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January 2011

The Day After Tomorrow: Macro-Financial Policy Catches Up With Reality

Otaviano Canuto's picture

The 2008–09 crisis opened the door to a different kind of thinking in international macroeconomics—and closed it on some of the previous orthodoxy. Let’s take a look at some of the most obvious cases.

First, some now see a bit of inflation (perhaps as high as 5 percent per year) as desirable for countries that pursue inflation targets, because it would allow more space to reduce nominal interest rates when an economy falls in recession. In fact, what to target (e.g., consumer, producer, asset, housing, or other prices) is the question.

Second, regulatory parameters and practices in the financial sector have proved to be

How Do Women Weather Economic Shocks?

Otaviano Canuto's picture

From the Latin American Debt crises to East Asia’s financial sector turmoil, past macroeconomic shocks have traditionally affected women differently than men. Such asymmetries are even more evident in the context of today’s financial crisis, where gender-differentiated impacts are expected to affect women more acutely than ever.

As women’s participation in the globalized workforce has steadily increased, the present shock is expected to have greater effects on women’s

Do the Poor Really Benefit from Labor Migration?

Otaviano Canuto's picture

Strong opinions abound on the issue of migration both in sending and receiving countries. But beyond the political discourse, labor migration is now central to the debate on international development and poverty reduction.  Does the migration of workers have a positive development impact? What the evidence shows is that differences in productivity and wages across the world are so large that worker migration offers huge rewards to those who move into higher-paying locations. The development problem, however, is that migrant working programs in high-income countries tend to benefit skilled workers, while the poor and unskilled are left with virtually no point of entry into international labor markets.

How can this change? How can migrant programs increase access to labor markets by the poor and, therefore, have a larger impact on poverty reduction? This is precisely the question that World Bank Senior Economist Manjula Luthria explores in

The Day After Tomorrow: If You Want To Grow, Learn

Otaviano Canuto's picture

Why is it that some countries are more developed than others? A country is “less developed” not only because it lack inputs (labor and capital) but because it uses them less efficiently. In fact, inputs are estimated to account for less than half of the differences in per capita income across nations. The rest is due to the inability to acquire, adopt and adapt better technologies to raise productivity. As an engine of growth, the potential of technological learning is huge—and largely untapped. Four global trends have begun to unlock that potential, and are bound to continue.

First, the vertical decomposition of production across frontiers allows less-advanced countries to insert themselves in supply chains by initially specializing in