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After several decades of increasing global economic integration, the world is facing the risk of policy-driven geoeconomic fragmentation (GEF). This note explores the ramifications. It identifies multiple channels through which the benefits of globalization were earlier transmitted, and along which, conversely, the costs of GEF are likely to fall, including trade, migration, capital flows, technology diffusion and the provision of global public goods. It explores the consequences of GEF for the international monetary system and the global financial safety net. Finally, it suggests a pragmatic path forward for preserving the benefits of global integration and multilateralism.

Capital movements. --- Monetary policy.

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External demand was the main driver of growth in Thailand in 2006 and 2007. However, WEO projections indicate moderating foreign demand in 2008, with U.S. growth being revised downwards to reflect the turmoil in housing and credit markets, and high oil prices. While the share of Thai exports to the US has fallen in recent years, the US remains Thailand's largest export destination. We use a small structural model and Bayesian estimation to assess the possible impact of a U.S. slowdown on Thai growth. We find that a 1 percent slowdown in U.S. growth in 2008-relative to the baseline forecast-could have an upper-bound impact on Thai GDP growth of 0.9 percentage points.

Exports --- Economic development --- Econometric models. --- Thailand --- Foreign economic relations --- Development, Economic --- Economic growth --- Growth, Economic --- Tʻai-kuo --- Hsien-lo --- Muang-Thai --- Thaimaa --- Prates Thai --- Prades Thai --- Thaïlande --- Kingdom of Thailand --- Prathēt Thai --- Tailand --- Thailandia --- Thajsko --- Royal Thai Government --- Ratcha Anachak Thai --- Koninkryk van Thailand --- تايلاند --- Tāylānd --- Tailandia --- Reino de Tailandia --- Tayilande --- Royômo de Tayilande --- Tayland Krallığı --- Pratet Tai --- Thài-kok --- Тайланд --- Каралеўства Тайланд --- Karaleŭstva Taĭland --- Tailandya --- Tajland --- Kraljevina Tajland --- Кралство Тайланд --- Kralstvo Taĭland --- Economic policy --- Economics --- Statics and dynamics (Social sciences) --- Development economics --- Resource curse --- International trade --- Siam --- Banks and Banking --- Foreign Exchange --- Inflation --- Production and Operations Management --- Macroeconomics: Production --- Price Level --- Deflation --- Interest Rates: Determination, Term Structure, and Effects --- Macroeconomics --- Currency --- Foreign exchange --- Finance --- Output gap --- Exchange rates --- Real exchange rates --- Real interest rates --- Production --- Economic theory --- Prices --- Interest rates --- United States

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We posit that the relationship between income inequality and economic growth is mediated by the level of equality of opportunity, which we identify with intergenerational mobility. In economies characterized by intergenerational rigidities, an increase in income inequality has persistent effects—for example by hindering human capital accumulation— thereby retarding future growth disproportionately. We use several recently developed internationally comparable measures of intergenerational mobility to confirm that the negative impact of income inequality on growth is higher the lower is intergenerational mobility. Our results suggest that omitting intergenerational mobility leads to misspecification, shedding light on why the empirical literature on income inequality and growth has been so inconclusive.

Labor --- Macroeconomics --- Equity, Justice, Inequality, and Other Normative Criteria and Measurement --- Institutions and Growth --- Measurement of Economic Growth --- Aggregate Productivity --- Cross-Country Output Convergence --- Aggregate Factor Income Distribution --- Personal Income, Wealth, and Their Distributions --- Wages, Compensation, and Labor Costs: General --- Human Capital --- Skills --- Occupational Choice --- Labor Productivity --- Labour --- income economics --- Income inequality --- Income distribution --- Personal income --- Wages --- Human capital --- National accounts --- Income --- United States

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We argue that in an economy with downward nominal wage rigidity, the output gap is negative on average. Because it is more difficult to cut wages than to increase them, firms reduce employment more during downturns than they increase employment during expansions. This is demonstrated in a simple New Keynesian model with asymmetric wage adjustment costs. Using the model's output gap as a benchmark, we further show that common output gap estimation methods exhibit a systematic bias because they assume a zero mean. The bias is especially large in deep recessions when potential output tends to be most severely underestimated.

Fiscal policy. --- Tax policy --- Taxation --- Economic policy --- Finance, Public --- Government policy --- Labor --- Macroeconomics --- Production and Operations Management --- Business Fluctuations --- Cycles --- Policy Objectives --- Policy Designs and Consistency --- Policy Coordination --- Macroeconomics: Production --- Wages, Compensation, and Labor Costs: General --- Wage Level and Structure --- Wage Differentials --- Price Level --- Inflation --- Deflation --- Labour --- income economics --- Output gap --- Potential output --- Wage adjustments --- Wage rigidity --- Sticky prices --- Production --- Prices --- Economic theory --- Wages --- United States

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This paper examines whether IMF lending is associated with increases in outflows to offshore financial centers (OFCs), known for bank secrecy and asset protection, relative to other international destinations. Using quarterly data from the BIS on bilateral bank deposits, we are unable to detect any positive and statistically significant effect of IMF loan disbursements on bank deposits in OFCs. The result holds even after restricting the sample to the duration of the IMF program, where disbursement quarters and non-disbursement quarters should be subject to similar degrees of macroeconomic stress. It is also robust to using the scheduled tranche of disbursements as an instrument for actual disbursements. While the effects vary by the type and conditionality of the IMF program, as well as the amount of lending, none of the effects are found to be positive and statistically significant. We also estimate whether the recent surge in emergency lending, during the Covid-19 crisis, is associated with an increase in outflows to OFCs but find no evidence to support this.

Macroeconomics --- Economics: General --- International Economics --- Banks and Banking --- Criminology --- Exports and Imports --- Industries: Financial Services --- Money and Monetary Policy --- Foreign Exchange --- Informal Economy --- Underground Econom --- International Lending and Debt Problems --- Bureaucracy --- Administrative Processes in Public Organizations --- Corruption --- Foreign Aid --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Economic & financial crises & disasters --- Economics of specific sectors --- Banking --- Corporate crime --- white-collar crime --- International economics --- Finance --- Monetary economics --- Offshore financial centers --- Financial services --- Crime --- Foreign aid --- Loans --- Financial institutions --- Bank credit --- Money --- Currency crises --- Informal sector --- Economics --- International finance --- International relief --- Credit