs), and foreign exchange intervention, as well as providing liquidity into money markets to address specific needs.17 Among these policy tools, monetary policy seems to have been used most often, with most countries raising rates (Brazil, India, Indonesia, Russia, South Africa, and Turkey).18 Liquidity measures were also undertaken to preserve orderly market conditions by ensuring liquidity in money markets were consistent with the intended monetary policy stance (Brazil, India, Indonesia). As highlighted in the IMF's October 2013 Global Financial Stability Report, crowded positions in local markets, lengthening duration, and reduced market liquidity had contributed to the volatility in the EMs. Macroprudential measures, CFMs, and foreign exchange intervention were used less widely across countries. Fiscal policy was least used.
Source: Desk economists, recent FSAPs, and Article IV Staff Reports.
We assess the effectiveness of policy responses through an event analysis for a sample of 12 EMs. These are the countries that were most hit during May-August 2013—that is, countries for which the exchange market pressure index (which combines changes in exchange rates and reserves) exceeds one standard deviation in at least one of those months. They include Brazil, Colombia, India, Indonesia, Malaysia, Mexico, Peru, Poland, Russia, South Africa, Thailand, and Turkey.19 The analysis focuses on markets' reactions following policy announcements and gauges whether policy responses have had a soothing effect on markets. Specifically, we look at whether the policy announcement had a countervailing effect on exchange rate depreciation, equity price declines, and bond yield increases.
The results, which are shown in Figure 22, indicate that many of the policy actions taken were broadly effective in dampening asset price changes (i.e., moderating the impact on currencies, bond yields, and equity prices). Liquidity provision measures dampened the pace of foreign exchange depreciation and the rise in bond yields but did not slow the fall in equity prices. The impact of liquidity provision measures on the pace of depreciation could be interpreted in two different ways: (i) it could reflect confidence effects that such measures provide to market participants (by reassuring markets that liquidity needs would be met, this could reduce the urge of some participants to bring forward their demand for foreign exchange), or (ii) it could mean that liquidity was provided to sterilize some of the effects of foreign exchange interventions. Interest rates hikes, CFMs (removal of restrictions on capital inflows), and macroprudential policies slowed the pace of depreciation, fall in equity prices, and the rise in bond yields. We could not find any statistically significant effect of fiscal policy announcements, which may reflect markets' assessment that there are greater implementation challenges of such measures or that it takes a long time for fiscal policy to influence macroeconomic outcomes.
Note: Figures highlighted in yellow are not statistically significant. Period May 2013-January 2014. Green check marks represent instances where policy actions had a dampening effect on the selected asset price. Red cross represents instances where policy actions did not have or had a worsening impact on the selected asset price.
Finally, we look at the effectiveness of foreign exchange intervention on calming market pressures. Countries intervened in foreign exchange markets in several ways, depending on the source of exchange market pressure. Some countries intervened in forward/swap markets and others intervened in the spot market. For example, Brazil announced a large intervention program, amounting to US$55 billion, and consisting of daily auctions of foreign exchange swaps. This particular type of intervention aimed to allow market participants to hedge their exposure rather than to satisfy demand by markets participants to reduce their exposure to the Brazilian real.
Since very few countries announced their intervention plans or published in a timely fashion the amounts and types of foreign exchange intervention, we looked at the effectiveness of intervention over a longer time span, using published intervention for six EMs, for which data are available, and monthly data on reserves accumulation adjusted for valuation effects.20 The analysis follows the work by Adler and Tovar (2011) and looks at the effectiveness of foreign exchange intervention to stem depreciation pressure. It explores the role of global risk aversion (as measured by the VIX), the level of reserves, and macro fundamentals (IMF, 2013b). The empirical analysis relates the rate of change in bilateral exchange rates against the U.S. dollar to a set of fundamentals, including interest rate differentials, EMBI spreads, commodity prices, the VIX, countries' experience with foreign exchange intervention (which in turn depends on past movements in exchanges rates), the extent of exchange rate misalignment, past volatility in exchange rate, foreign exchange reserves, and six-month-ahead rollover need.
The results suggest that foreign exchange interventions are effective in slowing the pace of depreciation when inflation is low, the currency is not overvalued, and reserves are adequate (Figure 23). In fact we find that if reserves are not adequate, selling foreign exchange can be destabilizing, and can lead to a faster pace of depreciation. This result is consistent with the empirical literature on foreign exchange intervention, which in general provides some support for intervention in helping slow the rate of change in the exchange rate.21 The analysis also indicates that the effectiveness of intervention in slowing the pace of depreciation depends on the level of uncertainty in global markets. In particular, the results indicate that when the VIX is above the 75th percentile, the smoothing effect of intervention on exchange rate depreciation pressure stops being statistically significant. In other words, when markets panic, intervention provides little or no help.
Note: Green check marks represent instances where policy actions had a dampening effect on the selected asset price. Red cross represents instances where policy actions did not have or had a worsening impact on the selected asset price.
Markets reassess emerging markets' fundamentals as global conditions change. The global financial system remains far from normal, and the transition path to a sustainable system is not yet risk-free. Indeed, occasional spikes in market volatility since the taper talk in May of 2013 serve as an important reminder. Such bumps during the monetary normalization process can be costly both at the national as well as the international level (see the IMF's 2014 Spillover Report). In this regard, the recent decline in market volatility points to potential risks going forward (Figure 24). A resurgence of portfolio flows into EMs since April 2014 has pushed asset prices near historically high levels. In addition, easier financing conditions have precipitated further compression of credit spreads. For example, corporate credit spreads in Brazil and China narrowed by around 70 basis points from June 2013 to June 2014, even as corporate profitability and interest coverage ratios declined and leverage increased. An environment of low rates and volatility, if it persists for a long period, may contribute to a rapid buildup of leveraged positions and credit risk, which could unwind in a volatile manner in the event of sudden shifts in markets' expectations. Potential adjustments in the term premium, as during the second half of 2013, are particularly relevant in the context of the expected rise in policy interest rates away from the zero lower bound as economic prospects improve in AEs.
The analysis in this paper has shown that the effects on EMs of the Fed's monetary policy announcements during the phase of unconventional monetary policy (post-2008), and especially during the period when tapering was first discussed (summer of 2013), can be sizable. However, after an initial phase of acute and systemic stress during which countries were indiscriminately affected, the effects of such announcements on EMs differed by country based on country fundamentals. Countries with sounder macroeconomic fundamentals were less affected than others. Still, there is no single fundamental that matters for all countries at all times, as markets appear to focus on different fundamentals at different points in time. That said, elevated current account deficits, high inflation, weak growth prospects, and low reserves are dominant factors affecting market reaction. Moreover, emerging markets that acted early and decisively have tended to fare better (Figure 25). In particular, monetary policy tightening was necessary where inflation was high and monetary policy credibility needed to be established. Targeted foreign exchange intervention to reduce volatility where reserves were adequate was also effective. Figure 25 shows that even countries with weak fundamentals were rewarded by markets if they took decisive policy action to address their vulnerabilities. This is illustrated by India and Indonesia, which improved their current account and hardly witnessed a move in their currencies in January compared with the May-December period when they had depreciated substantially.
Weaknesses in macroeconomic fundamentals need to be addressed through coherent and credible macro policies and frameworks. Improving growth prospects in emerging economies by shifting to a regime in which growth is more balanced and sustainable should also help reduce vulnerabilities—the bouts of volatility in the second half of last year have shown that countries with better growth prospects tend to be affected less.
Looking back to the May 2013 events suggests that AEs have an important role to play considering the numerous challenges associated with the normalization of monetary policy. This relates to how AE central banks communicate their policy intentions. Figure 26 shows the evolution of the U.S. expected short-term interest rates and news over the past six years. The figure suggests that since 2008, U.S. policymakers have aimed through their rate guidance to reduce longer-term interest rates—given the interest rate floor on policy rates—by lowering expected short-term interest rates (two-year-ahead, three-month interest rates). But the way this objective was achieved changed over time. The Fed started with qualitative time-dependent forward rate guidance, then moved to more explicit calendar-based guidance, and finally to state-dependent guidance (i.e., thresholds on unemployment conditional on inflation developments) and taper announcements. Forward guidance has also been complemented by other unconventional actions—namely, large-scale asset purchases (LSAP) by the Fed—to help further reduce longer term interest rates.
For the global community, there is scope to assess the extent to which the global financial safety net provides adequate support to countries in the context of, but not limited to, monetary policy normalization. For countries affected by policy normalization in advanced economies, there may be gaps in the global financial safety net that leave some countries more vulnerable to capital flow volatility. For instance, not all countries benefit from swap lines with source countries' central banks. This is an area that could be explored mutually between source and additional recipient countries.
Taking steps at the current juncture to identify enhancements to the global financial safety net would help to support both advanced and emerging markets as the global economy transitions away from large-scale liquidity support. Enhancements could include supporting central bank swap lines, cooperating with regional financial arrangements, or developing new IMF facilities. In this regard, the recent completion of the expansion of the ASEAN+3 Chang Mai Multilateral Initiative (CMII) is a potentially useful tool for regional cooperation in providing safety nets for countries that do not have access to currency swap lines with the G5 central banks, or which do not wish to borrow from the IMF's facilities. Countries could also make greater use of IMF precautionary arrangements if more insurance is needed. At the same time, enhanced cooperation between central banks and financial regulators could help limit the risk of swings in asset prices—including major currencies—and potential balance sheet implications. Finally, an idea worth considering would be an enhanced global financial safety net financed by source and recipient countries alike, as this would reduce incentives for countries to implement uncooperative and inward-looking policies, and would reduce fragmentation of the global financial system as well.
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The IMF team includes Ran Bi, Jiaqian Chen, Prachi Mishra, Kenji Moriyama, Lam Nguyen, Silvia Sgherri, Preya Sharma, Esteban Vesperoni, Sebatian Weber, and Gao Yuan. The authors thank the members of the IMF Executive Board for their invaluable input at an informal Board briefing, as well as participants at various IMF seminars for useful comments. The authors also thank Grace Angeles and Gillian Adu for their excellent assistance.
This expansion in the Fed balance sheet occurred in three successive stages: QE1 started in late November 2008 when the Fed decided to buy $600 billion in mortgage-backed securities (MBS); QE2 began in November 2010 with the Fed buying $600 billion of treasury securities; and QE3 began in mid-September 2012 with the Fed buying on a monthly basis $40 billion worth of MBS and $85 billion of treasury and agency bonds starting in December 2012.
The EMBI includes 55 EM countries from among 153 emerging and developing economies.
The determinants of capital inflows into EMs have been estimated using a reduced-form model that relates capital inflows in percent of GDP to external and domestic factors over the sample period (2002Q1–2012Q4) and with a panel of 44 countries. External factors include U.S. GDP growth, U.S. 10-year bond yields, the VIX, the expansion in U.S. Fed balance sheet since QE1, and the interaction between the VIX and U.S. 10 year yields). Domestic factors include GDP growth, domestic interest rates, and the real effective exchange rate misalignment as estimated by the IMF's External Balance Assessment methodology. The estimated "overflow" is consistent with the April 2014 Global Financial Stability Report estimates of excess inflows (about $480 billion).
Alternative measures of capital overflow identify countries where capital inflows, as a share of GDP exceeded the top 30th percentile of the cross-country sample and the countries' own threshold, set also at the top 30th percentile (Ghosh and others, 2012).
Mexico saw a significant accumulation of foreign assets in the form of reserves by the central bank but also the private sector through outward FDI, portfolio flows, and deposits abroad. In contrast, Turkey had limited foreign asset accumulation.
In contrast, hard hit by the 2008–09 crisis, most Eastern European countries went through a period of consolidation and narrowing of imbalances.
Markets in EMs may also have reacted to how U.S. markets absorbed the new and surprising narrative by the Fed's chairman.
See Chen, Mancini-Griffoli, and Sahay (2014).
Specifically, the May and June 2013 announcements were perceived as strong tightening shocks and the September announcement as a loosening shock.
See Chen, Mancini-Griffoli, and Sahay (2014). The analysis is centered on a panel regression across 21 EMs. The regression framework relates changes in asset prices and capital flows by country to U.S. monetary policy shocks measured by market and signal factors. Fixed effects capture differences between countries that stem from country-specific characteristics that do not vary over time.
Additional factors include risks in China's shadow banking system, idiosyncratic developments in Argentina, and rising political and policy risks in Turkey.
An event analysis was used to look at the change in bond yields in the two day window around Fed policy announcements and minutes release dates for the January 1, 2013–January 22, 2014 period and for a sample of 21 EMs. The analysis controls for country-specific effects and explores the extent to which macroeconomic fundamentals and structural factors mattered in explaining markets' reaction. See Mishra and others (2014) and Chen, Mancini-Griffoli and Sahay (2014).
Bowman, Londono, and Sapriza (2014) find that countries with high interest rates, credit default swap spreads, inflation rates, or current-account deficits, and those with more-vulnerable banking systems, were more affected by changes in U.S. financial variables.
If measured by bank credit to GDP, Mexico's financial markets are not deep. However, its markets are relatively deep based on liquidity measures, e.g., bid-ask spread or turnover in foreign exchange markets.
The Thai authorities did not change CFMs around the taper talk, but they raised the prospects of introducing them in April (prior to the taper talk) if capital inflows continued unabated. This may have contributed to stemming inflows and starting the reversal of the appreciation of the baht.
It is important to underscore that most countries raised rates to fight against rising inflation, not just capital outflows and depreciating currencies. If rates are increased just for the latter purposes, they risk having the opposite effects of undermining investor confidence in a sound policy framework, and slowing down the economy beyond measure, in both cases driving further capital outflows and currency depreciation.
See Bi, Sgherri, and N'Diaye (2014) for details.
The six EMs that publish intervention data are Chile, Colombia, Costa Rica, Mexico, Peru, and Turkey.
Intervention was found to be effective by Sarno and Taylor (2001) for AEs during "periods of high reputation and heavy sterilized intervention" (p. 854), and "if it is publicly announced and concerted" (p. 855), and by Dominguez (2003) for the United States, Japan, and Germany in influencing foreign exchange returns and volatility. Adler and Tovar (2011) find that, for EMs, intervention during episodes of appreciation pressure affects the pace of appreciation but not the level of the exchange rate. Kohlscheen and Andrade (2013) use high-frequency data of foreign exchange and official currency swap auctions in Brazil and demonstrate that public auctions have an economically and statistically significant effect on the foreign exchange rate. In a more general survey of the effectiveness of intervention in EMs, Ostry, Ghosh, and Chamon (2012, p. 12) find that the evidence on the effectiveness of sterilized intervention in EMs is mixed, but generally more favorable than in the advanced economy context.
See the IMF's 2014 Spillover Report for further analysis of "spillbacks" and when they may be important for source countries (IMF, 2014).