A Shifting U.S. Policy Mix: Global Rewards and Risks


maury-obstfeld-imfBy Maurice Obstfeld

Version inعربي (Arabic),  中文 (Chinese), Français (French), 日本語 (Japanese), Русский (Russian), and Español (Spanish)

After a year marked by financial turbulence, political surprises, and unsteady growth in many parts of the world, the Fed’s decision this month to raise interest rates for just the second time in a decade is a healthy symptom that the recovery of the world’s largest economy is on track.

The Fed’s action was hardly a surprise: markets had for weeks placed a high probability on last week’s move. But market developments preceding the Fed decision did surprise many market watchers. Continue reading

Going with the Flow: Benefits of Capital Inflows for Emerging Markets


deniz-igan-imfBy Deniz Igan

Michael Mussa, a former Chief Economist of the IMF, famously likened capital account liberalization to fire. In his comments at the IMF Economic Forum on October 2, 1998, he said: “Fire warms our homes, it cooks our food, our internal combustion engines,” and continued: “No doubt, fire is very useful, and we are not going to give up its manifold benefits. On the other hand, fire can also burn you down and do a great deal of damage.”

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A “New Normal” for the Oil Market


By Rabah Arezki and Akito Matsumoto

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

While oil prices have stabilized somewhat in recent months, there are good reasons to believe they won’t return to the high levels that preceded their historic collapse two years ago. For one thing, shale oil production has permanently added to supply at lower prices. For another, demand will be curtailed by slower growth in emerging markets and global efforts to cut down on carbon emissions. It all adds up to a “new normal” for oil.

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Big Bad Actors: A Global View of Debt


By Vitor Gaspar and Marialuz Moreno Badia

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

In the midst of the Great Depression, the American economist Irving Fisher warned of the dangers of excessive debt and the deflationary pressures that follow on its tail. He saw debt and deflation as the big, bad actors. Now, their close relatives—too high debt and too low inflation—are still in play, at least for advanced economies.

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Building Collaboration Without Crisis


By Ian Bremmer and David Lipton

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

Too often, a spirit of international cooperation evaporates just when it is most needed and most promising. And then, lack of cooperation leads to crisis; crisis belatedly forces cooperation; but that cooperation must begin with picking up the pieces.

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How Lowering Trade Barriers Can Revive Global Productivity and Growth


By Era Dabla-Norris and Romain Duval

Version in Español (Spanish)

Weak productivity growth in many advanced and emerging market economies in the wake of the global financial crisis is raising concerns about future growth prospects. New research indicates that easing barriers to international trade and foreign direct investment (FDI) could boost productivity and output.

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Warning Signs as Global Financial Risks Increase


GFSRBy José Viñals

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

 

Over the last six months, global financial stability risks increased as a result of the following developments:

  • First, macroeconomic risks have risen, reflecting a weaker and more uncertain outlook for growth and inflation, and more subdued sentiment. These risks were highlighted yesterday at the World Economic Outlook press conference.
  • Second, falling commodity prices and concerns about China’s economy have put pressure on emerging markets and advanced economy credit markets.
  • Finally, confidence in policy traction has slipped, amid concerns about the ability of overburdened monetary policies to offset the impact of higher economic and political risks.

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