Posted on September 25, 2013 by iMFdirect
By Helge Berger and Justin Tyson
Sooner or later, and one way or the other, government debt in advanced economies will have to come down from the record levels reached in the wake of the global economic and euro area crises. There is no magic number for how much sovereign debt an economy can shoulder. And, as bringing down debt by cutting government spending or raising taxes comes at the risk of reducing growth and employment in the short term, there are arguments to not proceed too hastily. But eventually debt will have to be put back on a downward path in many countries. This will help rebuild fiscal buffers and cope with the costs of aging. So, what should governments do?
Our new analysis takes a closer look at the historical record and key trade-offs. The bottom line: it is possible to reduce debt when growth is low. Ultimately perseverance should pay off.
Filed under: Economic research, Employment, Finance, Financial Crisis, Financial regulation, Financial sector supervision, Fiscal policy, growth, IMF, International Monetary Fund, Public debt | Tagged: debt, euro, Europe, fiscal consolidation, GDP, government budgets, government debt | Leave a Comment »
Posted on September 23, 2013 by iMFdirect
(Versions in Español and عربي)
Hot off the press: a new study out today from our economists pointing to the striking economic benefits that could come from increased female participation in the work force.
IMF Chief Christine Lagarde, calling attention to the findings of the paper, “Women, Work, and the Economy,” made the case for policymakers to shift into high gear and give women equal opportunities to participate in the work force.
Filed under: Advanced Economies, Economic research, Emerging Markets, Employment, Globalization, IMF, Inequality, International Monetary Fund | Tagged: Christine Lagarde, employment, empowering women, income, income inequality, research, tax, women | 1 Comment »
Posted on August 8, 2013 by iMFdirect
By Murtaza Syed
(Version in 中文)
Anticipation of the U.S. Federal Reserve’s exit from quantitative easing has dominated headlines in recent weeks. Half a world away, less conspicuously, but no less importantly, China, the globe’s second largest economy, is designing its own policy adjustments: firstly, unwinding the fiscal and monetary stimulus that helped shield it from the Great Recession and lifted global growth (but which also created some vulnerabilities), and secondly transitioning out of a growth model that has generated spectacular growth over the last three decades, but which is now running out of fuel.
Managed well, these twin adjustments would allow China to prolong its economic miracle in a sustainable way, with a significant positive impact for the rest of the world.
Filed under: Asia, Economic Crisis, Emerging Markets, Employment, Finance, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund, Public debt | Tagged: China, credit, interest rate-growth differential, investment, Labor, Murtaza Syed, reform | 5 Comments »
Posted on August 1, 2013 by iMFdirect
By Jarkko Turunen
(Version in Español)
A year ago, we were very concerned about lingering weakness in the U.S. housing market, which we saw as a major obstacle to the economic recovery.
But what a difference a year makes! As our latest report on the U.S. economy points out, the housing market recovery has been stronger than expected, and is providing a significant boost to private domestic demand and economic growth.
What has changed in the last 12 months? House prices have rebounded sharply and are currently about 7-12 percent above their level a year ago. Home sales increased by more than 15 percent over the same time period. Thanks to higher house prices and the positive effects of government housing finance programs, fewer homeowners are “underwater” (owe more on their mortgages than their houses are worth) or are behind on their mortgage payments, and fewer houses are entering foreclosure.
Filed under: Advanced Economies, Economic Crisis, Economic research, Employment, Finance, growth, IMF, International Monetary Fund, Investment, Public debt | Tagged: economic growth, Federal Reserve, house prices, housing, housing indicators, housing market, IMF, iMFdirect, International Monetary Fund, monetary policy, mortgages, U.S., United States | Leave a Comment »
Posted on July 30, 2013 by iMFdirect
By Deniz Igan
(Version in Español)
Much has changed on the fiscal front since we started worrying about U.S. fiscal sustainability. The federal government budget deficit has fallen sharply in recent years―from almost 12 percent of GDP in 2009 to less than 7 percent in 2012. And recent budget reports show that the deficit is shrinking faster than expected only a few months ago, to a projected 4½ percent of GDP for the current fiscal year, which ends September 30. Plus, health care cost growth has slowed down dramatically since the Great Recession, alleviating the pressure on public health care programs at least temporarily.
Does this mean we can stop worrying? Not quite. Recent developments certainly mean that things are better than we thought just a few years ago and the fiscal adjustment needed to restore sustainability is smaller. But if the choice and timing of policy measures is not right, the deficit reduction may turn out to be too much in the short run—stunting the economic recovery—and not enough in the long run.
So, in our recent annual check-up of the U.S. economy, our advice is to slow the pace of fiscal adjustment this year—which would help sustain growth and job creation—but to speed up putting in place a medium-term road map to restore long-run fiscal sustainability.
Filed under: Advanced Economies, Economic Crisis, Economic research, Employment, Finance, Fiscal policy, growth, IMF, International Monetary Fund | Tagged: Article IV, deficits, economic recovery, fiscal sustainability, IMF, iMFdirect, International Monetary Fund, public debt, United States | 3 Comments »
Posted on June 17, 2013 by iMFdirect
By: Jeffrey Hayden, Editor-in-Chief
Nazareth College was my second home. As a child, I spent countless evenings roaming the small liberal arts college in Rochester, N.Y., where my mother headed the office of graduate studies and continuing education.
Most of her students worked day jobs, attending class at night. For her, this made for late hours at the office—and for a complex juggling act: off to work in the morning to manage a staff, drop everything at 3 p.m. to rush home to fix dinner for the family, and then back to work around 5 p.m.—with me in tow—to staff the office until evening classes let out. Sleep and then repeat. This was the rhythm of my childhood.
I thought a lot about those days as we put together the special feature on women at work in this issue of F&D—about her example, and about the many women who share in her experience and the many who do not.
Filed under: Emerging Markets, Employment, Finance, IMF, International Monetary Fund | Tagged: capital markets, China, Christine Lagarde, diversity, F&D, IMF, iMFdirect, India, International Monetary Fund, women | Leave a Comment »
Posted on June 10, 2013 by iMFdirect
By Antoinette M. Sayeh
Sub-Saharan Africa is the second fastest-growing region of the world today, trailing only developing Asia. This is remarkable compared to the current complicated state of the global economy, with Europe still struggling and the United States slowly on the mend.
In 2012, Sub-Saharan Africa maintained solid growth, with output growth at 5 percent on average. The factors that have supported the region through the Great Recession—strong investment, favorable commodity prices, and generally prudent macroeconomic management—continued to be at play.
Filed under: Africa, Economic Crisis, Economic outlook, Emerging Markets, Employment, Financial Crisis, Français, growth, International Monetary Fund, Low-income countries | Tagged: Democratic Republic of Congo, Ethiopia, Ghana, growth, investment, jobs, Malawi, regional economic outlook, Sub-Saharan Africa, Tanzania, unemployment | 1 Comment »
Posted on May 29, 2013 by iMFdirect
By Sebastián Sosa, Evridiki Tsounta, and Hye Sun Kim
(Versions in Español and Português)
Latin America has enjoyed strong growth during the last decade, with annual growth averaging 4½ percent compared with 2¾ in the 1980s and 1990s. What is behind this remarkable economic performance and will this growth be sustainable in the years ahead?
Our recent study (see also our working paper) looks at the supply-side drivers of growth for a large group of Latin American countries, to identify what’s behind the recent strong output performance.
Filed under: Economic research, Emerging Markets, Employment, Español, Fiscal policy, growth, IMF, International Monetary Fund, Latin America | Tagged: capital, employment, GDP, growth, IMF, iMFdirect, International Monetary Fund, Labor, Latin America, output, productivity | Leave a Comment »
Posted on May 1, 2013 by iMFdirect
Guest post by George A. Akerlof
University of California, Berkeley
Senior Resident Scholar at the IMF, and co-host of the Conference on Rethinking Macro Policy II: First Steps and Early Lessons
(Versions in عربي, 中文, Français, 日本語, and Русский)
I learned a lot from the conference , and I’m very thankful to all the speakers. Do I have an image of the whole thing? I don’t know whether my image is going to help anybody at all, but my view is that it’s as if a cat has climbed a huge tree. It’s up there, and oh my God, we have this cat up there. The cat, of course, is this huge crisis.
And everybody at the conference has been commenting about what we should do about this stupid cat and how do we get it down and what do we do. What I find so wonderful about this conference is all the speakers have their own respective image of the cat, and nobody has the same opinion. But then, occasionally, those opinions mesh. That’s my image of what we have been accomplishing.
Filed under: Advanced Economies, Economic Crisis, Economic research, Employment, Finance, Financial Crisis, G-20, IMF, International Monetary Fund, recession | Tagged: credit, credit default swaps, economic crisis, Economics, fiscal policy, GDP, George Akerlof, IMF, iMFdirect, International Monetary Fund, mortgages | 4 Comments »