Inequality: Fiscal Policy Can Make the Difference

By Vitor Gaspar and Mercedes Garcia-Escribano

 October 11, 2017

Versions in عربي (Arabic),  Español (Spanish), Français (French), 日本語 (Japanese), Русский (Russian)

Wealth and poverty side-by-side in Rio de Janeiro, Brazil: inequality is rising within countries around the world (photo: Jean-Marc David/SIPA/Newscom). 

Income inequality among people around the world has been declining in recent decades. This is due to countries like China and India’s incomes catching-up to advanced economies. But the news is not all good. Inequality within countries has increased, particularly in advanced economies. Since the global economic recovery has gained pace and is now widespread, policymakers have a window of opportunity to respond with reforms that tackle inequality, and our new Fiscal Monitor shows how the right mix of fiscal policies can make the difference.

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Pension Shock

By Mauricio Soto

August 24, 2017

Young adults in the workforce will need to build their own nest eggs in the age of public pension reforms. (photo: Ingram Publishing/Newscom).

Young adults in advanced economies must take steps to increase their retirement income security

Public pensions have played a crucial role in ensuring retirement income security over the past few decades. But for the millennial generation coming of working age now, the prospect is that public pensions won’t provide as large a safety net as they did to earlier generations. As a result, millennials should take steps to supplement their retirement income.

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Chart of the Week: Norway’s Home-Price Boom

By IMFBlog

July 10, 2017 

A crane looms over the city of Oslo, Norway: Constraints on new construction limit the supply of housing, driving up prices (photo: Ingram Publishing/Newscom)

Think Londoners and New Yorkers have it bad when it comes to sky-high house prices? Residents of Oslo have reason to gripe, too.

House prices in the Norwegian capital are among the world’s highest, as measured by the average cost of a home relative to household median income. Prices in Oslo are perhaps the most visible symptom of a real estate boom across the oil-rich, Nordic nation of 5.2 million people.

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Every Woman Counts: Gender Budgeting in G7 Countries

By Christine Lagarde

May 13, 2017

Versions in عربي (Arabic), 中文 (Chinese),  Français (French),  本語 (Japanese), Русский (Russian), and Español (Spanish)

Finance ministers and central bank governors from the G7 countries met in Bari, Italy, this weekend to consider global economic issues, including steps to maintain economic stability and improving gender equality as important agenda items.

Women’s economic empowerment has long been an international priority, of course. The G6—as it was then—was first created in 1975, a year named “International Women’s Year” by the United Nations to help more women worldwide realize their full potential. Mountain climber Junko Tabei masterfully demonstrated this potential when she became the first woman to conquer Mount Everest in that year. However, as the world dealt with the aftermath of the first oil shock and the end of the fixed exchange rate system, global economic stability and women’s empowerment were rarely part of the same conversation.

Junko Tabei, the first woman to climb Mount Everest and the “Seven Summits”—the highest mountains across seven continents (photo: John van Hasselt/Corbis/Getty Images)

How times have changed. Today, in discussions on the global economy, female economic empowerment is almost always on the agenda. Continue reading “Every Woman Counts: Gender Budgeting in G7 Countries” »

Union of Labor and Growth

By IMFBlog

John Evans is Head of the Trade Union Advisory Committee to the Organisation for Economic Cooperation and Development, which represents some 65 million organized workers worldwide. In this podcast, he says that the labor market works much like any other market, driven by supply and demand, and the latter is very dependent on how well the economy is doing.  Continue reading “Union of Labor and Growth” »

Can Raising Japan’s Minimum Wage Accelerate Wage Growth?

By Luc Everaert and Giovanni Ganelli

Version in 日本語 (Japanese)

Japan’s minimum wage is 798 JPY ($6.52) per hour, lower than many other advanced countries, including the United States, and among the lowest relative to the average wage (see chart). For a country that needs consumers to boost spending to pull the economy out of 15 years of deflation and reinvigorate growth, a hike in wages across the board can go a long way. Continue reading “Can Raising Japan’s Minimum Wage Accelerate Wage Growth?” »

A Sea Change: The New Migration from sub-Saharan Africa

By Jesus Gonzalez-Garcia and Montfort Mlachila

Versions in Français (French), and Português (Portuguese)

Migration of sub-Saharan Africans is growing rapidly. Just like the region’s population, the number of migrants doubled since 1990 to reach about 20 million in 2013. In the coming decades, migration will expand given the demographic boom in the working-age population—the group that typically feeds migration. We studied these trends in a recent paper because both receiving and sending countries need the right policies so all can benefit.

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Canada’s Financial Sector: How to Enhance its Resilience

By Hamid Faruqee and Andrea Pescatori

(Version in Français)

In the aftermath of the 2008 financial crisis, Canada’s financial system held up remarkably well—making it the envy of its Group of Seven peers. This relative resilience was particularly impressive considering its most important trading and financial partner, the United States, was the epicenter of the crisis.

Part of Canada’s success story lies in the fact that its banking system is dominated by a handful of large players who are well capitalized and have safe, conservative, and profitable business models concentrated in mortgage lending—much of it covered by mortgage insurance and backstopped by the federal government. Notwithstanding such an enviable record and sound financial system, we need to keep an eye on certain financial risks.

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Korea: Keeping It Dynamic

MD's Updated HeadshotBy Christine Lagarde

(Versions in 한국의 and 中文)

My arrival in Seoul was somewhat delayed when dense fog caused my plane from Phnom Penh to be temporarily diverted from Seoul to Daegu. Still, better late than never! I was delighted to be back in Seoul, capital of one of the world’s most dynamic and innovative economies. Just remember: in a remarkably short period of time, Korea has risen from close to the bottom to close to the top—becoming the thirteenth most prosperous economy with an income per capita that is higher than the European Union average.

With such a track record, Korea plays an increasingly important role on the global stage. It held the annual presidency of the Group of Twenty advanced and emerging economies at the height of the global financial crisis in 2010. It is host to the Green Climate Fund, whose aim is to help developing countries respond to climate change—surely one of the greatest challenges of the 21st century. And it is playing ever increasing leadership roles in other international institutions, including the IMF.

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Can Policymakers Stem Rising Income Inequality?

The issue of rising income inequality is now at the forefront of public debate. There is growing concern as to the economic and social consequences of the steady, and often sharp, increase in the share of income captured by higher income groups. While much of the discussion focuses on the factors driving the rise in inequality—including globalization, labor market reforms, and technological changes that favor higher-skilled workers—a more pressing issue is what can be done about it.

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