This paper provides new evidence of the effect of conventional monetary policy shocks on income inequality. We construct a measure of unanticipated changes in policy rates—changes in short-term ...interest rates that are orthogonal to unexpected changes in growth and inflation news—for a panel of 32 advanced and emerging market countries over the period 1990–2013. Our main finding is that contractionary monetary policy shocks increase income inequality, on average. The effect is asymmetric—tightening of policy raises inequality more than easing lowers it—and depends on the state of the business cycle. We find some evidence that the effect increases with the share of labor income and is mitigated by redistribution policies. Finally, while an unexpected increase in policy rates increases inequality, changes in policy rates driven by an increase in growth and inflation are associated with lower inequality.
Okun’s Law BALL, LAURENCE; LEIGH, DANIEL; LOUNGANI, PRAKASH
Journal of money, credit and banking,
October 2017, Letnik:
49, Številka:
7
Journal Article
Recenzirano
This paper asks how well Okun’s Law fits short-run unemployment movements in the United States since 1948 and in 20 advanced economies since 1980.We find that Okun’s Lawis a strong relationship in ...most countries, and one that is fairly stable over time. Accounts of breakdowns in the Law, such as the emergence of “jobless recoveries,” are flawed or exaggerated. We also find that the coefficient in the relationship—the effect of a 1% change in output on the unemployment rate—varies substantially across countries. This variation is partly explained by idiosyncratic features of national labor markets, but it is not related to differences in employment protection legislation.
We present evidence on one facet of energy security in OECD economies—the extent of diversification in sources of oil and natural gas supplies. Viewed from the perspective of the energy-importing ...countries as a whole, there has not been much change in diversification in oil supplies over the last decade, but diversification in sources of natural gas supplies has increased steadily. We document the considerable cross-country heterogeneity in the extent of diversification. We also show how the extent of diversification changes if account is taken of the political risk attached to suppliers; the size of the importing country; and transportation risk.
► Global diversification is constant but large differences exist among countries. ► Political risk and distance have large impacts on diversity measures. ► Size has little impact on diversity measures. ► France, US, and UK show low vulnerability for both fuels. ► Smaller European countries show high vulnerability for both fuels.
This paper reviews the state of theory and evidence on the design of labor market institutions in emerging markets and developing economies. Compared with advanced economies, these economies tend to ...have larger market failures, which creates a strong case for government intervention. But they also face larger risks of policy failures due to informality and limited administrative capacity. We draw specific implications from this tension for the design unemployment insurance, job protection legislation, minimum wages and wage bargaining systems. We then use text mining techniques to identify and review a decade of IMF recommendations in these areas for 30 emerging market and developing economies.
Episodes of account liberalization increase the Gini measure of inequality, based on panel data estimates for 149 countries from 1970 to 2010. These episodes are also associated with a persistent ...increase in the share of income going to the top. We investigate three channels through which these impacts could occur. First, the impact of liberalization on inequality is stronger where credit markets lack depth and financial inclusion is low; positive impacts of liberalization on poverty rates also vanish when financial inclusion is low. Second, the impact on inequality is also stronger when liberalization is followed by a financial crisis. Third, liberalization seems to alter the relative bargaining power of firms and workers: the labor share of income falls in the aftermath of capital account liberalization.
This paper provides evidence that financial globalization—liberalization of the capital account—makes income distribution more uneven by raising the share of income that goes to the richest income ...deciles. We also offer evidence that changes in domestic fiscal policies in the aftermath of financial globalization are one channel through which these distributional effects could occur. Specifically, we show that episodes of capital account liberalization are followed by greater fiscal consolidation and reduced fiscal redistribution, both of which lead to increased inequality.
This paper revisits, by means of both time series and panel data analyses, the empirical regularity identified by Okun’s (in: Proceedings of the business and economics statistics section, American ...Statistical Association, Washington, DC, 98–103, 1962) seminal paper. Based on a sample of 85 advanced and developing economies between 1978 and 2014, we confirm the existence of an average negative and statistically significant Okun’s relationship. At the same time, results suggest that the relation varies substantially across countries and times. Finally, we identify several factors affecting the variation in Okun’s coefficient across and within countries. Across countries, the relationship is stronger in countries with higher average unemployment, a larger share of public employment, lower informality and smaller agricultural sectors, and one that is more diversified. Within countries, in addition to some of these factors, we find that deregulation in labor and product markets and recessions have strengthened the response of unemployment to the business cycle.
This paper assesses the performance of the IMF’s unemployment forecasts for 84 countries, both advanced and emerging market economies, between 1990 and 2015. The forecasts are reported in the World ...Economic Outlook, a leading IMF publication. The forecasts display a small amount of bias—they tend to predict lower unemployment outcomes than occur—which arises because the forecasters fail to predict accurately the sharp increase in unemployment during downturns. Forecasts are characterized by inefficiency (errors of the past are repeated in the present) and rigidity (forecast revisions are serially correlated). There is little to choose between IMF and Consensus Forecasts, a source of private sector forecasts, for the small subset of 12 countries for which both sets of forecasts are available.
Confronting Inequality Ostry, Jonathan D; Loungani, Prakash; Berg, Andrew ...
01/2019
eBook
Inequality has drastically increased in many countries around the globe over the past three decades. The widening gap between the very rich and everyone else is often portrayed as an unexpected ...outcome or as the tradeoff we must accept to achieve economic growth. In this book, three International Monetary Fund economists show that this increase in inequality has in fact been a political choice-and explain what policies we should choose instead to achieve a more inclusive economy.Jonathan D. Ostry, Prakash Loungani, and Andrew Berg demonstrate that the extent of inequality depends on the policies governments choose-such as whether to let capital move unhindered across national boundaries, how much austerity to impose, and how much to deregulate markets. While these policies do often confer growth benefits, they have also been responsible for much of the increase in inequality. The book also shows that inequality leads to weaker economic performance and proposes alternative policies capable of delivering more inclusive growth. In addition to improving access to health care and quality education, they call for redistribution from the rich to the poor and present evidence showing that redistribution does not hurt growth. Accessible to scholars across disciplines as well as to students and policy makers,Confronting Inequalityis a rigorous and empirically rich book that is crucial for a time when many fear a new Gilded Age.
The performance of
Consensus Forecasts of real GDP growth is evaluated for a large number of industrialized and developing countries for the time period 1989 to 1998. Two key findings emerge. First, ...the record of failure to predict recessions is virtually unblemished. Second, there is a high degree of similarity between private sector growth forecasts and those of international organizations (the IMF, OECD and the World Bank). The paper also provides preliminary evidence on the efficiency of, and extent of bias in, these forecasts.
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