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Tag Archives: Investment

A Capital Market Union for Europe: Why it’s Needed and How to Get There

By Ashok Vir Bhatia, Srobona Mitra, and Anke Weber When savers and firms invest and borrow beyond their national borders, they enjoy opportunities to diversify their portfolios and lower their funding costs, respectively. In Europe, this idea—of an integrated financial system that offers a richness of financing choice—remains an elusive goal: capital markets are far from integrated. Our recent research finds that European finance is still sharply segmented along national lines, with...

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A Role for Financial and Monetary Policies in Climate Change Mitigation

By William Oman Español July 2019 was the hottest month ever recorded on earth, with countries across the world experiencing record-breaking temperatures. A prolonged drought is affecting millions of people in East Africa, and in August 2019 Greenland lost 12.5 billion tons of ice in one day. A review of the literature by IMF staff aims to spur discussion of what policies to mitigate climate change could or should include. The review suggests that, while fiscal tools are first in line,...

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chart of the weekFuel for Thought: Ditch the Subsidies

By IMFBlog Pensions, education, healthcare, better infrastructure, technology, and climate change: fiscal policymakers have their work cut out for them on many fronts.  Whether you live in a rapidly aging advanced economy,  or a low-income or emerging market economy with a young, booming population, all these issues matter for you.  As the Fiscal Monitor in April 2019 shows, government policies on taxes and spending have to adapt and should shift to growth-enhancing investment.  This means,...

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US Business Investment: Rising Market Power Mutes Tax Cut Impact

By Emanuel Kopp, Daniel Leigh, and Suchanan Tambunlertchai US business investment has been on the rise. Since the passage of the Tax Cuts and Jobs Act at the end of 2017, US businesses have bought more machinery, developed software, and created new intellectual property. Some believe that the key to this growth in business investment has been the Act’s cut to the corporate tax rate from 35 percent to 21 percent, which lowered the cost of capital. Lower capital costs could, at least...

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Outlook for Latin America and the Caribbean: A Stalling Recovery

By Alejandro Werner Español Economic activity in Latin America and the Caribbean remains sluggish. Real GDP is expected to grow by 0.6 percent in 2019—the slowest rate since 2016—before rising to 2.3 percent in 2020. The weak momentum reflects negative surprises in the first half of 2019, elevated domestic policy uncertainty in some large economies, heightened US-China trade tensions, and somewhat lower global growth. Elevated policy uncertainty in some large economies of the region has...

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Rebalancing the Global Economy: Some Progress but Challenges Ahead

By Gita Gopinath Español, 日本語 Following the global financial crisis, overall current account surpluses and deficits fell sharply from about 6 percent of global GDP in 2007 to about 3.5 percent in 2013. Since then, as shown in our new External Sector Report, global current account imbalances have declined only slightly to 3 percent of world GDP in 2018, while rotating toward advanced economies and away from emerging economies, including China whose current account is now broadly in line with...

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Chart of The WeekThe Price of Capital Goods and the Threat to Investment

By IMFBlog Español, Português Over the past three decades, the prices of machinery and equipment have fallen sharply relative to overall prices. Rising trade and sweeping technological improvements have led to more efficient production of capital goods. This has helped countries around the world raise real investment and improve living standards. However, trade tensions and sluggish productivity growth could slow the decline in the relative price of machinery and equipment, which would...

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China Deepens Global Finance Links as It Joins Benchmark Indexes

By Sally Chen, Dimitris Drakopoulos, and Rohit Goel 中文, 日本語 China is embarking on the next stage of its integration into global financial markets. It is a stage that is likely to see a fresh flood of overseas investment, improved liquidity, better governance, and a broader range of instruments. The catalyst: inclusion of Chinese stocks and bonds in a larger number of global financial-market indexes. As Chinese securities are added, investment managers who seek to match or surpass the...

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The Impact of US-China Trade Tensions

By Eugenio Cerutti, Gita Gopinath, and Adil Mohommad 中文 US-China trade tensions have negatively affected consumers as well as many producers in both countries. The tariffs have reduced trade between the US and China, but the bilateral trade deficit remains broadly unchanged. While the impact on global growth is relatively modest at this time, the latest escalation could significantly dent business and financial market sentiment, disrupt global supply chains, and jeopardize the projected...

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Chart of the WeekFalling Costs Make Wind, Solar More Affordable

By Christian Bogmans Harnessing wind and solar energy for low-carbon electric power generation was once considered uneconomical. Now, rapidly falling costs for these technologies are boosting global renewable energy capacity. Renewable energy sources can help reduce carbon emissions substantially and the effects of global warming. As the Chart of the Week from the April World Economic Outlook shows, solar and onshore wind turbines saw the biggest price declines among low-carbon energy...

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