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Tag Archives: United States

Chart of the WeekThe Threat of Inequality of Opportunity

By Shekhar Aiyar and Christian Ebeke There are clashing views on the relationship between income inequality and growth. Some have pointed to at least some measure of inequality as a necessary outcome of the rewards to innovation and risk-taking. Others have argued that excessive income inequality depresses investment in both human and physical capital, two key sources of long-term growth. In recent research we argue that the crucial missing link in the inequality-growth relationship is...

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A Map of Inequality in Countries

By William Gbohoui, Raphael Lam, and Victor Lledo Social and economic inequality between and within regions in countries is rising in many advanced economies and is now at the forefront of the policy debate because of perceptions that some people and places have been left behind. Changes in global trade and technology have shifted jobs and industries on the map, but the economic gains within countries are not well shared. One might think the solution is for people to move in search of...

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Lower for Longer: Rising Vulnerabilities May Put Growth at Risk

By Tobias Adrian and Fabio Natalucci عربي, 中文, Español, Français, Português, 日本語, Русский The pace of global economic activity remains weak, and financial markets expect rates to stay lower for longer than anticipated in early 2019. Financial conditions have eased even more, helping contain downside risks and support the global economy in the near term. But loose financial conditions come at a cost: they encourage investors to take more chances in a quest for higher returns, so risks to...

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The World Economy: Synchronized Slowdown, Precarious Outlook

By Gita Gopinath عربي, 中文, Español, Français, 日本語, Português, Русский The global economy is in a synchronized slowdown and we are, once again, downgrading growth for 2019 to 3 percent, its slowest pace since the global financial crisis. Growth continues to be weakened by rising trade barriers and increasing geopolitical tensions. We estimate that the US-China trade tensions will cumulatively reduce the level of global GDP by 0.8 percent by 2020. Growth is also being weighed down by...

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Global Banks May Grow More Vulnerable to a Dollar Disruption

By Claudio Raddatz and Adolfo Barajas عربي, 中文, Español, Français, 日本語, Português, Русский When a Mexican airline buys Brazilian airplanes, it’s likely to finance the purchase with a US dollar loan obtained from a non-US bank. That’s just one example of the dollar’s outsize role in international financial transactions between non-US counterparts. What happens if non-US banks suddenly find themselves short of dollars? That was the case during the global financial crisis of 2007-2008, when...

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Widening Gaps: Regional Inequality within Advanced Economies

By John Bluedorn, Weicheng Lian, Natalija Novta, and Yannick Timmer عربي, 中文, Español, Français, 日本語, Português, Русский Differences in economic performance between regions within countries can be large and sometimes even larger than between countries. For example, average real GDP per person in the United States is about 90 percent higher than in Slovakia. At the same time, within the United States, per capita GDP in the state of New York is 100 percent higher than in Mississippi. Many...

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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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New Index Tracks Trade Uncertainty Across the Globe

By Hites Ahir, Nicholas Bloom, and Davide Furceri Español, Português Rising trade uncertainty is cited as a driving factor for “sluggish global growth” in the current issue of the IMF’s World Economic Outlook, which describes the state of the world economy. But how is trade uncertainty measured? How has it evolved over time? Are changes in trade uncertainty confined to specific countries and regions of the world? A new measure of trade uncertainty finds that by this measure of uncertainty...

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Taming the Currency Hype

By Gustavo Adler, Luis Cubeddu, and Gita Gopinath Escalating trade tensions are taking a toll on the global economy and are partly responsible for the recent downward revisions to our growth forecasts for 2019-20. Facing sluggish growth and below-target inflation, many advanced and emerging market economies have appropriately eased monetary policy, yet this has prompted concerns over so-called beggar-thy-neighbor policies and fears of a currency war. In this blog post, we discuss the...

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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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