Posted on March 19, 2014 by iMFdirect
By Sanjeev Gupta and Michael Keen
(Version in Español, Français, Русский, 中文 and 日本語)
These are difficult times for ministers of finance. Fiscal constraints are tight and raising economic growth a priority. At the same time, income inequality is on the rise, and so is public pressure for governments to do something about it through their tax and spending policies. What’s a minister to do? How can he or she meet these seemingly incompatible demands?
A new IMF paper provides some guidance. Governments, of course, will have their own equity objectives. What the paper aims to do is look at precisely how countries can achieve their distributional goals—whatever they are—at the least possible cost to (and maybe even increasing) economic efficiency. This can help achieve sustainable growth and, in many cases, lead to fiscal savings. An earlier study by IMF researchers found that on average, fiscal redistribution has been associated with higher growth, because it helps reduce inequality.
Filed under: Advanced Economies, Economic research, Employment, Fiscal policy, IMF, Inequality, International Monetary Fund | Tagged: developing economies, education, government spending, health, income distribution, income inequality, inequality, pension, property taxes, retirement, taxes | 1 Comment »
Posted on February 4, 2013 by iMFdirect
by Carlo Cottarelli and Philip Gerson
Version in Español and عربي
We’re one month into 2013, and if past experience is any guide, by now many people will have all but forgotten the promises they made about the things they planned to do over the coming year.
It’s a time-honored tradition in many countries for people to make resolutions at the New Year, usually involving things that are good for them, like achieving a healthier weight. Unfortunately, it’s also traditional that these commitments quickly fall by the wayside, only to be taken up again next year, usually with the same results.
But unlike many of these resolutions, the ones made by most advanced economies to reduce their 2012 fiscal deficits were by and large kept. The average headline deficit in these countries fell by about ¾ percent of GDP last year, bringing the cumulative deficit decline to 3 percent of GDP since budget shortfalls peaked in 2009. This is good news.
Filed under: Advanced Economies, Economic Crisis, Emerging Markets, Europe, Fiscal policy, growth, IMF, International Monetary Fund, Public debt | Tagged: advanced economies, deficit reduction, fiscal consolidation, fiscal policy, government debt, government spending, IMF, iMFdirect, International Monetary Fund, Japan, United States, United States Federal Reserve | 2 Comments »
Posted on December 11, 2012 by iMFdirect
The head of the IMF Christine Lagarde has weighed in on the ongoing U.S. fiscal cliff debate. Three weeks before a series of automatic tax increases and spending cuts are due to kick in if lawmakers don’t reach a new deal, Lagarde said she favors a comprehensive fix, rather than a quick one.
“My view is that the best way forward is to have a balanced approached that takes into account both increasing revenues and cutting spending as well.”
Filed under: Advanced Economies, Economic Crisis, Employment, Fiscal policy, growth, IMF, International Monetary Fund | Tagged: Christine Lagarde, CNN, entrepreneurs, Europe, fiscal cliff, government spending, growth, households, IMF, iMFdirect, International Monetary Fund, investors, taxes, United States | 7 Comments »
Posted on November 16, 2009 by iMFdirect
By Carlo Cottarelli
One obvious fallout of the global financial crisis is a huge deterioration in fiscal conditions, particularly in advanced countries. The numbers are nothing short of staggering. Gross general government debt in the G-20 advanced economies is projected to approach 120 percent of GDP by 2014, up from about 80 percent in 2007, and this is even assuming no renewal of fiscal stimulus beyond 2010.
Some might think that this comes from an “exotic” form of fiscal policy whereby governments opened their coffers to prop up financial institutions. But only a small part of this debt spike is matched by a rise in financial assets. It really boils down to “plain vanilla” deficits—revenue losses from the recession, fiscal stimulus, and some underlying spending increases that would have occurred even without a recession.
Filed under: Economic Crisis, Financial Crisis, Fiscal Stimulus, IMF | Tagged: debt overhang, debt ratios, fiscal exit strategies, fiscal space, Fiscal Stimulus, government spending, health spending, pensions, population aging | 2 Comments »