##g funds. more broadly, short - term public budget relief ( through fast - disbursing development policy operations ) must be strictly and verifiably targeted to restoring fiscal space for essential social needs ( health, education, nutrition ) ; a sharp focus on long - term development goals, above all the need to support food security, social safety nets and infrastructure, especially in african countries, must be maintained. we support the envisaged surge in the deployment of ibrd and ifc resources. lending growth over time under persistent uncertainty on economic and financial conditions warrants continued budgetary discipline and a thorough review of both institutions ’ financial sustainability and overall risk exposure. the front - loading of ida resources and fast implementation procedures such as the vulnerability financing facility, are appropriate measures at this time of crisis. we believe that ida is well positioned to accelerate its support to low income countries, thanks to the substantial increase of its commitment authority for the next three years under the ida 15 replenishment. 3. crisis and climate change : two intertwined challenges the complexity of dealing with climate change reflects the intricacy of development challenges in an increasingly interdependent world. climate change encompasses, and amplifies, concerns related to natural resource scarcity, food supply and security. it entails substantial financial requirements and distributional tradeoffs that, in turn, pose daunting political economy challenges. however, neither these challenges nor emergencies related to crisis management should undermine the wbg ’ s commitment to the climate change agenda. scientists have documented that the window of opportunity to tackle climate change is shrinking fast and that urgent and unprecedented levels of multilateral collaboration are needed. moreover, the un climate change conference in copenhagen in december will shape a new global financial regime providing the world bank with a unique opportunity to liaise with lead negotiators emphasizing the wbg role in the international debate on climate change. in particular, we expect the wbg to help develop currently existing or proposed financial schemes to support less carbon intensive technologies and to adapt rural and urban environments to the adverse impacts of climate change. 4. voice we welcome the progress made in implementing the first stage of the reform aimed at enhancing the representation of dtc in the world bank group. as agreed at the last annual meetings, the shareholding review should consider the evolving weight of all members in the world economy and other bank - specific criteria consistent with the development mandate of the institution. we invite management, in close interaction with the board, to

economic shocks. indeed, the few analyses that have tried to address the m. j. beechey, b. k johannsen and a. levin ( 2007 ), “ are long - run inflation expectations anchored more firmly in the euro area than in the united states? ”, cepr discussion papers no. 6536. the standard deviation of the ( target ) fed fund rate since 1999 is 1, 83 percentage points, compared with 0, 89 percentage points of the policy rate of the ecb. the average policy rate has been 3, 6 for the fed and 3, 1 for the ecb. issue in a systematic way give some hints that all of these factors may have played a role. 3 in particular : o shocks : differences in the type and intensity of shocks ( especially productivity shocks ) have probably played a major role in the last decade. o structure : higher wage and price flexibility may explain part of the higher volatility of policy rates in the united states. o policy : the ecb may have, at least according to some estimates, a higher degree of policy inertia, which may grant it with more leverage on long - term interest rates. there is however no crystal clear evidence of a significantly different response to measures of economic slackness, which may indicate that the different mandates do not impinge too much even in the shorter term. besides this, we have to be very careful in judgement as we are far from being in a position to state how close to optimal is any of the two policies, given structure and preferences in the two economies. the recent financial turmoil and the different policy responses across the atlantic have once again spurred a debate ( particularly in europe ) on whether the different mandate is the source of divergence ( and political calls on the ecb to adopt a fed - like response ). again it is likely that a combination of factors are at play : • if we compare, for example, the change in the forecasts of the two central banks in the last year, we see that the fed has changed its forecasts of growth for 2008 by much more than the ecb ( - 2 % vs. - 0, 5 % ), while the reverse is true for inflation ( + 0, 4 % vs. + 0, 9 % ). these changes in the respective outlook go some way towards explaining a different policy response : after all, and notwithstanding the strict financial linkages, we should not forget that the sub - prime crisis originated in the