Chart of the Week: Inequality and the Decline in Labor Share of Income

By IMFBlog

As discussed in the IMF’s G20 Note, and a blog last week by IMF Managing Director Christine Lagarde, a forthcoming chapter of the World Economic Outlook seeks to understand the decline in the labor share of income (that is, the share of national income paid in wages, including benefits, to workers) in many countries around the world. These downward trends can have potentially large and complex social implications, including a rise in income inequality.  Continue reading “Chart of the Week: Inequality and the Decline in Labor Share of Income” »

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.  Continue reading “Revisiting the Paradox of Capital: The Reversal of Uphill Flows” »

Investing in a Rebalancing of Growth in Asia

Continuing my travels through Asia for the launch of our latest Regional Economic Outlook: Asia and Pacific, I am writing to you today from Singapore. Last week, I wrote about the near-term outlook for Asia. Today, I turn to the key medium-term challenge—an issue emphasized by G-20 ministers over the weekend—the need to rebalance economic growth. For much of Asia, this means shifting away from heavy reliance on exports by strengthening domestic sources of growth. While much of the discussion on this issue has focused on ways to increase consumption, the role of investment is equally important and should not be overlooked.

By | October 25th, 2010|Asia, Economic outlook, IMF, International Monetary Fund|

Asia: The Challenge of Capital Inflows

History has shown that persistent and large capital inflows can be a double edged sword. While they bring with them numerous benefits, they do pose risks and policy dilemmas. Continued large capital flows pose, for example, the risk of overheating and runups in asset prices that may subsequently render the region vulnerable to outflows and asset price busts.

By | May 18th, 2010|Asia, Economic Crisis, Economic research, Financial Crisis, IMF|
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