Inequality: Tools from the Old Masters to Help Today’s Policymakers

By Vitor Gaspar, Paolo Mauro, and Tigran Poghosyan

October 3, 2017

Unemployed day laborers in South Africa: the country has relatively high income, but also high inequality (photo: Rogan Ward/Newscom).

With inequality rising in many countries, policymakers need to choose the best fiscal policies that will help share the benefits of economic growth, and in so doing, make it more inclusive.

The early 20th century English economist Arthur Pigou, among others, saw economic welfare as influenced by both “the size of the national dividend” and “the way in which it is distributed among the members of the community.” Continue reading “Inequality: Tools from the Old Masters to Help Today’s Policymakers” »

Beheading the Hydra: How the IMF Fights Corruption

By Alistair Thomson 

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. Continue reading “Beheading the Hydra: How the IMF Fights Corruption” »

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. Continue reading “Chart of the Week: Seeking Solutions to Growing Inequality” »

Act Local, Solve Global: The $5.3 Trillion Energy Subsidy Problem

By Benedict Clements and Vitor Gaspar

(Versions in 中文, Français日本語Русский and Español)

US$5.3 trillion; 6½ percent of global GDP—that is our latest reckoning of the cost of energy subsidies in 2015. These estimates are shocking. The figure likely exceeds government health spending across the world, estimated by the World Health Organization at 6 percent of global GDP, but for the different year of 2013. They correspond to one of the largest negative externality ever estimated. They have global relevance. And that’s not all: earlier work by the IMF also shows that these subsidies have adverse effects on economic efficiency, growth, and inequality.

What are energy subsidies

We define energy subsidies as the difference between what consumers pay for energy and its “true costs,” plus a country’s normal value added or sales  tax rate. These “true costs” of energy consumption include its supply costs and the damage that energy consumption inflicts on people and the environment. These damages, in turn, come from carbon emissions and hence global warming; the health effects of air pollution; and the effects on traffic congestion, traffic accidents, and road damage. Most of these externalities are borne by local populations, with the global warming component of energy subsidies  only a fourth of the total (Chart 1).

Continue reading “Act Local, Solve Global: The $5.3 Trillion Energy Subsidy Problem” »

The Other Rebalancing: Asia’s Quest for Inclusive Growth

For the past two or three decades, rising inequality—inequality of incomes, of economic outcomes and of economic opportunities—has taken a back seat to the goal of boosting overall growth. But growing discontent with the fallout of the global financial crisis has put inequality back on top of the policy agenda. While the symptoms may be different, tackling inequality is no less an issue in Asia. Indeed, research shows that inequality can be counterproductive to sustaining longer-term growth. So, in increasingly turbulent global economic times, this gives added importance to promoting shared—or inclusive—growth in Asia that is more likely to be sustained. This has been a major focus our latest Regional Economic Outlook, which we presented in Manila today. A great challenge for the government here, and for other countries across the region, is to raise living standards for a wide section of their populations.

By | October 17th, 2011|Asia, Economic outlook, growth, Inequality, International Monetary Fund, 中文, 日本語|
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