Healing the Pandemic’s Economic Scars Demands Prompt Action
How Investment Funds Can Drive the Green Transition
Financial Perils in Check for Now, Eyes Turn to Risk of Market Correction
By Tobias Adrian and Fabio Natalucci
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“The vaccines are here!”—the cry heard and welcomed the world over—has boosted hopes of a global economic recovery in 2021. […]
Chart of the WeekHow the Rich Get Richer
Wealth begets wealth. This simple concept of privilege has added to growing discontent with inequality that has escalated under the shadow of the COVID-19 pandemic.
A paper co-authored this year by economists from the IMF and other institutions confirms that wealthier people are more likely to earn higher returns on their investments. It also shows that the children of wealthy people, while likely to inherit that wealth, aren’t necessarily going to make the same high returns on investments.
Detailed data on wealth are extremely rare, but 12-years of tax records (2004-2015) from Norway have opened a new window into wealth accumulation for individuals and their offspring. The Nordic country has a wealth tax that requires assets to be reported by employers, banks and other third parties in order to reduce errors from self-reporting. The data, which are made public under certain conditions, also make it possible to match parents with their children.
The data show that an individual in the 75th percentile of wealth distribution who invested $1 in 2004 would have yielded $1.50 by the end of 2015—a return of 50 percent. A person in the top 0.1 percent would have yielded $2.40 on the same invested dollar—a return of 140 […]
Chart of the WeekThe Crisis is Not Over, Keep Spending (Wisely)
By Oya Celasun, Lone Christiansen, and Margaux MacDonald
The pandemic-induced economic crisis is set to leave deep scars. Human capital erosion from prolonged high unemployment and school closures, value destruction from bankruptcies, and constraints on future fiscal policy from elevated public debt top the list. […]
Outlook for Latin America and the Caribbean: New Challenges to Growth
Economic activity in Latin America and the Caribbean stagnated in 2019, continuing with the weak growth momentum of the previous five years and adding more urgency and new challenges to reignite growth. Indeed, real GDP per capita in the region has declined by 0.6 percent per year on average during 2014–2019—a sharp contrast from the commodity boom’s average increase of two percent per year during 2000–2013. […]
Tentative Stabilization, Sluggish Recovery?
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In the October World Economic Outlook, we described the global economy as in a synchronized slowdown, with escalating downside risks that could further derail growth. Since then, some risks have partially receded with the announcement of a US-China Phase I trade deal and lower likelihood of a no-deal Brexit. […]
Fiscal Policies to Curb Climate Change
By Vitor Gaspar, Paolo Mauro, Ian Parry, and Catherine Pattillo
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Global warming has become a clear and present threat. Actions and commitments to date have fallen short. […]
Connecting the Dots Between Sustainable Finance and Financial Stability
Evan Papageorgiou, Jochen Schmittmann, and Felix Suntheim
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Unsafe working conditions. Use of child or forced labor. Environmental impact on protected areas. […]