Posted on August 28, 2014 by iMFdirect
By Deniz Igan
(Version in Español)
Something unusual happened this year. For the first time in almost ten years, a book by an economist made it to Amazon’s Top 10 list. Thomas Piketty’s Capital in the Twenty-First Century captured the attention of people from all walks of life because it echoed what an increasing number of Americans have been feeling: the rich keep getting richer and poverty in America is a mainstream problem.
The numbers illustrate the troubling reality. According to the U.S. Census Bureau, 1 in 6 Americans—almost 50 million people—are living in poverty. Recent research documents that nearly 40 percent of American adults will spend at least one year in poverty by the time they reach 60. During 1968–2000, the risk was less than 20 percent. More devastatingly, 1 in 5 children currently live in poverty and, during their childhood, roughly 1 in 3 Americans will spend at least one year living below the poverty line.
Filed under: Advanced Economies, Economic outlook, Economic research, Employment, Financial Crisis, Globalization, IMF, International Monetary Fund, Investment, recession, Reform, unemployment | Tagged: economic recovery, education, health care, jobs, labor market, poverty, poverty reduction, recession, rich and poor, tax, U.S., United States, wages | Leave a comment »
Posted on August 14, 2014 by iMFdirect
By Stephan Danninger
(Versions in 日本語)
Japan’s GDP declined by almost 7 percent in the second quarter, more than many had forecast including us here at the IMF. Many cite the increase in the sales tax this April for this decline. But that is not the full story.
Yes, it is true that consumer responses to major tax increases are difficult to predict, and large spending swings are not unusual. We see this pattern in many countries (see chart) including Germany’s 2007 VAT increase, which had a short-lived impact.
Filed under: Advanced Economies, Asia, Economic outlook, Economic research, Employment, Finance, Fiscal policy, growth, IMF, International Monetary Fund, Investment, Reform | Tagged: Abenomics, Bank of Japan, consumption tax, Germany, inflation, Japan, labor market, sales tax, structural reform, VAT | Leave a comment »
Posted on August 5, 2014 by iMFdirect
By Ruud de Mooij and Ikuo Saito
(Versions in 日本語)
It is no surprise that, as part of its revised growth strategy presented in June, the Japanese government has announced it will reduce the corporate income tax rate. At more than 35 percent for most businesses, the Japanese rate is one of the highest among the industrialized countries of the Organization for Economic Cooperation and Development (see Chart 1). Moreover, at a time when Japan needs to boost economic growth, the corporate income tax rate is generally seen as the country’s most growth-distortive tax.
Filed under: Advanced Economies, Asia, Economic research, Employment, Financial regulation, Globalization, growth, IMF, International Monetary Fund, Investment | Tagged: consumption tax, corporate income tax, Italy, Japan, public debt, small and medium-sized enterprises, tax cuts, tax deduction, tax incentives | Leave a comment »
Posted on July 28, 2014 by iMFdirect
By Ruy Lama
House prices are rising rapidly in the UK at an annual rate of 10.5 percent. House price inflation is particularly high in London (20 percent per year), and it is gradually accelerating in the rest of the country. The recent increases in house prices have been getting a lot of attention, and understandably have raised questions about living standards and whether another “boom-bust” cycle has begun.
The current UK housing cycle raises two important questions. What is driving the rise in house prices? And how should macroeconomic policies respond?
Macroeconomic policies should tackle two crucial issues in the housing market: (i) mitigating systemic financial risks during upswings in house prices and leverage; and (ii) encouraging an adequate supply of housing in order to safeguard affordability. In this blog, we discuss how the UK authorities are addressing these two issues and what additional policies may be necessary to manage risks from the housing market.
Filed under: Advanced Economies, Economic outlook, Economic research, Employment, Europe, Financial Crisis, growth, IMF, International Monetary Fund, Investment | Tagged: Article IV, house prices, housing market, inflation, Loan-to-income ratio, loan-to-value ratio, Macroeconomic policies, mortgages, United Kingdom | Leave a comment »
Posted on July 22, 2014 by iMFdirect
By John Bluedorn and Shengzu Wang
Since the financial crisis, the euro area current account, made up mostly of the trade balances of the individual countries, has moved from rough balance into a clear surplus. But the underlying rebalancing across economies within the euro area has been highly asymmetric, with some debtors, like Greece, Ireland, and Spain, seeing large current account improvements (sometimes into surplus), while creditors, like Germany and the Netherlands, have basically maintained their surpluses (Chart 1). A set of new staff papers look at the drivers of the improvements in debtor current accounts and the persistence of creditor current accounts, and whether these developments are a cause for concern.
Filed under: Advanced Economies, Economic Crisis, Employment, Europe, Financial Crisis, IMF, International Monetary Fund, Investment, Reform | Tagged: competitiveness, economic rebalancing, employment, euro area, Germany, Greece, inflation, Ireland, labor cost, lowflation, Netherlands, Spain, trade | Leave a comment »
Posted on July 21, 2014 by iMFdirect
By Min Zhu
(Versions in 中文, Español)
Asia is set to be the powerhouse for growth in the next decade, just as it was in the last one. The size of its economy is expected to expand more rapidly than the other regions of the world, and its share in the world output is expected to rise from 30 percent to more than 40 percent in the coming decade. The structure of the economy is expected to continue to transform from a narrower manufacturing hub to a group of vibrant, diverse and large markets with a rising middle-class population.
The role of the financial sector is critical in the success of this seismic transformation. Let me explain by focusing on three areas:
Filed under: Asia, Emerging Markets, Employment, Finance, Financial Crisis, Financial regulation, Globalization, growth, IMF, Inequality, International Monetary Fund, Investment | Tagged: Asian financial crisis, bond markets, China, financial services, income inequality, India, Indonesia, Japan, Korea, Min Zhu, population aging | Leave a comment »