How Policy Makers Can Better Predict a Downturn – and Prepare

By Claudio Raddatz and Jay Surti

October 3, 2017

Versions in  عربي (Arabic) ,  (Chinese), Español (Spanish), Français (French),日本語  (Japanese),  Русский (Russian)

A trading floor in Singapore. Financial conditions provide valuable clues to the economic outlook and can improve the accuracy of forecasts (photo: Caro/Oberhaeuser/Newscom).

The global financial crisis showed that periods of robust growth and seeming calm in financial markets can be followed by a sudden surge in market volatility and an unexpected economic downdraft. That’s why it is so important for policy makers to keep a close watch on so-called financial conditions. These can include everything from bond yields and oil prices to foreign exchange rates and levels of domestic debt. Continue reading “How Policy Makers Can Better Predict a Downturn – and Prepare” »

Rising Household Debt: What It Means for Growth and Stability

By Nico Valckx

October 3, 2017

Versions عربي (Arabic), 中文 (Chinese),  Español (Spanish),  Français (French),  日本語, (Japanese), Русский (Russian)

Household debt, including mortgage debt, has been on the rise since the global financial crisis (photo: Louoates/iStock).

Debt greases the wheels of the economy. It allows individuals to make big investments today–like buying a house or going to college – by pledging some of their future earnings.

That’s all fine in theory. But as the global financial crisis showed, rapid growth in household debt – especially mortgages – can be dangerous. Continue reading “Rising Household Debt: What It Means for Growth and Stability” »

Corruption in Latin America: A Way Forward

By David Lipton, Alejandro Werner, and S. Pelin Berkmen

September 28, 2017

Versions in Español (Spanish),  Português (Portuguese)

Sustained action on many fronts will be needed to push countries out of the corruption trap (photo: People Images/iStock). 

In our first blog of this two-part series, we noted that, despite recent progress, corruption in Latin America is still high. In this second blog, we look at measures to fight corruption that have worked well in other countries. Learning about these policies can provide insights to guide Latin America in the design of their anti-corruption strategies, even if the final shape of these policies will differ depending on country specifics. Continue reading “Corruption in Latin America: A Way Forward” »

The Disconnect Between Unemployment and Wages

By Gee Hee Hong, Zsoka Koczan, Weicheng Lian, Malhar Nabar

September 27, 2017

Versions in عربي (Arabic), 中文 (Chinese), Español (Spanish), Français (French), 日本語 (Japanese),  Русский (Russian)

Demand for workers is rising, but pay is hardly catching up (photo: Shironosov/iStock).

Over the past three years, labor markets in many advanced economies have shown increasing signs of healing from the Great Recession of 2008-09. Yet, despite falling unemployment rates, wage growth has been subdued–raising a vexing question: Why isn’t a higher demand for workers driving up pay?

Our research in the October 2017 World Economic Outlook sheds light on the sources of subdued nominal wage growth in advanced economies since the Great Recession.  Understanding the drivers of the disconnect between unemployment and wages is important not only for macroeconomic policy, but also for prospects of reducing income inequality and enhancing workers’ security. Continue reading “The Disconnect Between Unemployment and Wages” »

Better thy Neighbor? Cross-border Effects of Fiscal Actions

By Patrick Blagrave, Giang Ho, Ksenia Koloskova, and Esteban Vesperoni

September 27, 2017

Versions in عربي (Arabic),  中文 (Chinese), Español (Spanish), Français (French), 日本語  (Japanese),  Русский (Russian)

Domestic fiscal policies, such as public spending, can generate meaningful spillovers to neighboring countries (Photo: Ymgerman/iStock by GettyImages)

In the wake of the global financial crisis, fiscal stimulus was advocated widely to help mitigate the recession. The thinking at the time was that fiscal stimulus would be particularly effective because its impact on activity tends to be larger when demand falls short of supply and central banks keep interest rates low. This, in turn, would lead to larger positive cross-border effects—or spillovers—on other countries.

Continue reading “Better thy Neighbor? Cross-border Effects of Fiscal Actions” »

Chart of the Week: High Hurdles for Trade in Services

By IMFBlog

September 25, 2017

A shop window in Stockholm, Sweden: 62 % of jobs in the country are in the services sector (photo: Bob Strong/Reuters/Newscom).

The service sector accounts for some two-thirds of economic activity, and roughly the same share of jobs around the world. And yet the barriers to trade in services—from banking to online consultations with doctors or engineers—remain high.

Continue reading “Chart of the Week: High Hurdles for Trade in Services” »

Structural Reforms Give Biggest Help To Lagging Countries

By Angana Banerji and Christian Ebeke

September 22, 2017

Structural reforms can jumpstart productivity in countries with weaker initial productivity, and help them catch up with their peers (photo: The Palmer/iStock).

Labor and product market reforms, which make economies more efficient, can benefit all countries. But they are especially helpful in jumpstarting productivity in countries where productivity is weaker. This is good news as it implies that reforms are one route through which countries with lower per capita incomes can catch up with richer countries instead of persistently lagging behind: economic hardship is not destiny. Our new paper provides fresh arguments in favor of the often-difficult structural reforms. Continue reading “Structural Reforms Give Biggest Help To Lagging Countries” »

Corruption in Latin America: Taking Stock

By  David LiptonAlejandro Werner, Carlos Gonçalves

September 21, 2017 

Versions in Español (Spanish)  Português (Portuguese)

Systemic corruption drains public resources and drags down economic growth (photo: People Images/iStock).

Corruption continues to make headlines in Latin America. From a scheme to shelter assets leaked by documents in Panama, to the Petrobras and Odebrecht scandals that have spread beyond Brazil, to eight former Mexican state governors facing charges or being convicted, the region has seen its share of economic and political fallout from corruption. Latin Americans are showing increasing signs of discontent and demanding that their governments tackle corruption more aggressively.

Continue reading “Corruption in Latin America: Taking Stock” »

Growth That Reaches Everyone: Facts, Factors, Tools

By Rupa Duttagupta, Stefania Fabrizio, Davide Furceri, and Sweta Saxena

September 20, 2017

Versions in Русский (Russian), Español (Spanish) 

People lining up in front of a charity house in São Paulo, Brazil: Over 200 million people around the world are unemployed, despite overall economic growth (photo: Paulo Whitaker/Reuters/Newscom)

Economic growth provides the basis for overcoming poverty and lifting living standards. But for growth to be sustained and inclusive, its benefits must reach all people.

While strong economic growth is necessary for economic development, it is not always sufficient.

Over the past few decades, growth has raised living standards and provided job opportunities, lifting millions out of extreme poverty. But, we have also seen a flip side. Inequality has risen in several advanced economies and remains stubbornly high in many that are still developing. Continue reading “Growth That Reaches Everyone: Facts, Factors, Tools” »

Chart of the Week: Banking on Women—A Case for More

By IMFBlog

September 19, 2017

Versions in  中文 (Chinese), Español (Spanish),日本語 (Japanese), Русский (Russian) 

Worldwide, women hold less than 20 percent of board seats of banks and banking supervision agencies. More women on bank boards may have a positive effect on bank stability (photo: istocksdaily/iStock by Getty Images)

The “glass ceiling” in finance has barely cracked. Compared to the available talent pool, there is still a large gap between the representation of men and women in leadership positions in banks and bank supervision agencies worldwide.

A recent IMF staff paper provides a comprehensive dataset on banking sector characteristics and performance, as well as on the share of women on the boards of directors and banking supervision agency boards, covering 72 countries over 13 years. Continue reading “Chart of the Week: Banking on Women—A Case for More” »

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