Posted on January 12, 2015 by iMFdirect
In the end, the case for job rich, inclusive growth is not economic, it’s political, according to Nobel prize-winning economist Michael Spence.
In this podcast with the IMF, Spence discusses the growing sense in many countries that it’s mostly the wealthy population who are reaping the benefits of economic development.
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Employment, Financial Crisis, Global Governance, IMF, International Monetary Fund, Multilateral Cooperation | Tagged: China, economic development, global economy, Great Recession, inclusive growth, infrastructure, investment, Michael Spence, podcasts, public sector | Leave a comment »
Posted on June 4, 2014 by iMFdirect
By Jesus Gonzalez-Garcia and Francesco Grigoli
(Version in Español)
Government ownership of banks is still common around the world, despite the large number of privatizations that took place over the past four decades as governments reduced their role in the economy. On average, state-owned banks hold 21 percent of the assets of the banking system worldwide. In Latin American and Caribbean countries, the public banks’ share is about 15 percent, with some of them showing very large shares, for instance, Argentina, Brazil, Uruguay, and Costa Rica are all over 40 percent (see Figure 1).
State-owned banks play an important role in the financial system. They fulfill functions that are not performed by private banks, provide financing for projects that benefit the rest of the economy, and provide countercyclical lending (lending more when the economy is weak). But public banks usually respond to the needs of governments owing to the state’s obvious involvement in their administration. As a result, government’s participation in the banking system may weaken fiscal discipline by allowing the public sector to access financing that they would not obtain from other sources.
In our recent study, we use a panel dataset for 123 countries to test whether a larger presence of state-owned banks in the banking system is associated with more credit to the public sector, larger fiscal deficits, higher public debt ratios, and the crowding out of credit to the private sector.
Filed under: Economic outlook, Economic research, Emerging Markets, Español, Finance, Fiscal policy, Government, International Monetary Fund, Latin America, Public debt | Tagged: Argentina, bank credit, banking, big banks, Caribbean, Latin America, public sector, Uruguay | Leave a comment »
Posted on July 19, 2012 by iMFdirect
By Ajai Chopra
The U.K. economy has been flat for nearly two years. This stagnation has left output per capita a staggering 14 percent below its precrisis trend and 6 percent below its pre-crisis level.
Weak growth has kept unemployment high at 8.1 percent, with youth unemployment an alarming 22 percent.
The effects of a persistently weak economy and high long-term unemployment can reverberate through a country’s economy long into the future—commonly referred to by economists as hysteresis.
Our analysis of such hysteresis effects shows that the large and sustained output gap, the difference between what an economy could produce and what it is producing, raises the danger that a downturn reduces the economy’s productive capacity and permanently depresses potential GDP.
Filed under: Advanced Economies, Economic Crisis, Economic research, Employment, Europe, Fiscal policy, Fiscal Stimulus, growth, IMF, International Monetary Fund, Public debt | Tagged: bank funding, Bank of England, banks, borrowing costs, collateral, credit, crisis, deficits, demand, Economics, financial stability, GDP, government, gross domestic product, haricuts, hysteresis, idle capital, IMF, infrastructure, interest rates, International Monetary Fund, investment, liquidity, monetary policy, new technologies, output, output gap, policymakers, private sector, public debt, public sector, quantitative easing, risks, stagnation, U.K., unemployment, United Kingdom, yield curve | 6 Comments »