Chart of the Week: Seeking Solutions to Growing Inequality

By IMFblog

As finance ministers and central banks gather in Washington this week for the spring meetings of the IMF and World Bank, income inequality will be among the topics of discussion.

While global economic integration has brought enormous benefits in the form of rising living standards, it has also contributed to widening inequality within some countries. In advanced economies, the incomes of the top 1 percent have grown three times faster than those of the rest of the population over the past three decades.

Why should this be a concern to policy makers? To put it simply, when the benefits of growth are shared more broadly, growth is stronger, more durable, and more resilient.

In a speech on April 12, IMF Managing Director Christine Lagarde outlined steps governments can take to help workers who have been affected by labor-market dislocations, including greater emphasis on retraining and vocational training, job search assistance, and relocation support.

The IMF’s Fiscal Monitor, to be released on April 19, also explains how governments can use taxation and spending to ensure that growth is more equitable.

The Ties That Bond Us: What Demand For Government Debt Can Tell Us About the Risks Ahead

It has become apparent in recent years is that advanced economy government bond markets can also experience investor outflows, and associated runs. Our new research shows that advanced economies’ exposure to refinancing risk and changes in government borrowing costs depend mainly on who is holding the bonds— the demand side for government debt. Tracking who owns what, when and for how long can shed some light on potential risks in advanced economies’ government debt markets.

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