The Case for Fiscal Policy to Support Structural Reforms


By Angana Banerji, Era Dabla-Norris, Romain Duval, and Davide Furceri

Versions in 中文 (Chinese), Français (French),Deutsch (German), Русский (Russian), and Español (Spanish)

Many advanced countries need  structural reforms to make their economies more productive and raise long-term living standards.  Our new research shows that provided countries can afford it, fiscal policy, through spending or tax incentives, can help governments overcome some obstacles to the reforms, particularly in the early stages.   Continue reading

Dealing with Sovereign Debt—The IMF Perspective


By Sean Hagan, Maurice Obstfeld, and Poul M. Thomsen

Versions in Français (French), Deutsch (German), ελληνικά (Greek), and Español (Spanish)

Debt is central to the functioning of a modern economy. Firms can use it to finance investments in future productivity. Households can use it to finance lumpy purchases, such as big consumer durables, or a home. Sometimes, however, firms’ investments do not pan out or a household’s main earner loses his or her job. Countries’ legal systems generally recognize that in these cases, debtors and creditors alike—along with society at large—may be better off if there is an orderly procedure for reorganizing debts.  Continue reading

Navigating Through Global Cross Currents: Latest Outlook for Latin America and the Caribbean


Event onlyBy Alejandro Werner

Versions in Português (Portuguese), and Español (Spanish)

The global landscape has changed since our last update in October 2016. These changes have been mainly shaped by:

  • An anticipated shift in the U.S. policy mix, higher growth and inflation, and a stronger dollar. In the United States—while potential policy changes remain uncertain—fiscal policy is likely to become expansionary, while monetary policy is expected to tighten faster than previously expected because of stronger demand and inflation pressures. As a result, growth is projected to rise to 2.3 percent in 2017 and 2.5 percent in 2018—a cumulative increase in GDP of ½ percentage point relative to the October forecast. The expected change in the policy mix and growth has led to an increase in global long-term interest rates, a stronger dollar in real effective terms, and a moderation of capital flows to Latin America.
  • Improved outlook for other advanced economies and China for 2017–18, reflecting somewhat stronger activity in the second half of 2016 as well as projected policy stimulus.
  • Some recovery in commodity prices, especially metal and oil prices, on the back of strong infrastructure and real estate investment in China, expectations of fiscal easing in the United States, and agreement among major petroleum producers to cut supply.

Continue reading

Roads to Stronger Growth in Low-Income Countries


By Tao Zhang and Vladimir Klyuev

Versions in:  عربي (Arabic), 中文 (Chinese), Français (French), and Español (Spanish)

Low-income countries should build more infrastructure to strengthen growth. A new IMF analysis looks at ways to overcome obstacles.

The clock is now ticking on the 2030 Agenda for Sustainable Development, and while investment—critical to this agenda—has been rising in recent years among low-income countries, weak infrastructure is still hampering growth. Governments need to make significant improvements to lay foundations for flourishing economies: roads to connect people to markets, electricity to keep factories running, sanitation to stave off disease, and pipelines to deliver safe water. Continue reading

A Field Guide to Exchange Rate Regimes in Central, Eastern and Southeastern Europe


By Philip Gerson and Johannes Wiegand

For an economist interested in examining the evolution of monetary and exchange rate regimes, Central, Eastern and Southeastern Europe (CESEE) provides a habitat of unparalleled diversity. Almost every type of regime can be found in the region: from floating and inflation targeting over various pegs to the unilateral use of the euro and full euro area membership.

Continue reading

Can Raising Japan’s Minimum Wage Accelerate Wage Growth?


By Luc Everaert and Giovanni Ganelli

Version in 日本語 (Japanese)

Japan’s minimum wage is 798 JPY ($6.52) per hour, lower than many other advanced countries, including the United States, and among the lowest relative to the average wage (see chart). For a country that needs consumers to boost spending to pull the economy out of 15 years of deflation and reinvigorate growth, a hike in wages across the board can go a long way. Continue reading

%d bloggers like this: