What to Do about Growth

2019-03-26T11:52:13-04:00February 28, 2017|

camilla-andersen-may2015By Camilla Lund Andersen

Deep unease about rising inequality and stagnating living standards in advanced economies was at the heart of the 2016 political upheaval. Globalization and trade have been blamed, but entrenched slow growth—what economists call secular stagnation—may be the real culprit. Parents who took for granted that their children would enjoy a brighter future had their dreams dashed by the global financial crisis of 2008. Nine years later, rising populism and a return to nationalist, inward-looking policies threaten to unravel the postwar economic order.  […]

The IMF’s Work on Inequality: Bridging Research and Reality

2019-03-26T12:04:27-04:00February 22, 2017|

By Prakash Loungani and Jonathan D. Ostry

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

Over the past three decades, income inequality has gone up in most advanced economies and in many developing ones as well. Why? Much of the research on inequality has focused on advances in technology and liberalization of trade as the main drivers. While technology and trade are global trends that are difficult to resist, IMF studies have shown that the design of government policies matters and can help limit increases in inequality. […]

Managing the revenue from natural resources—what’s a Finance Minister to do?

2017-04-14T01:59:33-04:00June 9, 2014|

By Sanjeev Gupta and Enrique Flores

(Versions in Español)

The Finance Minister answers her mobile. On the line is the Minister of Energy, who informs her that the country has struck oil and that he expects revenues from its sale to start flowing into the budget in the coming four years. While excited by the prospects of higher revenues—indeed the average resource-rich country gets more than 15 percent of GDP in resource revenues—she starts to ponder how to use these revenues for her country’s development. She is aware that only […]

Meeting Rising Pressures to Address Income Inequality—A User’s Guide

2017-04-14T02:09:45-04:00March 19, 2014|

By Sanjeev Gupta and Michael Keen

(Version in  EspañolFrançaisРусский中文 and 日本語)

These are difficult times for ministers of finance. Fiscal constraints are tight and raising economic growth a priority. At the same time, income inequality is on the rise, and so is public pressure for governments to do something about it through their tax and spending policies. What’s a minister to do? How can he or she meet these seemingly incompatible demands?

A new IMF paper provides some guidance. Governments, […]

Warning! Inequality May Be Hazardous to Your Growth

2017-04-15T14:25:28-04:00April 8, 2011|

Some people dismiss inequality and focus on overall growth—arguing that a rising tide lifts all boats. But when—as in the U.S. in recent decades—a handful of yachts become ocean liners while the rest remain lowly canoes, something is seriously amiss. In fact, inequality matters. And it matters in all corners of the globe. Medical researchers ask how smoking, weight, and so on influence life expectancy. We wondered, what keeps long periods of high growth going? Somewhat to our surprise, income inequality stood out as a key driver. The upshot? It is a big mistake to separate analyses of growth and income distribution. A rising tide is still critical to lifting all the boats. But lifting up the lowest boats may actually help to keep the tide rising!
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