Speed Limits for Financial Markets? Not So Fast

By IMFBlog

June 1, 2017

Traders on the floor of the New York Stock Exchange (photo: Andrew Kelly/Reuters/Newscom)

On the afternoon of May 6, 2010, a financial tsunami hit Wall Street. Stunned traders watched as graphs on their computer screens traced the vertiginous 998-point plunge in the Dow Jones Industrial Average, which erased $1 trillion in market value in 36 minutes.

There was little in the way of fundamental news to drive such a dramatic decline, and stocks bounced back later that day. The event, quickly dubbed the “flash crash,” focused attention on the role of high-frequency trading and algorithms in amplifying market volatility.

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Tomorrow’s Workplace

By Camilla Lund Andersen

May 31, 2017

It seems fitting that we are launching our redesigned magazine with a cover dedicated to millennials and the future of work. But while Finance & Development has mainly changed its appearance, not its content, young adults may have to make more fundamental adjustments to keep pace with the requirements of tomorrow’s workplace. Millennials face myriad challenges as they seek to carve out a prosperous future for themselves.

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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…)

Chart of the Week: Sharing the Fruits of Growth

By IMFBlog

At last week’s Spring Meetings of the IMF and World Bank, economists and policymakers discussed ways to maintain the momentum of the global economic expansion—while also ensuring that the fruits of growth are shared more widely within their countries. Fiscal policy—government’s ability to tax and spend—has an important role to play.

The effectiveness of fiscal policy in mitigating inequality varies widely by country, as seen in our Chart of the Week. The chart shows the redistribution effect of fiscal policy before and after taxes, as measured by the change in the Gini coefficient. A Gini of zero expresses perfect equality, while a Gini of one expresses maximum inequality. (more…)

With Global Financial Markets, How Much Control Do Countries Have Over Economic Policies?

By Selim Ali Elekdag and Gaston Gelos

Versions in عربي (Arabic), Français (French), Русский (Russian), and Español (Spanish)

The outlook for further interest-rate increases by the US Federal Reserve revives interest in a compelling question: In an increasingly integrated global financial system, how much control do countries outside of the US retain over their economic policies?

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Services Exports Open a New Path to Prosperity

By Prakash Loungani, Chris Papageorgiou, and Ke Wang

Versions in 中文 (Chinese), Français (French), 日本語 (Japanese), and Русский (Russian)

Services, which already account for 50 percent of world income and 70 percent of employment, are also becoming an important part of international trade. Services exports—accounting for nearly one fourth of total exports—have come to play a central role in the global economy, thanks in large part to advances in technology. (more…)

Maintaining the Positive Momentum of the Global Economy

Lagarde.2015MDPORTRAIT4_114x128By Christine Lagarde

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

Baden-Baden, the German spa town built on ancient thermal springs, is a fitting venue to discuss the health of the global economy during this week’s meeting of the Group of Twenty finance ministers and central bank governors.

Policymakers will likely share a sense of growing optimism, because the recent strengthening of activity suggests that the world economy may finally snap out of its multi-year convalescence.  (more…)

By | March 14th, 2017|Advanced Economies, G-20, growth, IMF, Investment, jobs, U.S., Uncategorized|0 Comments

Revisiting the Paradox of Capital: The Reversal of Uphill Flows

By Emine Boz, Luis Cubeddu, and Maurice Obstfeld

Versions in عربي (Arabic),  中文 (Chinese), Français (French),  Русский (Russian), and Español (Spanish)

Basic economic theory tells us that capital should flow from slow-growing rich countries to faster-growing poor ones in search of higher returns. A decade ago, our former Research Department colleagues Eswar Prasad, Raghuram Rajan, and Arvind Subramanian examined why the reverse had been true—capital generally flowed “uphill” from poorer to richer countries. Building on the seminal work of Robert Lucas, they argued that certain characteristics of poorer countries, such as weaker institutions and lower levels of education, may reduce the risk-adjusted returns to investing there.  (more…)

Chart of the Week: More Women, More Growth

By iMFdirect

International Women’s Day and the United States’ February jobs report are both coming up this week. So, we decided today’s chart should focus on women and work.

Around the world, women seeking employment face barriers—from legal hurdles to disincentives like lower wages. Leveling the playing field could bring significant benefits.  (more…)

By | March 6th, 2017|Gender issues, health, IMF, income, U.S., wages|0 Comments

Have Data—Will Travel

By iMFdirect

Author and innovation guru, Alec Ross says that technology is shaping the industries of the future.

“Ninety percent of the world’s data has been produced in the last two years. In fact, if you take the sum of all the information produced by human kind—from paintings on cave walls—to the year 2003, the sum of that data we now produce every two days.”  (more…)

By | March 3rd, 2017|commodities, IMF, trade, U.S.|0 Comments
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