Democratizing the Money Market
By IMFBlog
May 26, 2017
Just as technology is changing the way we live and work, it also affects the way we use and move our money. In this podcast, lawyer and bitcoin expert Patrick Murck of Harvard University tells us that financial technology, or fintech, is poised to revolutionize the way the world does business.
How Flexible Exchange Rates Helped Latin America Adjust to Commodity Price Shocks
By Yan Carrière-Swallow, Nicolás Magud, and Juan Yépez
May 25, 2017
Versions in Português (Portuguese), and Español (Spanish)
(photo: Ivan Alvarado/Reuters/Newscom)
As world prices for Latin America’s key exports—oil, metal, and agricultural products—fell from their super-cycle peak in 2011 and demand from trading partners weakened, export revenues have dropped sharply. Across most of South America, export revenues have fallen by one-third, and by more than half in the case of Venezuela. The size of these shocks has been historic in some cases, ranking among the largest trade price busts faced by emerging economies around the world since 1960. (more…)
How Trade with China Boosts Productivity
By JaeBin Ahn and Romain Duval
May 24, 2017
Version in 中文 (Chinese), Français (French), Русский (Russian)
Container port, Qingdao city, China. Trade with China has helped improve living standards in advanced economies through higher productivity (photo: Imagine China/Newscom)
Advocates of protectionist policies in advanced economies blame job losses on growing trade with China, and influential researchers have provided some empirical backing for their claims. Yet the benefits of trade with China are often overlooked. Among them is faster growth in productivity—the key driver of improved living standards. This suggests that rather than erecting new barriers to trade, advanced economies should continue to open up—while doing much more to help those who have lost their jobs to overseas competition. (more…)
Chart of the Week: Central and Eastern Europe Close the Gap
By IMFBlog
May 22, 2017
Version in Русский (Russian)
Most of the countries of Central, Eastern, and Southeastern Europe will see their economies humming away at a strong growth rate in 2017. A measure of their success at fully utilizing their economic machine is the output gap—the difference between what the economy is currently producing, and what it can produce when it is at full capacity.
Our Chart of the Week from a recently published report on the Central, Eastern, and Southeastern European region shows how close these economies come to performing at full potential. (more…)
Restarting the Growth Engine in Sub-Saharan Africa
By IMFBlog
May 19, 2017
Version in Français (French)
The IMF’s latest economic health check of sub-Saharan Africa shows that growth fell to its lowest level in 20 years.
In this podcast, the IMF African Department’s Celine Allard, who oversaw the report, says that this drop brought a halt to the 5 to 6 percent growth rate that was enjoyed in the last two decades. Some factors contributing to this slowdown are lower commodity prices, the devastation of a severe drought—exacerbating crop infestation and leading to a famine affecting some 20 million people—and political conflicts that affect trade.
Beheading the Hydra: How the IMF Fights Corruption
May 18, 2017
Versions in عربي (Arabic), 中文 (Chinese), Français (French), 日本語 (Japanese), Русский (Russian), and Español (Spanish)
Corruption drains public resources and drags down economic growth in multiple ways (photo: dareknie/iStock by Getty Images)
Corruption—the abuse of public office for private gain—is a many-headed monster. It is pervasive in many countries, but only a fraction of cases make headlines; fewer are successfully prosecuted. Yet the cumulative burden is massive. By some estimates, bribery alone amounts to $1 trillion each year, and corruption more broadly to much more. While the precise figures are the subject of debate, the importance of the problem is not. (more…)
Chart of the Week: Budget-friendly, Equitable Growth in France
By IMFBlog
May 15, 2017
Version in Français (French)
One need look no further than the national motto—liberté, égalité, fraternité—to understand that equality is an especially important concept in France. French policies play an important role in combating inequality. This is primarily achieved through a combination of minimum wage policies and an extensive tax and transfer system.
But these traditional equality-enhancing policies may have reached their limits as unemployment has become entrenched and budgets have been severely stretched. So, what are the best policies for a country weighing how to boost growth, lessen inequality, and minimize costs? It is not a zero sum game.
Every Woman Counts: Gender Budgeting in G7 Countries
May 13, 2017
Versions in عربي (Arabic), 中文 (Chinese), Français (French), 本語 (Japanese), Русский (Russian), and Español (Spanish)
Finance ministers and central bank governors from the G7 countries met in Bari, Italy, this weekend to consider global economic issues, including steps to maintain economic stability and improving gender equality as important agenda items.
Women’s economic empowerment has long been an international priority, of course. The G6—as it was then—was first created in 1975, a year named “International Women’s Year” by the United Nations to help more women worldwide realize their full potential. Mountain climber Junko Tabei masterfully demonstrated this potential when she became the first woman to conquer Mount Everest in that year. However, as the world dealt with the aftermath of the first oil shock and the end of the fixed exchange rate system, global economic stability and women’s empowerment were rarely part of the same conversation.
Junko Tabei, the first woman to climb Mount Everest and the “Seven Summits”—the highest mountains across seven continents (photo: John van Hasselt/Corbis/Getty Images)
How times have changed. Today, in discussions on the global economy, female economic empowerment is almost always on the agenda. (more…)
A New Twist in the Link Between Inequality and Economic Development
May 11, 2017
Version in عربي (Arabic), Español (Spanish)
Much has been written about the relationship between inequality and economic development, but theory remains inconclusive. When income is more concentrated in the hands of a few individuals, this can lead to less demand by the general population and lower investment in education and health, impairing long-term growth. At the same time, a certain level of inequality endows the rich with the means to start businesses, and creates incentives to increase productivity and investment, promoting economic activity. But the initial inequality levels also matter to explain why an increase in inequality varies in its impact on economic development across countries.
The Economics of Trust
By IMFBlog
May 10, 2017
Trust in other people—the glue that holds society together—is increasingly in short supply in the United States and Europe, and inequality may be the culprit.
In surveys over the past 40 years, the share of Americans who say that most people can be trusted has fallen to 33 percent from about 50 percent. The erosion of trust coincides with widening disparities in incomes. (more…)
