Battling Global Unemployment: Too Soon to Declare Victory


Prakash LounganiBy Prakash Loungani

(Version in Français and Español)

Seven years after the onset of the Great Recession, the global unemployment rate has returned to its pre-crisis level: the jobless rate fell to 5.6% in 2014; essentially the same as in 2007, the year before the recession (chart 1, left panel).

Global Unemployment 1

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Inclusive Growth=Stability


By iMFdirect

In the end, the case for job rich, inclusive growth is not economic, it’s political, according to Nobel prize-winning economist Michael Spence.

In this podcast with the IMF, Spence discusses the growing sense in many countries that it’s mostly the wealthy population who are reaping the benefits of economic development.

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Portfolio Investment in Emerging Markets: More Than Just Ebb and Flow


Evan PapageorgioBy Evan Papageorgiou

When the U.S. Federal Reserve first mentioned in 2013 the prospect of a cutback in its bond buying program, markets had a “taper tantrum.” Many emerging markets saw large increases in volatility, even though outflows from their domestic markets were small and short-lived. Now the Fed has ended its bond buying and is looking ahead to rate hikes, and portfolio flows continue to arrive at the shores of emerging market economies. So everything’s fine, right? Not quite.

In our latest Global Financial Stability Report, we show that the large concentration of advanced economy capital invested in emerging markets acts as a conduit of shocks from the former to the latter.

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Good Governance Curbs Excessive Bank Risks


By Luis Brandão-Marques, Gaston Gelos, and Erik Oppers 

The global financial crisis reminded us that banks often take risks that are excessive from society’s point of view and can damage the economy. In part, this is the result of the incentives embedded in compensation practices and of inadequate monitoring by stakeholders.  Our analysis found the right policies could reduce banks risky behavior. 

Our findings

In our latest Global Financial Stability Report we take stock of recent developments in executive pay, corporate governance, and bank risk taking, and conduct a novel empirical analysis.

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It’s Unofficial!


DSC_7906By Sabina Bhatia 

I know it might sound odd, but I actually like the IMF-World Bank Annual Meetings. I know the traffic snarls on Pennsylvania Avenue are terrible, Washington cabbies ruder than ever, lots of men in dark suits (and sadly, they are still mostly men), and there is the constant rush from meeting to meeting.

But beyond the long lines, long hours, cold coffee and the constant buzz of communiqués, press releases, and scores of official meetings, I find my place in the  rich and stimulating discussions among the non-official community.

This year, over 600 civil society organizations, including members of parliament, academics, and several youth and labor groups, came to the meetings. They deliberated, discussed and debated some thorny issues. The burning issues close to their hearts? Not that different from what officials are also debating.  Here is some of what I heard:

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The Growth of Shadow Banking


By Gaston Gelos and Nico Valckx

Shadow banking has grown by leaps and bounds around the world in the last decade.  It is now worth over $70 trillion. We take a closer look at what has driven this growth to help countries figure out what policies to use to minimize the risks involved.

In our analysis, we’ve found that shadow banks are both a boon and a bane for countries. Many people are worried about institutions that provide credit intermediation, borrow and lend money like banks, but are not regulated like them and lack a formal safety net. The largest shadow banking markets are in the United States and Europe, but in emerging markets, they have also expanded very rapidly, albeit from a low base.

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Now Is a Good Time to Invest in Infrastructure


By Abdul Abiad, Davide Furceri, and Petia Topalova

Infrastructure is the backbone of well-functioning economies. Unfortunately, that backbone is becoming increasingly brittle in a number of advanced economies. For example, there has been a decline in the overall quality of infrastructure in the United States and Germany (Figure 1; see the FT 2014 and ASCE 2013 for more in infrastructure in the U.S., and Der Speigel 2014 and Kunert and Link 2013 for Germany). In many emerging market and developing economies, the expansion of the backbone has not kept pace with the broader economy, and this is stunting the ability of these economies to grow.

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