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Tag Archives: Fiscal Policy

The Effect of Inequality on the Transmission of Monetary and Fiscal Policy

Marco Del Negro, Keshav Dogra, and Laura Pilossoph Monetary policy can have a meaningful impact on inequality, as recent theoretical and empirical studies suggest. In light of this, how should policy be conducted? And how does inequality affect the transmission of monetary policy? These are the topics covered in the second part of the recent symposium on “Heterogeneity in Macroeconomics: Implications for Policy,” hosted by the new Applied Macroeconomics and Econometrics Center (AMEC) of...

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Stimulus, Savings, and Inflation: The Top Five Liberty Street Economics Posts of 2021

New York Fed researchers tackled a wide array of topics on Liberty Street Economics (LSE) over the past year, with the myriad effects of the pandemic—on supply chains, the banking system, and inequality, for example—remaining a major area of focus. Judging by the list below, LSE readers were particularly interested in understanding what comes next: the most-viewed posts of the year analyze households’ use of stimulus payments, the implications of lockdown-period savings, the risk of a new...

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Addressing Inflation Pressures Amid an Enduring Pandemic

By Tobias Adrian and Gita Gopinath With inflationary pressures intensifying and Omicron generating new uncertainties, monetary policymakers are facing new and challenging tradeoffs. The resurgence of the pandemic and the latest variant, Omicron, have sharply increased uncertainty around global economic prospects. This comes as several countries grapple with inflation well above their monetary policy targets. It is however evident that the strength of the economic recovery and magnitude of...

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The G20 Common Framework for Debt Treatments Must Be Stepped Up

By Kristalina Georgieva and Ceyla Pazarbasioglu With the debt service suspension initiative expiring and interest rates poised to rise, low-income countries will find it increasingly difficult to service their debts. Despite significant relief measures brought on by the COVID-19 crisis, about 60 percent of low-income countries are at high risk or already in debt distress. In 2015 that number was below 30 percent. With policy space tightening for highly indebted countries, the framework can...

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Sovereign Domestic Debt Restructuring: Handle with Care

By Peter Breuer, Anna Ilyina, and Hoang Pham Restructuring domestic debt is like surgery: You only do it if you must, and you avoid it if it might do more harm than good. With rising debt vulnerabilities and growing stocks of sovereign domestic debt in emerging and developing economies, the questions of when and how to restructure such debt are now more acute than ever.  Restructuring domestic debt is a tool that can be used by sovereigns facing fiscal and economic stress. Over the past two...

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How Trade Can Help Speed Asia’s Economic Recovery

By Pragyan Deb, Julia Estefania-Flores, Siddharth Kothari, and Nour Tawk 中文, 日本語 A renewed push to liberalize trade can invigorate durable growth and minimize post-pandemic scarring. Trade has historically been a powerful driver of economic growth and poverty alleviation in Asia, though the momentum of lowering trade barriers has slowed in recent years. While tariff barriers to trade in Asia are low overall, a new measure of nontariff barriers suggests those remain high in many Asian...

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Sharing the Gains of Automation: The Role of Fiscal Policy

By Nikolay Gueorguiev and Ryota Nakatani Careful calibration of spending and tax policies can reduce inequality caused by automation. For many observers, automation has been responsible for both strong economic growth and rising inequality in many countries in recent decades. Automation raises productivity, but it can exacerbate inequality. This is because it replaces low-skilled workers and helps owners of capital earn bigger monopoly rents. And with the advent of next-level automation in...

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CHART OF THE WEEKThe Unequal COVID Saving and Wealth Surge

By Cian Allen and Cyril Rebillard Household saving increased sharply during the COVID-19 crisis in many countries. Lower consumption, both as a result of lockdowns or precaution, combined with an increase in disposable income from government transfers allowed households to put more money into their bank accounts, buy shares, a house, or pay back their debt. Along with saving, surging equity and housing prices also made certain households a lot wealthier. In our latest chart of the week, an...

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Countering Tax Avoidance in Sub-Saharan Africa’s Mining Sector

By Giorgia Albertin, Dan Devlin, and Boriana Yontcheva Sub-Saharan African countries will need to implement targeted policy actions to reduce profit shifting in the mining sector and avoid losses in tax revenue. Sub-Saharan Africa is estimated to possess 30 percent of global mineral reserves, representing a major opportunity for the region. Despite the high level of private investment in this critical sector, new analysis finds that many multinational companies are avoiding paying their...

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Fiscal Policy for an Uncertain World

By Vitor Gaspar, Sandra Lizarazo, Paulo Medas, and Roberto Piazza  中文,  Español, Français, 日本語, Português, Русский As public debt rises to record levels, countries need to calibrate fiscal policies to their own unique circumstances. Vaccination has saved lives and helped economic recovery in many countries, but uncertainty remains high amid new virus variants. The pandemic will leave a lasting mark on inequality, poverty, and government finances, our latest Fiscal Monitor finds. With the...

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