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While the world is focused on addressing the near-term ramifications of the COVID-19 shock, we turn attention to another important aspect of the pandemic: its fallout on medium-term potential output through scarring. Taking Australia and New Zealand as examples, we show that the pandemic will likely have a large and persistent impact on potential output, broadly in line with the experience of advanced economies from past recessions. The impact is driven by employment, capital stock, and productivity losses in the wake of an unprecedented sectoral reallocation, hightened uncertainty, and reduced migration. Maintaining fiscal and monetary policy support until the recovery is firmly entrenched and putting in place a strong structural policy agenda to counter the pandemic’s adverse effects on medium-term potential output will be important to support standards of living and strengthen economic resilience in case of renewed shocks.

Pandemics --- COVID-19 (Disease) --- Economic aspects. --- Business and Economics. --- Macroeconomics. --- Economics: General. --- International Economics. --- Macroeconomics: Consumption, Saving, Production, Employment, and Investment: General (includes Measurement and Data) --- Economic Growth and Aggregate Productivity: General. --- Measurement of Economic Growth. --- Aggregate Productivity. --- Cross-Country Output Convergence. --- Economywide Country Studies: Oceania. --- Economic & financial crises & disasters. --- Economics of specific sectors. --- Financial crises. --- Economic sectors. --- Currency crises. --- Informal sector. --- Economics. --- Aggregate Productivity --- Business and Economics --- Cross-Country Output Convergence --- Currency crises --- Economic & financial crises & disasters --- Economic Growth and Aggregate Productivity: General --- Economic sectors --- Economics of specific sectors --- Economics --- Economics: General --- Economywide Country Studies: Oceania --- Financial crises --- Informal sector --- International Economics --- Macroeconomics --- Measurement of Economic Growth

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This paper provides estimates of potential output growth in post-apartheid South Africa using both time trend techniques and a production function approach which indicates a potential growth rate of around 3 percent. The implied output gap provides statistically significant information for predicting inflation and could thus provide valuable input for formulating macroeconomic policy. Growth accounting and regression analysis suggest that an increase in trend GDP growth after the end of apartheid in 1994 is attributable to higher TFP growth driven by trade liberalization and greater private sector participation.

Macroeconomics --- Production and Operations Management --- Economic Growth and Aggregate Productivity: General --- Measurement of Economic Growth --- Aggregate Productivity --- Cross-Country Output Convergence --- Economywide Country Studies: Africa --- Macroeconomics: Production --- Production --- Cost --- Capital and Total Factor Productivity --- Capacity --- Total factor productivity --- Potential output --- Output gap --- Capacity utilization --- Production growth --- Economic theory --- Industrial productivity --- Industrial capacity --- South Africa

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The Fund has recognized in recent years that one cannot separate issues of economic growth and stability on one hand and equality on the other. Indeed, there is a strong case for considering inequality and an inability to sustain economic growth as two sides of the same coin. Central to the Fund’s mandate is providing advice that will enable members’ economies to grow on a sustained basis. But the Fund has rightly been cautious about recommending the use of redistributive policies given that such policies may themselves undercut economic efficiency and the prospects for sustained growth (the so-called “leaky bucket” hypothesis written about by the famous Yale economist Arthur Okun in the 1970s). This SDN follows up the previous SDN on inequality and growth by focusing on the role of redistribution. It finds that, from the perspective of the best available macroeconomic data, there is not a lot of evidence that redistribution has in fact undercut economic growth (except in extreme cases). One should be careful not to assume therefore—as Okun and others have—that there is a big tradeoff between redistribution and growth. The best available macroeconomic data do not support such a conclusion.

Economic Development --- Income Distribution --- Business & Economics --- Macroeconomics --- Macroeconomic Analyses of Economic Development --- Economic Development: Human Resources --- Human Development --- Migration --- Measurement of Economic Growth --- Aggregate Productivity --- Cross-Country Output Convergence --- Fiscal Policy --- Taxation and Subsidies: Externalities --- Redistributive Effects --- Environmental Taxes and Subsidies --- Aggregate Factor Income Distribution --- Personal Income, Wealth, and Their Distributions --- Income inequality --- Personal income --- Fiscal redistribution --- Income distribution --- National accounts --- Income --- United States

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This paper examines the growth performance of sub-Saharan African countries since 1960 through the lens of growth turning points (accelerations and decelerations) and periods of sustained growth (growth spells). Growth accelerations are generally associated with improved external conditions, increased investment and trade openness, declines in inflation, better fiscal balances, and improvements in the institutional environment. Transitioning from growth accelerations to growth spells often requires additional efforts beyond what is needed to trigger an acceleration. Growth spells are sustained by fiscal policy that prevents excessive public debt accumulation, monetary policy geared toward low inflation, outward-oriented trade policies, and structural policies that reduce market distortions, as well as supportive external environment and improvements in democratic institutions. Overall, determinants of growth spells in sub-Saharan Africa are different from those in the rest of the emerging and developing countries.

Foreign Exchange --- Inflation --- Macroeconomics --- Public Finance --- Macroeconomic Analyses of Economic Development --- Measurement of Economic Growth --- Aggregate Productivity --- Cross-Country Output Convergence --- Duration Analysis --- Economywide Country Studies: Africa --- Debt --- Debt Management --- Sovereign Debt --- Energy: Demand and Supply --- Prices --- Price Level --- Deflation --- Currency --- Foreign exchange --- Public finance & taxation --- Real exchange rates --- Exchange rate arrangements --- Public debt --- Oil prices --- Debts, Public --- United States

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Over the past decades ASEAN countries have experienced rapid economic growth accompanied by a dramatic fall in poverty rates, but income inequality has not retreated. This research aims at identifying factors which could contribute to more equally distributed growth in ASEAN. To measure inclusive growth, we use a variable integrating per capita income growth and an equity index. A cross-country panel analysis of the impact of macro-structural factors on inclusive growth and its two components suggests that fiscal redistribution, female labor force participation, productivity growth, FDI inflows, digitalization, and savings significantly drive inclusive growth. A scenario analysis based on our econometric results suggests that the implementation of fiscal redistribution and labor market-oriented structural reforms could help significantly accelerate inclusive growth in ASEAN.

Macroeconomics --- Equity, Justice, Inequality, and Other Normative Criteria and Measurement --- Economic Growth of Open Economies --- Macroeconomic Analyses of Economic Development --- Measurement of Economic Growth --- Aggregate Productivity --- Cross-Country Output Convergence --- Economic Growth and Aggregate Productivity: General --- Aggregate Factor Income Distribution --- Personal Income, Wealth, and Their Distributions --- Economic growth --- Inclusive growth --- Income inequality --- Personal income --- Income distribution --- Fiscal redistribution --- National accounts --- Economic development --- Income --- Indonesia