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Articles by IMF Blog

How Countries Can Diversify Their Exports

2 days ago

By Gonzalo Salinas
Four economy-wide factors—governance, education, infrastructure, and trade policy—relate closely to more varied and complex exports across countries
As the world’s biggest copper producer, Chile’s shipments of the metal meet around one-third of global demand and represent about half its goods exports.
But beyond mining’s dominance, Chile’s trade flows are more varied and complex than they may appear, with significant exports of vehicles, pharmaceuticals and telecommunications equipment. And according to a recent IMF staff paper, the Andean economy is among those that shine as a role model for diversification policies.

The new approach to explaining diversification underscores the need to effectively shorten geographic distance by enhancing connectivity between

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To Safeguard Global Financial Stability, Boost the Resilience of Investment Funds

7 days ago

By Tobias Adrian, Antonio Garcia Pascual, Ranjit Singh, and Jay Surti
Investment funds were hit hard by the pandemic; their response amplified its adverse impact on financial markets and capital flows.
Our brush last year with one of the biggest economic shocks of our lifetimes revealed some fundamental vulnerabilities that could affect global financial stability. Caught up in the financial market turmoil generated by risk averse investors, many investment funds were heavily affected by the “dash-for-cash” that extended across borders—and which triggered significant outflows from risky assets and from emerging and developing economies. As this happened, and investor capital flowed out of money market and open-end mutual funds, asset managers were forced to fire-sell these assets, which

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How to Tax in Asia’s Digital Age

10 days ago

By Era Dabla-Norris, Ruud De Mooij, Andrew Hodge, and Dinar Prihardini
New global reforms will change where tech giants pay taxes in Asia and make the international tax system more robust.
Digitalization —the technology that powers fintech, e-commerce, and online services—enables us to make mobile money transfers, purchase goods and services online, and interact with people across the globe. It has created some of the largest global businesses, such as online platforms and marketplaces connecting producers and consumers across the world.

The agreed changes could spur more comprehensive reforms applied to all companies and to a larger share of profits.

Asia alone has roughly two billion internet users, with considerable room to grow. Asia’s advanced and emerging market economies

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The Climate Issue

17 days ago

By Gita Bhatt
In Ernest Hemingway’s novel The Sun Also Rises, a character is asked how he went bankrupt. “Two ways,” he answers. “Gradually, then suddenly.”
It’s the same with climate change. The damage is becoming less and less gradual, and unless we take action, the world could suddenly reach an irreversible tipping point.
We now know the problem is much worse than we once thought. It requires not incremental change, but radical overhaul—roughly halving carbon emissions each decade through 2050. Getting there demands that we rapidly shift to renewables, build new electricity networks, increase energy efficiency, and embrace low-carbon transport. Cheaper renewable energy and technology advances make the move from carbon affordable and feasible.
This special issue on climate, in

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Your Top 5 Back-to-School Blogs

22 days ago

By IMFBlog
What’s on your mind as you (or your kids) head back to school?
To help you stay on top of the news and policy debates from the past few months, our IMFBlog editors have put together a list of our top reads on economics and finance.
Our list of blogs gives you a snapshot on the state of the global economy, a glimpse at the new world of cryptocurrencies, and some insight into the phenomenon of rising prices.
Urgent Action Needed to Address a Worsening “Two-Track” Recovery 
Cryptoassets as National Currency? A Step Too Far
US Dollar Share of Global Foreign Exchange Reserves Drops to 25-Year Low
Four Facts about Soaring Consumer Food Prices
Four Factors Behind the Metals Price Rally


We want to hear from you!
Click here for a 3-question survey on IMFBlog.

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A Shot in the Arm—How Special Drawing Rights Can Help Struggling Countries

29 days ago

By IMFBlog
The largest allocation of Special Drawing Rights, or SDRs, in history—about $650 billion—came into effect earlier this week. The allocation is a significant shot in the arm for the world and, if used wisely, a unique opportunity to combat this unprecedented crisis.
The SDR allocation will provide additional liquidity to the global economic system—supplementing countries’ foreign exchange reserves and reducing their reliance on more expensive domestic or external debt. Countries can use the space provided by the SDR allocation to support their economies and step up their fight against the crisis.
SDRs are being distributed to countries in proportion to their quota shares in the IMF. This means about $275 billion is going to emerging and developing countries, of which low-income

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Your Weekend Podcast Roundup

August 20, 2021

By IMFBlog
We may not be commuting as much, but it seems we’re still listening. According to the latest Infinite Dial survey from Edison Research and Triton Digital, the percentage of people listening to podcasts weekly grew 17 percent in 2021.
Whether you’re hitting the road this weekend, or re-organizing the kitchen cupboards (again), here’s a list of podcast interviews with some of the brightest minds in economics and development, as selected by our editors at Finance & Development.

Ruchir Agarwal with a Proposal to End the Pandemic: There will be no durable end to the economic crisis until enough people around the world are vaccinated against Covid-19. Economist Ruchir Agarwal and IMF Chief Economist Gita Gopinath have joined forces to come up with a plan that would make that

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Pacific Island Airlines: Flying on Empty?

August 18, 2021

By Vybhavi Balasundharam and Leni Hunter
With virtually no international travel since March 2020, national airlines in the Pacific face mounting financial difficulties. For Pacific Island countries this shock is particularly severe given the weak financial condition of national carriers prior to the pandemic, the reliance of these countries on airline connectivity to support tourism, and limited fiscal space to provide ongoing or future financial support to these airlines.

Recovery from this crisis presents an opportunity to overhaul governance and oversight of national airlines.

Recovery from this crisis presents an opportunity to overhaul governance and oversight of national airlines to mitigate future risks, according to recent IMF staff research.
The Pacific Islands are among the

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From the History Books: The Rethinking of the International Monetary System

August 16, 2021

By Atish Rex Ghosh

Fifty years ago, the world changed. On August 15, 1971, US President Richard Nixon slammed shut the “gold window,” suspending dollar convertibility. Although it was not Nixon’s intention, this act effectively marked the end of the Bretton Woods system of fixed exchange rates. But, in truth, with the rise of private cross-border capital flows, a system based on fixed exchange rates for the major currencies was no longer viable and Nixon’s decision—decried at the time as an abrogation of America’s international responsibilities—paved the way for the modern international monetary system.

The collapse of Bretton Woods prompted a fundamental rethink about what would give stability to the international monetary system.

The Bretton Woods era
When the Bretton Woods system was

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IMF Summer Reads

August 13, 2021

By IMFBlog
A book is a must, as you head off to visit family and friends, or take time off during the summer to unwind. A good book can bring in new thinking and perspective from the past. And it can inspire and motivate us to act.
Below you’ll find some additions to your summer reading list, and possibly some food for thought, based on a selection of recent book reviews by our editors at Finance & Development (F&D).

Rebellion, Rascals, and Revenue: Tax Follies and Wisdom through the Ages by Michael Keen and Joel Slemrod

“This is a rare find that can and should be read and enjoyed not only by experts but by anyone who has ever had questions about taxation. As Michael Keen (of the IMF) and Joel Slemrod (University of Michigan) show, ‘taxes are us’ in the sense that everywhere

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CHART OF THE WEEKPutting Public Investment to Work

August 11, 2021

By Mariano Moszoro
For countries on the path to recovery, reviving economic activity is a major priority. And what better way to support a come-back than by creating jobs. Our new IMF staff research shows that when governments spend on infrastructure, they create many new jobs.
Drawing on a 19-year dataset of over 5,600 construction companies from 27 advanced economies and 14 emerging market economies, we use an innovative approach to measure the direct employment effect of $1 million of infrastructure spending by country income group and sector—electricity, roads, schools, hospitals, and water and sanitation. Because there is no data available for low-income developing countries, we estimate the employment impact by extrapolating from advanced economies and emerging market economies.

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Coming Together

August 10, 2021

By Vitor Gaspar and Gita Gopinath
عربي, Español, Français, Português, Русский
Differences in vaccine access and the ability to deploy policy support are creating a growing divergence between advanced economies from many emerging market and developing economies. Faced with high deficits and historic levels of debt, countries with limited access to financing are walking a fiscal tightrope between providing adequate support and preserving financial stability.

IMF support focused most where it mattered the most.

Without resolute measures to address this growing divide, COVID‑19 will continue to claim lives and destroy jobs, inflicting lasting damage to investment, productivity, and growth in the most vulnerable countries. The pandemic will further disrupt the lives of the most vulnerable,

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Women in Economics

August 6, 2021

By IMFBlog
Women remain underrepresented in economics, yet many have made an outsized impact on the field. Whether it’s in working to eliminate poverty, reinventing development economics, examining social safety nets, or improving democratic institutions, Finance & Development magazine has regularly highlighted the contributions made by women economists.
In F&D’s People in Economics series, the work of women economists has featured prominently. To add to your summer reading list, below are some of the profiles from recent years of the important thinkers who are leaving a mark.

Rohini Pande of Yale University has been called one of the most influential development economists of her generation and has made groundbreaking contributions to political economy, international development,

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Managing the Political Economy of Climate Change Policies

August 5, 2021

By Davide Furceri, Michael Ganslmeier, and Jonathan D. Ostry
Few issues have sparked more attention than how to avoid environmental and human catastrophe from climate change. But even in the wake of massive public protests and an ambitious agenda since the 2015 Paris Agreement, governments are wary of the political costs of enacting climate mitigation policies.
In recent IMF staff research, we identify strategies that can minimize or even eliminate such challenges.
In the first analysis of its kind, we combined information on the political aftermath (governmental popular support) of policy changes with information on the policy changes themselves in a sample of 31 OECD countries. Our data on political support comes from the private consultancy PRS Group’s International Country Risk

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Chart of the WeekHow To Escape The Perils of Fragility

August 3, 2021

By Olusegun Akanbi, Kenji Moriyama, Keyra Primus
Already facing huge development needs, the COVID-19 pandemic is exacerbating the challenges facing fragile and conflict states—a group of currently about 40 countries trapped in cycles of low administrative capacity, political instability, conflict, and weak economic performance. Our new IMF staff working paper, which analyzes the experiences of 196 countries between 1979 and 2018, shines a light on how countries can avoid or break out of this trap.
As our chart of the week shows, weaker growth raises the probability of falling into fragility, particularly for countries in the middle-range of government effectiveness (measured by, e.g., the ability to collect taxes and enforce contracts). The top chart measures the change in the probability

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How the Pandemic Widened Global Current Account Balances

August 2, 2021

By Martin Kaufman and Daniel Leigh
عربي, 中文, Español, 日本語, Português, Русский
2020 was a year of extremes. Travel all but ceased for a period. Oil prices wildly fluctuated. Trade in medical products reached new heights. Household spending shifted to consumer goods rather than services and savings ballooned as people stayed home amid a global shutdown.

If not for the crisis, global current account balances would have continued to decline.

Exceptional policy support prevented a global economic depression, even as the pandemic took a heavy toll on lives and livelihoods. The global reaction, as seen in major shifts in travel, consumption, and trade, also made the world a more economically imbalanced place as reflected in current account balances—a record of a country’s transactions with the

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Making The Digital Money Revolution Work for All

July 29, 2021

By Tobias Adrian and Tommaso Mancini-Griffoli
History moves in uneven steps. Just as the telegraph erased time and distance in the 19th century, today’s innovations in digital money may bring significant changes in the way we lead our lives. The shift to electronic payments and social interactions brought on by the pandemic may cause similarly rapid and widespread transformations.

The challenges are significant, and so is the potential reward. But policy action must begin immediately.

But we must look beyond the dazzle of technology and the alluring image of futuristic payment services. At the IMF, we must identify and help countries solve the deeper policy tradeoffs and challenges that are arising.
The rapid pace of change is a call to action—for countries to guide, and not be guided

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Drawing Further Apart: Widening Gaps in the Global Recovery

July 27, 2021

By Gita Gopinath
عربي, 中文, Español, Français, 日本語, Português, Русский
The global economic recovery continues, but with a widening gap between advanced economies and many emerging market and developing economies. Our latest global growth forecast of 6 percent for 2021 is unchanged from the previous outlook, but the composition has changed.

The recovery is not assured until the pandemic is beaten back globally.

Growth prospects for advanced economies this year have improved by 0.5 percentage point, but this is offset exactly by a downward revision for emerging market and developing economies driven by a significant downgrade for emerging Asia. For 2022, we project global growth of 4.9 percent, up from our previous forecast of 4.4 percent. But again, underlying this is a sizeable upgrade

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Cryptoassets as National Currency? A Step Too Far

July 26, 2021

By Tobias Adrian and Rhoda Weeks-Brown
New digital forms of money have the potential to provide cheaper and faster payments, enhance financial inclusion, improve resilience and competition among payment providers, and facilitate cross-border transfers.
But doing so is not straightforward. It requires significant investment as well as difficult policy choices, such as clarifying the role of the public and private sectors in providing and regulating digital forms of money.
Some countries may be tempted by a shortcut: adopting cryptoassets as national currencies. Many are indeed secure, easy to access, and cheap to transact. We believe, however, that in most cases risks and costs outweigh potential benefits.
Cryptoassets are privately issued tokens based on cryptographic techniques and

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Stepping Up to Meet Low-Income Countries’ Pandemic Recovery Needs

July 26, 2021

By Christian Mumssen and Seán Nolan 
 中文, Español, 日本語, Português, Русский
Low-income countries have been hard hit by the pandemic. Their large financing needs are only likely to grow as they deal with the crisis and its economic aftermath. The IMF has approved a far-reaching package of support that would expand their access to financial assistance at zero-interest rates, while providing stronger safeguards against taking on debt they cannot handle. For these efforts to succeed, economically stronger member countries will have to play their part.
A rapid, unprecedented response
The pandemic has dealt a severe blow to the economies of many low-income countries: output growth stopped or reversed, living standards declined, poverty increased, and a decade of solid progress is now threatened.

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Reaching Net Zero Emissions

July 22, 2021

By Florence Jaumotte and Gregor Schwerhoff
عربي, 中文, Español, 日本語, Português, Русский
Climate action is gaining momentum. Since the 2015 Paris Agreement, countries have intensified climate action and many have committed to reach net zero emissions by 2050, meaning that any additional carbon emissions will be offset completely by carbon emissions withdrawn from the atmosphere.
However, the carbon budget, or maximum amount of emissions allowable, to limit global warming to well below 2°C is running out quickly. More frequent and intense disasters, a decline in agricultural productivity, and rising sea levels will only grow more common if this critical goal is not met.

Our analysis shows that delaying action on carbon pricing by 10 years would likely result in missing a mid-century net zero

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Taming Market Power Could (also) Help Monetary Policy

July 21, 2021

By Romain Duval, Davide Furceri, and Marina M. Tavares
Some central banks are currently debating whether to tighten monetary policy to fight inflationary pressures, after having eased decisively in response to the COVID-19 shock. In making such decisions, central bankers have to consider how much businesses and consumers will respond. The structure of the financial system and the future expectations of consumers and businesses are key drivers of how effective monetary policy actions will be. Yet there’s another, overlooked, driver: corporate market power.
New IMF staff research has found ever larger and more powerful companies are making monetary policy a less potent tool for managing the economy in advanced economies, all else equal.
Market power has risen in many advanced economies and

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Seizing the Opportunity for a Pro-Growth, Post-Pandemic World

July 20, 2021

By Geoffrey Okamoto
عربي, 中文, Español, Français, 日本語, Português, Русский
Since March 2020, governments have spent $16 trillion providing fiscal support amid the pandemic, and global central banks have increased their balance sheets by a combined $7.5 trillion. Deficits are the highest they have been since World War II and central banks have provided more liquidity in the past year than in the past 10 years combined. This was absolutely necessary — IMF research indicates that if policymakers had not acted, last year’s recession, which was the worst peacetime recession since the Great Depression, would have been three times worse.
That’s where we’ve come from, but where are we headed? In the year ahead, as more vaccines roll off the production line, more people get jabbed, and more economies

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The Resilience of Private Balance Sheets in Europe during COVID-19

July 15, 2021

By Estelle Xue Liu, Karim Foda, and Sebastian Weber
Español, Français, Português
One of the positive surprises about last year’s recession is how little damage it inflicted on average household and corporate balance sheets in Europe.
In the past, deep recessions were followed by protracted weakness as they left households and businesses with significantly higher debt and lower income and capital. So far this has not been the case with the COVID-19 crisis, largely thanks to the extraordinary policy response by governments and central banks.
As the recovery takes hold, however, policy makers will need to maintain support for the hardest hit segments of the economy and remain alert for signs of economic damage yet to emerge. Not all private balance sheets were equally resilient.
In new IMF

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Chart of the WeekCould Renewed Social Unrest Hinder the Recovery?

July 13, 2021

By Metodij Hadzi-Vaskov, Samuel Pienknagura, and Luca Ricci
Protests driven by the pandemic’s economic fallout are on the rise, with potentially long-lasting economic consequences.
Protests can be catalysts for political reform and social change. But what impact do they have on the economy?
According to the latest Global Peace Index, the number of riots, general strikes and anti-government demonstrations around the world have increased by a staggering 244 percent in the last decade. Lockdowns and fears of contagion forced a temporary lull. But in virtually every region of the world, demonstrators are making a comeback. Causes range from frustration over governments’ handling of the crisis to mounting inequality and corruption—factors that tend to heighten existing tensions and

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What COVID-19 Can Teach Us About Mitigating Climate Change

July 9, 2021

By Oya Celasun, Florence Jaumotte, and Antonio Spilimbergo
While the COVID-19 pandemic continues to ravage the world, climate change—a crisis that can cause even greater destruction—looms. All crises teach us lessons, but the pandemic has gone further: it has reminded us about the power of nature. A recent Ipsos poll conducted globally for the IMF found that 43 percent of people surveyed reported being more worried about climate change now than they were before the pandemic, with only 7 percent saying they are less worried. The heightened public awareness about the dangers of unmitigated climate change make this an important moment for policymakers to enact bold reforms. But many challenges lie ahead.

First, let’s note some of the similarities between COVID-19 and climate change. Human

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Urgent Action Needed to Address a Worsening ‘Two-Track’ Recovery

July 7, 2021

By Kristalina Georgieva
عربي, 中文, Español, Français, 日本語, Português, Русский
When G-20 finance ministers and central bank governors gather in Venice this week, they can take inspiration from the city’s unbreakable spirit.
As the world’s first international financial center, Venice has faced the vagaries of economic fortunes over centuries, while being directly affected by climate change. This extraordinary resilience is needed more than ever as policymakers continue to face extraordinary challenges.
The good news is that the global recovery is progressing broadly in line with the IMF’s April projections of 6 percent growth this year. After a crisis like no other, we are seeing in some countries a recovery like no other, propelled by a combination of strong fiscal and monetary policy

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Sub-Saharan Africa: We Need to Act Now

June 28, 2021

By Kristalina Georgieva and Abebe Aemro Selassie
中文, Español, Français, Português
Sub-Saharan Africa is in the grips of a third wave of COVID-19 infections that threatens to be even more brutal than the two that came before.
This is yet more evidence of a dangerous divergence in the global economy. One track for countries with good access to vaccines, where strong recoveries are taking hold. And another for those countries that are still waiting and at risk of falling further behind.
The growth of infections in sub-Saharan Africa is now the fastest in the world, with an explosive trajectory that is outpacing the record set in the second wave. At this pace, this new wave will likely surpass previous peaks in a matter of days—and in some countries, infections are already more than double, or

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Four Facts about Soaring Consumer Food Prices

June 24, 2021

By Christian Bogmans, Andrea Pescatori, and Ervin Prifti
Rising world food prices for producers are making headlines and causing concerns among the public. The most recent data show a moderation in consumer food price inflation globally, but as we explain below, that could change in the coming months. This would only add to the high prices that consumers in many countries already lived through last year.
If prices eventually rise again, there will likely be sizeable differences between countries. Due to various factors, it is probable that the effect would be felt most by consumers in emerging markets and developing economies still wrestling with the effects of the pandemic.

Emerging markets and low-income countries are more vulnerable to food price shocks.

Fact #1: Food price inflation

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A Proposal to Scale Up Global Carbon Pricing

June 18, 2021

By Vitor Gaspar and Ian Parry
Between one quarter and one half. That’s how much carbon dioxide (CO2) and other greenhouse gases must fall over the next decade to keep alive the goal of restricting global warming to below 2°C. The fastest and most practical way to achieve this is by creating an international carbon price floor arrangement.

Climate change presents huge risks to the functioning of the world’s economies.

This matters to the IMF because climate change presents huge risks to the functioning of the world’s economies. The right climate policies can address these risks and also bring tremendous opportunities for transformative investments, economic growth, and green jobs—so much so that our Board recently approved proposals to include climate change in our regular country

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