Macroeconomic policy

Olivier Blanchard, 01 May 2015

Complex forces are shaping macroeconomic evolutions around the world. In this column, IMF’s Chief Economist Olivier Blanchard describes some of these forces and provides an overview of the state of the world economy. Putting the forces together, the baseline forecasts are that advanced countries will do better this year than last, and emerging countries will slow down. Overall, the global growth will be roughly the same as last year, with the macroeconomic risks having slightly decreased.  

Fatih Guvenen, Fatih Karahan, Serdar Ozkan, Jae Song, 29 April 2015

Many policy design issues depend crucially on the nature of the idiosyncratic risks to labour income. The earning dynamics literature has typically relied on an implicit or explicit assumption that earnings shocks are log-normally distributed. This column challenges conventional knowledge by bringing in new evidence from a very large administrative dataset on US workers. It presents evidence suggesting income shocks exhibit substantial deviations from log-normality, and that shock persistence depends on income levels as well as the size and sign of the shock.

Charles Wyplosz, 27 April 2015

It seems that there will be no agreement between Greece and its Eurozone partners. Short of cash, the Greek government will have no choice but to suspend payment of its maturing debts. This column looks at what happens next. In brief, it will be very much up to the ECB to decide.

Donato Masciandaro, Davide Romelli, 26 April 2015

In the aftermath of the Global Crisis, many countries increased their central banks’ involvement in financial supervision. This column uses a novel dataset to argue that financial crises episodes significantly increase the probability of reforms in the financial structure. More interestingly, the authors find evidence of a ‘bandwagon effect’ by showing that politicians are more likely to undertake reforms when their peers do so. 

Robert E. Hall, 22 April 2015

The disappointing post-Crisis performance of the US economy and even more disappointing performance of continental Europe and Japan have revived interest in the possibility of secular stagnation. This column argues that a consensus is forming that inadequate demand will no longer be a factor in whatever US stagnation occurs in coming years. In Japan and Europe, on the other hand, the case for boosting demand is strong and inadequate demand is almost surely a main cause of the stagnation. 

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