The Unassuming Economist

A new IMF country report says that “Poverty and income inequality are high in Israel compared with peers, being exacerbated by the lower labor participation and productivity of some population groups, such as the Israeli-Arab and Haredi populations and non-Haredi Jewish women. Israel’s low redistribution of income through the budget limits its impact on reducing poverty and inequality. Given the projected rise in the share of the Haredi, and, to a lesser extent Arab, populations in coming decades, addressing the structural issues behind their low participation and productivity is an urgent matter.”

A new IMF working paper constructs a new database on fiscal consolidation of 14 Latin American and Caribbean economies over the period 1989-2016. This paper further classifies “the consolidation episodes as “tax-based” or “expenditure-based” depending on whether tax hikes or expenditure cuts account for most of the budgetary impact of the consolidation.”

“The average consolidation size (excluding zero observations i.e. considering that a fiscal policy action occurred) is 0.9 percent of GDP with a standard deviation of about 1 percentage point (Table 1). Expenditure based consolidations are typically larger, although comparisons along this dimension should be made with care given the relatively small number of expenditure-based consolidations.”

From a new IMF country report:

“The West African Economic and Monetary Union (WAEMU) member countries have experienced growth acceleration since 2012. Relative to an earlier reference period in the 1990s, the WAEMU’s recent strong growth has coincided with an increase in macroeconomic stability and investment, improvement in political institutions, improvement in the terms of trade, and increase in productivity.”

“Real GDP per capita in WAEMU countries has remained mostly stagnant while it has increased in other LIDCs (Figure 2). Income per capita in the WAEMU was close to that of the group of low and middle-income countries or low income developing countries or SSA in the early 1960s. However, since then, in terms of per capita income, WAEMU’s countries have experienced a widening gap relative to other LIDCs. While the share of the WAEMU income per capita in purchasing power parity—PPP—was 108 percent of that of the group of low-income developing countries in the early 1960s, it dropped to 65 percent in 2017.”

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A new paper finds that “Okun’s Law is valid in Brazil as a whole and in one of the three metropolitan regions studied and there are regional differences in the responsiveness of labor markets to output fluctuations and deviations from their long-term levels.”

This paper also notes the findings from my paper that “The Okun’s coefficient varies substantially from country to country. Idiosyncratic characteristics of national labor markets explain in part this variation. (Ball; Leigh; Loungani, 2012).” […] “According to Ball, Jalles and Loungani (2014) the magnitude of the coefficient also depends on the costs related to the adjustment of employment, which can be either technological costs or costs arising from the employment protection laws; and the number of workers entering and leaving the labor force. Because these factors are different between countries so tend also to be the coefficients.”

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Ball, Leigh, and Loungani (2012) is available here.

Ball, Jalles, and Loungani (2014) is available here.

From the 2018 IEO Dialogue:

“In January 2018, the Executive Board approved a Management Implementation Plan (MIP) prepared by IMF staff to follow up on the 2017 evaluation of THE IMF AND FRAGILE STATES. IMF staff will prepare a paper laying out a clear strategic framework to guide IMF involvement in social protection, for consideration by the Board in February 2019. This framework will discuss how to assess the macro-criticality of social protection and will lay out more effective approaches to program design for both concessional and non-concessional lending to mitigate adverse impacts of program measures on the most vulnerable.”

“In the last few months, the IMF has taken important actions to follow up on earlier evaluations. In February, the Executive Board approved general guidance on Fund engagement with currency unions when the policies of union-level institutions are critical to the success of Fund-supported programs—a step recommended in the 2016 evaluation of The IMF and the Crises in Greece, Ireland, and Portugal. Acting on recommendations of the 2016 IEO evaluation of Data at the IMF, the Executive Board approved an “Overarching Strategy on Data and Statistics at the Fund in the Digital Age” that sets a course for the IMF to better respond to the challenges and opportunities of digitalization.”

(From left to right) Prakash Loungani, IEO Advisor; Charles Collyns, IEO Director; Montek Singh Ahluwalia, former Deputy Chairman of the Planning Commission and former IEO Director; and N.K. Singh, Chairman of Fifteenth Finance Commission, participate in a seminar in New Delhi, India in February 2018.