The Unassuming Economist

A new IMF report says that “Finland’s labor market features a highly educated workforce and has safeguarded equality during a time of adverse shocks. But labor market outcomes have not been as good as in Nordic peers for many years. This paper suggests that there is room for improvement in two main areas. First, wages have become misaligned with productivity at the sectoral level during the past decade. More firm-level flexibility in collective bargaining could help to address this. Second, labor supply is lower among certain population groups compared to other Nordics; to this end, bolstering work incentives further for the low skilled, women of child-bearing age, young and old workers would help. These structural measures would be important also because employment seems to respond less to cyclical growth upswings now than before the turn of the millennium. Finally, additional policies to facilitate the adjustment of the labor market to global trends—technological change and globalization—will likely be needed over the longer term.”

From a new IMF working paper:

“We present estimates of welfare by country for 2007 and 2014 using the methodology of Jones and Klenow (2016) which incorporates consumption, leisure, mortality and inequality, and we extend the methodology to include environmental externalities. During the period of the global financial crisis welfare grew slightly more rapidly than income per capita, mainly due to improvements in life expectancy. This led to welfare convergence in most regions towards advanced country levels. Introducing environmental effects changes the welfare ranking for countries that rely heavily on natural resources, highlighting the importance of the natural resource base in welfare. This methodology could provide a theoretically consistent and tractable way of monitoring progress in several Sustainable Development Goal (SDG) indicators.”

A new IMF working paper “reviews Djibouti’s macroeconomic reforms aimed at achieving middle-income status as envisaged in Vision Djibouti 2035, the authorities’ development strategy. In this context, the paper reviews policy options available to the authorities in three critical reform areas: translating the investment boom into strong and inclusive growth to reduce poverty and unemployment; fiscal policy to support growth while preserving debt sustainability; and the important role of the business climate in growth acceleration.”

A new World Bank  independent evaluation report finds that “the World Bank has made a significant effort to incorporate the shared prosperity goal—since its introduction in 2013–into its various products and services, across regions, global practices and World Bank Group institutions. In addition to the World Bank Group’s first goal of poverty reduction, shared prosperity goal is defined as the growth of real incomes of the bottom 40 percent. Lessons from the evaluation of early implementation of the goal and the World Bank Group’s related, equity oriented operations pre-2013 period, however, suggest that an increased focus on distributional issues in the World Bank’s lending projects does not automatically lead to improved development outcomes.”

From VoxEU: “The Eurozone crisis has opened fault lines between German economists and policymakers and those in a number of Eurozone (in particular periphery) countries.This column introduces a new eBook explaining the historical development of the ordoliberal school of economics and its influence on German policymaking, and contrasting it critically with what we like to call the Anglo-Saxon-Latin pragmatism of economic policymaking.”

Download the new eBook here.