Tariffs Do More Harm Than Good at Home


maurice-obstfeld2By Maurice Obstfeld

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

A longstanding challenge for the global economy is the possibility that some countries compete for export markets through artificially low prices. Political leaders and pundits sometimes propose import tariffs to offset the supposed price advantages and exert pressure for policy changes abroad. What proponents often fail to realize is that such tariff policies, while certainly hurting their targets, can also be very costly at home. And surprisingly, the self-inflicted harm can be substantial even when trade partners do not retaliate with tariffs of their own. Continue reading

The Lowdown on U.S. Core Inflation


Yasser AbdihBy Yasser Abdih

There was a time when U.S. central bankers worried that inflation was too high, and they tried to bring it down. Now the opposite is true: the Federal Reserve is concerned that inflation has remained stubbornly low, and it’s trying to boost prices. The reason: persistently low inflation raises the risk that prices will actually start to decline, a dangerous condition known as deflation. That’s bad news because it makes people less willing to borrow and spend—anticipating lower prices, consumers will put off spending—and could also lead to a fall in wages. Continue reading

Oil Exporters Learn to Live with Cheaper Oil


By Martin Sommer, Juan Treviño, and Neil Hickey

Version in  عربي (Arabic)

The significant and prolonged drop in oil prices since mid-2014 has changed the fortunes of many energy-exporting nations around the world. This applies particularly to countries of the Middle East and Central Asia, because these regions are home to 11 of the world’s top 20 energy exporters.

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Make in India: Which Exports Can Drive the Next Wave of Growth?


By Rahul Anand, Kalpana Kochhar, and Saurabh Mishra

The expansion of India’s exports of services between 1990 and 2013 has been nothing short of spectacular, putting India on a par with the world’s high-income economies in terms of service-product sophistication and as a share of total exports. This has created unique opportunities for continued growth. By contrast, when it comes to exports of manufactured goods, India has lagged behind its emerging-markets peers, both in quality and as a percentage of the total export basket, leaving substantial room for improvement.

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China and Africa: Will the Honeymoon Continue?


By Wenjie Chen and Roger Nord

(Versions in عربي中文, Français, Português, and Español)

China’s President Xi Jinping’s recent pledge of US$60 billion in financial support over the next three years illustrates the depth of the partnership between China and Africa.

However, China’s shift from an investment-heavy, export led growth strategy to an economic model that relies more on domestic consumption has led to a dramatic decline in commodity prices. Lower commodity prices and lower volumes of trade have hit sub-Saharan Africa’s commodity exporters hard. But over the medium term, this shift may offer sub-Saharan African countries the opportunity to diversify their economies away from natural resources, and create jobs for their young populations, provided they pursue the right policies to foster competitiveness and integrate into global value chains.

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Multi-Track Monetary Policies in Advanced Economies: What This Means for Asia


By James Daniel and Rachel van Elkan

Since mid-2014, diversity and divergence—applying to countries’ economic situations, policies and performance—have dominated global economic discussions. Differing economic performance in major advanced countries has led to divergent monetary policies.

Both the Bank of Japan and the European Central Bank have started significant expansions of their balance sheets, while the U.S. Federal Reserve has ended its bond-buying program and is expected to start raising rates. This has had many effects, in particular, contributing to a sharp depreciation of the Yen and the Euro against the U.S. dollar (see chart 1).

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A Tale of Two States—Bringing Back U.S. Productivity Growth


By Roberto Cardarelli and Lusine Lusinyan 

(Versión en español)

Today’s Pop Quiz: What do Oregon and New Mexico have in common? What could possibly link the spectacular vistas of Crater Lake to the glistening White Sands?

Answer: One link is these two states have the highest share of computer and electronic production in the entire United States. Think Intel in the Silicon Forest or Los Alamos. They also rank similarly in information technology usage by their businesses.

For Crater Lake: (photo: Eye Ubiquitous/Newscom)    For White Sands: (photo: Eye Ubiquitous/Newscom)

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