For Your Eyes Only: Three Jobs Not to Defer in 2013


David LiptonBy David Lipton

(Versions in  عربي, 中文, EspañolFrançaisРусский, 日本語)

With the New Year, we all hope to put the global financial crisis behind us. We also need to do more to secure our future.

Beyond our current economic and financial problems, there are long-term issues that we all know about, but that get too little attention in an era when policymakers are so fully engaged in slogging away at more immediate problems. Unfortunately, long-term issues unaddressed today will become crises tomorrow.

So we had better lengthen our focus, see what looms on the horizon, and do more to steer the global economy in a better direction.

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Jobs. Jobs. Jobs. Getting the Labor Markets Working Again


By Olivier Blanchard

The sharp and persistent rise in unemployment in advanced economies since the 2008-09 financial crisis is a hotly debated policy issue.  Rightly so:  High persistent unemployment has major human and economic costs, from loss of morale to loss of skills.  More broadly, it seems to undermine the very fabric of society.

Against this backdrop, the theme for the IMF’s 13th Jacques Polak Annual Research Conference, “Labor Markets through the Lens of the Great Recession,” could not be timelier. This year’s conference program weaves together a number of contributions by researchers both inside and outside the IMF, aiming to shed light on those labor market issues that are central to the current economic and social landscape.

Cyclical vs. structural

Peter Diamond, Nobel Prize winner in Economics and Professor of Economics at MIT, will give the keynote Mundell-Fleming lecture on the controversial issue of cyclical vs. structural unemployment.

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Not Making the Grade: Report Card on Global Financial Reform


by Laura Kodres

Despite a host of reforms in the right direction, the financial structures that were in place before the global crisis have not actually changed that much, and they need to if the global financial system is to become a safer place.

Although the intentions of policymakers are clear and positive, the system remains precarious.

Our new study presents an interim report card on progress toward a safer financial system. Overall, there is still a long way to go.

How we measure progress

In our study, we first tried to pay attention to those features of financial systems related to the crisis—the large dominant, highly interconnected institutions, the heavy role of nonbanks, and the development of complex financial products for instance—features that need to be addressed in some way.

To do this we needed to construct measures of these features in a way that would allow us to gauge how well the reforms are working toward changing them. We looked at a lot of data, but we focus on three types of features.

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Promoting Multilateral Solutions for a Globalized World


Jeremy CliftBy Jeremy Clift

(Version in Español عربي)

We live in an increasingly globalized and interconnected world, helping to spread ideas, information, and technology ever more quickly. The globalized economy has created a complex and interlocking network of capital and trade flows that have brought major economic gains, lifting hundreds of millions of people out of poverty around the world.

But, as we have seen from the prolonged global financial crisis, our interconnectedness carries grave risks as well as benefits. With instant communication comes the risk of rapid contagion. There is, thus, a strong public interest in ensuring that global economic integration is supported by a coherent set of coordinated national macroeconomic policies and a harmonized international regulatory regime that addresses the fragilities in our global financial system.

The new issue of Finance & Development magazine looks at different aspects of interconnectedness. Kishore Mahbubani, dean of the National University of Singapore’s Lee Kuan Yew School of Public Policy and author of the forthcoming book The Great Convergence: Asia, the West, and the Logic of One World, argues that what he terms the global village increasingly requires global solutions to big emerging problems such as climate change.

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Can Policymakers Stem Rising Income Inequality?


By David Coady and Sanjeev Gupta

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.

In our recent study we find that public spending and taxation policies have had, and are likely to continue to have, a crucial impact on income inequality in both advanced and developing economies.

In advanced economies, this is especially important given that the ongoing fiscal adjustment needs to be continued for many years to reduce public debt to sustainable levels. But it is equally important in developing economies where inequality is relatively high.

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Global Challenges, Global Solutions


By iMFdirect

The IMF-World Bank Spring Meetings are upon us here in Washington DC.

With global challenges that require global solutions—the theme of the meetings—IMF Managing Director Dominique Strauss-Kahn reminds us that this is “not the time for complacency.”

Government ministers and officials, members of civil society organizations, journalists, and others are flocking to Washington DC this week to discuss and decide on key issues facing the global economy. Continue reading

Help in the Neighborhood: ‘Just a Phone Call Away’


By Alfred Kammer

Regional technical assistance centers have gradually evolved to play a major role in IMF technical assistance. These centers, which are largely donor financed, have become important vehicles for helping countries carry out economic reforms.

Their objective is to assist countries in designing and implementing their poverty reduction and broader developmental strategies and help countries integrate into the world economy.

For example, they help strengthen public financial management, and so improve governance and transparency, facilitating donors’ use of budget support instruments. They help improve tax and customs administration, providing an environment that is more conducive to investment and growth, increasing the resource envelope for poverty reducing spending and reducing the opportunities for corruption. At the same time, such reforms facilitate trade and enable countries to take better advantage of the forces of globalization.

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