Economics – New Links for Students from the IMF


The IMF’s well written Finance & Development magazine has recently published two helpful online compilations of articles that may be useful to students and those interested in economic issues.    They are rich collections of material that are totally free!!
1. Back to Basics — explaining some fundamental concepts in Economics and Finance
2. People in Economics — a collection of profiles of leading economists and policymakers, including 10 Nobel Prize winners.
In addition,
  • listen to regular audio podcasts with leading experts on development issues around the world–or download from iTunes.
  • and get free a neat new ipad app for IMF news and data–it lets you chart and view global economic indicators and forecasts

Disappearing Deficits


By Tim Irwin

Suppose a government must reduce its budget deficit. Perhaps it made a commitment to do so; perhaps investors are beginning to doubt its ability to repay debt. It could cut spending or raise taxes, but that is painful and unpopular. What can it do?

In our work at the IMF, we sometimes discover that governments choose to employ accounting devices that make the deficit smaller without actually causing any pain, and without actually improving public finances.

In ideal accounting, this would not be possible. In real accounting, it sometimes is.

How the devices work

Some governments, for example, have been able to reduce their reported deficits by taking over companies’ pensions schemes. The government’s obligation to make future pension payments has a real cost, but it doesn’t count as a liability in the accounting. So when the government receives a pension scheme’s assets from the company, it can treat the receipt of those assets as revenue that reduces its deficit.

Many other governments have been able to defer spending, without significantly reducing it in the long run, by entering into public-private partnerships. Under these contracts, a private company builds and maintains an asset like a road or a hospital. In return, the government agrees to pay the company for its costs over 20 or 30 years. In a sense, the government has bought the asset on an installment plan, but government accounting seldom counts this obligation as a liability.

In each of the above cases—and in others analyzed in my note, Accounting Devices and Fiscal Illusions—the government’s deficit is lower at first, but only at the expense of bigger future deficits.

Continue reading

Youth Speaking Out


CliftJBy Jeremy Clift

Young people, hardest hit by the global economic downturn, are speaking out and demanding change. Coming of age in the Great Recession, the world’s youth face an uncertain future, with lengthening job lines, diminished opportunities, and bleaker prospects that are taking a heavy emotional toll.

Some people call them the iPod generation—insecure, pressured, overtaxed, and debt-ridden—but insecure or not, around the world young people are challenging a system that appears to have let many down. “Young people want a world economy that is more just, more equal, and more human,” says Angel Gurría, secretary-general of the Organization for Economic Cooperation and Development.

Differing impact on generations

Youth Demanding Change

The Great Recession has taken its toll on the different generations in different ways. For the post–World War II baby boom generation, it’s essentially a wealth crisis. A generation that had hoped to retire has seen the value of its property and savings dramatically eroded. For the group known as Gen X (born 1965–80), it’s an income crisis. They should be in the period of their life when they are earning the most, but the downturn has depressed their salaries and threatens their pensions. For Gen Y (1981–2000), it’s about their future and the potentially damaging legacy of the boomer generation.

In recent issues of the magazine, we have looked at the impact of aging populations on economies around the world and how inequality affects growth.

In the March 2012 issue of F&D, we look at the need to urgently address the challenges facing youth and create opportunities for them. Watch a video on this.

Continue reading

Saudi Arabia: a Key Regional and Global Player


By Christine Lagarde

(Version in عربي)

I have just returned from Saudi Arabia, where I was welcomed with exceptional warmth and hospitality. It was my first visit as the Managing Director of the IMF.

It was a pleasure to be in Saudi Arabia, a country with rich heritage and culture. And a country that is seeking to chart a path that balances the drive for greater economic development and closer integration into the global economy with the strong desire to preserve the traditions and values of its people.

I had the privilege of meeting H.M. King Abdullah, senior government officials, and representatives of the private sector. Our discussions were productive and constructive, and we traded views on current global, regional, and domestic developments. Continue reading

Driving the Global Economy with the Brakes On


By Olivier Blanchard

(Versions in  عربي中文EspañolFrançaisРусский日本語)

After the speech by the IMF’s Managing Director in Berlin yesterday, my main messages on the global outlook will not surprise you.

Starting with the bad news–the world recovery, which was weak in the first place, is in danger of stalling. The epicenter of the danger is Europe, but the rest of the world is increasingly affected.

There is an even greater danger, namely that the European crisis intensifies. In this case, the world could be plunged into another recession.

Turning to the good news–with the right set of measures, the worst can definitely be avoided, and the recovery can be put back on track. These measures can be taken, need to be taken, and need to be taken urgently.

And now the numbers, starting at the epicenter:

The IMF’s forecast for growth in Euro Area for 2012 is ‑0.5 percent—this marks a decrease of 1.6 percentage points relative to our September 2011 projection. In particular, we predict negative growth in Italy (‑2.2 percent) and Spain (‑1.7 percent).

We have also revised downwards our forecasts for other advanced countries, although by less. Only for the United States, is our forecast unchanged at 1.8 percent.

Continue reading

Nanjing and the New International Monetary System


By Dominique Strauss-Kahn

(Version in 中文)

I am delighted to be back in China this week for a high-level seminar in Nanjing on the international monetary system. Every time I come to this part of the world, I am impressed by the dynamism of the economies and the optimism of the people. The future is here.

The region’s economic performance over the past few decades has been nothing short of remarkable. Asia now accounts for about a third of the global economy, up from under just a fifth in 1980. This trend has been reinforced by the crisis, with the emerging market powerhouses leading the global recovery.

Asia has also made tremendous progress with poverty reduction. China alone has pulled hundreds of millions of people out of poverty over the past few decades. Such a feat has never before been accomplished in the history of human civilization.

But to sustain this progress, Asia needs to grapple with numerous challenges today, among them the need to deal with overheating pressures and volatile capital inflows. And this relates directly to our discussion at Nanjing. Continue reading

All Eyes on Paris and the G-20


By iMFdirect

Certainly the world did not end in 2008 with the collapse of Lehman and the crisis that followed. But, it didn’t mostly—perhaps only—because extraordinary international policy cooperation helped avert a far worse outcome.
Dominique Strauss-Kahn

… the G-20 has now to adapt to a new economic environment. It must prove that it is able to coordinate the economic policies of major economies on an ongoing basis.
French G-20 Presidency

G-20 Finance Ministers and Central Bank Governors gather in Paris for their first ministerial level meeting of France’s G-20 presidency at a critical juncture Continue reading

A Stronger Financial Architecture for Tomorrow’s World


By Dominique Strauss-Kahn

(Version in Español Français 日本語)

The international monetary system (IMS) is a topic that encompasses a wide range of issues—reserve currencies, exchange rates, capital flows, and the global financial safety net, to name a few. It is one of the key issues on the G-20’s work agenda for 2011, and a topic that is eliciting lively discussion—for instance the recent, insightful report of the group chaired by Michel Camdessus, called the “Palais-Royal Initiative”.

Some are of the view that the current system works well enough. While not perfect, they point to its resilience during the crisis, citing the role of the U.S. dollar served as a safe haven asset. And now that the global recovery is underway, they see little reason to worry about the IMS. In other words, “if it ain’t broke, don’t fix it”.

I take a less sanguine view. Continue reading

2011—A Pivotal Year for Global Cooperation


By John Lipsky

(Version in Español | 中文 | Français | 日本語 | Русский | عربي )

2011 represents a pivotal year for the global economic recovery and for international policy cooperation—as well as for the role of the Fund in addressing these two principal challenges.

With the crisis of 2008-09 receding, and following the unprecedented efforts expended in 2010 developing the outlines of a new, post-crisis world, 2011 will be the year in which post-crisis plans will be implemented, tested, and assessed. If they are deemed to be successful, it will not be an exaggeration to claim that a new model for global economic and financial governance will be under way. If unsuccessful, however, the sense of failure likely would undermine confidence while adding to the formidable list of challenges to be overcome. Continue reading

2010: The Year of IMF Reform


By James Boughton, IMF Historian

(Version in Español)

The year 2010 was—finally—the year of IMF reform. Dominique Strauss-Kahn, the IMF’s Managing Director, did not exaggerate when he asserted that the agreements of 2010 were “the most important reform in the governance of the institution since its creation.” What will happen now, and why is it so important?

Three major changes have been agreed to. Each one is a major reform and the culmination of years of work. Each one will be difficult to make effective. Each one should prove to be a blessing, but only if it is well implemented. Continue reading

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