Trade Winds—Has the Spectre of Protectionism Blown Away?


By Tamim Bayoumi

The global crisis has pushed trade reforms off—or at least to the edge of—the political radar screen. But shying away from improving the trade system in these tough economic times seems a little like cutting off your nose to spite your face.

The IMF’s First Deputy Managing Director David Lipton summed the issue up in a recent speech: “trade wars can put millions of jobs in jeopardy, while trade integration can be an engine of growth.”

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Warning! Inequality May Be Hazardous to Your Growth


By Andrew G. Berg and Jonathan D. Ostry

Many of us have been struck by the huge increase in income inequality in the United States in the past thirty years. The rich have gotten much richer, while just about everyone else has had very modest income growth.

Some dismiss inequality and focus instead on overall growth—arguing, in effect, that a rising tide lifts all boats. But assume we have a thousand boats representing all the households in the United States, with boat length proportional to family income. In the late 1970s, the average boat was a 12 foot canoe and the biggest yacht was 250 feet long. Thirty years later, the average boat is a slightly roomier 15 footer, while the biggest yacht, at over 1100 feet, would dwarf the Titanic! When a handful of yachts become ocean liners while the rest remain lowly canoes, something is seriously amiss.  

In fact, inequality matters. And it matters in all corners of the globe. Continue reading

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