Global governance

Tito Cordella, Andrew Powell, 02 September 2019

Countries almost always repay loans from the IMF and the World Bank before others, even though this preferred treatment rarely appears in legal contracts. This column presents a framework to investigate this puzzle. It argues that the ability to restrict lending allows international financial institutions to lend at the risk-free rate and creates incentives for repayment. IMF and World Bank loans are thus complementary to commercial lending.

Robert Barro, 25 July 2019

GDP counts investment twice – when it occurs and when rental income results. This column proposes an amendment to the national accounting system that only includes investment once. This would ensure that national income accounts do not overstate the resources available for consumption. It also has major implications for the estimation of the capital share in income.

Arancha Gonzalez, Marion Jansen, 04 July 2019

Economic governance is confronting the unfolding of three tectonic shifts: a digital revolution, an environmental revolution, and a social revolution. We are seeing the return of geopolitics. This column introduces a new book from CEPR, the International Trade Centre and the European University Institute that collects insights from 28 women policymakers and thought leaders on how to shape a system of global governance capable of managing those shifts and of rebuilding trust that voters appear to have lost in many countries.

Beatrice Scheubel, Livio Stracca, Cédric Tille, 26 April 2019

More than ten years on from the start of the Global Crisis, policymakers are discussing the effectiveness of the global financial safety net – the combination of reserves, central bank swap lines, regional financial arrangements, and the IMF. This column evaluates the effectiveness of the use of IMF support and foreign reserves in globally driven crises. It finds that actual use of IMF support helps during currency crises – the type of crisis for which the support was originally designed. Use of reserves is of limited effectiveness and only during sudden stops. 

José Antonio Ocampo, 09 April 2019

The IMF will turn 75 this year. Updating and reforming of some aspects of its core functions should be considered to reflect the current global monetary context. This column analyses the IMF’s global reserve system, identifying three issues and suggesting two alternatives. Ultimately, greater use of the Fund’s Special Drawing Rights would mitigate several problems in the current system.

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