The Broader View: The Positive Effects of Negative Nominal Interest Rates


By Jose ViñalsSimon Gray, and Kelly Eckhold

Versions in: عربي (Arabic), Deutsch (German), 日本語 (Japanese), and Español (Spanish)

We support the introduction of negative policy rates by some central banks given the significant risks we see to the outlook for growth and inflation. Such bold policy action is unprecedented, and its effects over time will vary among countries. There have been negative real rates in a number of countries over time; it is negative nominal rates that are new. Our analysis takes a broad view of recent events to examine what is new, country experiences so far, the effectiveness of negative nominal rates as well as their limits and their unintended consequences. Although the experience with negative nominal interest rates is limited, we tentatively conclude that overall, they help deliver additional monetary stimulus and easier financial conditions, which support demand and price stability. Still, there are limits on how far and for how long negative policy rates can go. Continue reading

Capacity Development in Africa: the Faces behind the Numbers


By Carla Grasso CGrasso

Versions in:  عربي (Arabic),  中文 (Chinese), Français (French),  日本語 (Japanese), Português (Portuguese), Русский (Russian), and Español (Spanish)

If there’s one thing all economists can agree on, it’s the importance of numbers. Without good data, it is difficult to assess how an economy is performing and formulate smart policies that help improve lives. Continue reading

The Changing Roles of Emerging Economies and the Insurance Sector


by iMFdirect

Today the IMF published some of its new research from the Global Financial Stability Report on two hot topics: emerging economies and the insurance sector in advanced economies.  Here’s a quick take on the latest analysis. Continue reading

Imagine What Fiscal Policy Could Do For Innovation


By Vitor Gaspar and Ruud De Mooij

Versions in عربي (Arabic), 中文 (Chinese), Français (French), 日本語 (Japanese), Русский (Russian), Español (Spanish)

Imagine how three-dimensional printing, driverless cars and artificial intelligence will change our future. Or think of how developments in information technology, e-commerce and the sharing economy are already changing the way we learn, work, shop, and travel. Innovation drives progress and, in economic terms, determines productivity growth. And productivity growth, in turn, determines prosperity. It impacts our lives and well-being in fundamental ways: it determines where and how long we live; it determines our quality of life. Continue reading

Oil Prices and the Global Economy: It’s Complicated


By Maurice Obstfeld, Gian Maria Milesi-Ferretti, and Rabah Arezki

Versions in عربي (Arabic), 中文 (Chinese), Français (French),
日本語 (Japanese), Русский (Russian), Español (Spanish)

Oil prices have been persistently low for well over a year and a half now, but as the April 2016 World Economic Outlook will document, the widely anticipated “shot in the arm” for the global economy has yet to materialize. We argue that, paradoxically, global benefits from low prices will likely appear only after prices have recovered somewhat, and advanced economies have made more progress surmounting the current low interest rate environment.

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The Case for Reforming the Price of Water


David Lipton2012By David Lipton

Versions in عربي (Arabic), 中文 (Chinese), Français (French), 日本語 (Japanese), Русский (Russian), and Español (Spanish)

One of the first things most students of economics learn is the diamond and water paradox. How can it be that water is free even though life cannot exist without it, while diamonds are expensive although no one dies for lack of diamonds?

The answer is that water can be free if its supply is abundant relative to demand. Nevertheless, it is abundantly clear that worldwide, the demand for water outpaces supply. This imbalance is the clearest sign that water is underpriced. Yet, many governments are reluctant to price water like other goods.

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Monetary Policy and Financial Stability: Canada’s House-Price Dilemma


By Cheng Hoon Lim

(Version in Français)

Canada’s housing market is sizzling hot and the Bank of Canada has a monetary policy dilemma: increase interest rates to cool the housing market would hurt borrowers and the economy; keep interest rates low adds fuel to the borrowing that led to the rise in housing prices and in household debt. What to do?

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