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A quarterly magazine of the IMF
  March 2004
Volume 41, Number 1
Health and Economics

Checking Up on Health
Picture This examines trends in world health. The past century has been marked by rapid advances in human welfare. People in most parts of the world are healthier and are living longer. While this trend is likely to continue, hopes are fading in some regions where progress slowed or stopped in the 1990s, primarily as a result of the AIDS epidemic.
(314 kb, pdf file)

Health, Wealth, and Welfare
David E. Bloom, David Canning, and Dean T. Jamison
The authors explore the economics of health and development, arguing that new evidence coupled with a wider perspective suggest sizable economic returns to better health. Drawing on studies of human welfare, they say that past estimates of economic progress have been understated and that recent economic losses caused by HIV/AIDS are likewise being understated if economists rely on GDP per capita as a yardstick. A better indicator is "full income"—an assessment of economic welfare that captures both the value of changes in life expectancy and income as measured in national accounts. For Africa, they say, this new yardstick "signals catastrophe ahead."
(302 kb, pdf file)

Making Health Care Accountable
Robert Hecht, Amie Batson, and Logan Brenzel
Why performance-based funding of health services in developing countries is getting more attention. Box on Guatemala's experience.
(183 kb, pdf file)

New Antimalarial Drugs: Biology and Economics Meet
Kenneth J. Arrow
Malaria remains one of the greatest scourges of humanity. A global public goods commission looks at ways to stop or slow the spread of drug-resistant strains of malaria.
(127 kb, pdf file)

Medicines, Patents, and TRIPS
Arvind Subramanian

The agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) introduced intellectual property rules into the multilateral trading system for the first time, with profound consequences for developing countries. But the high cost of AIDS treatments has injected an ethical element into the TRIPS debate, posing new problems for the pharmaceuticals industry.
(141 kb, pdf file)
The IMF's Independent Evaluation Office (IEO)

Evaluating the Evaluator

Introduction to a set of articles examining the progress made by the new IMF watchdog—the Independent Evaluation Office—in probing the effectiveness of the IMF. The IEO was set up in July 2001 and has now completed three studies.
(110 kb, pdf file)

Appraising the IMF's Performance
Princeton's Peter Kenen, a seasoned watcher of the Bretton Woods institutions and an authoritative voice on international economic policy, reviews the IEO's work. The article is followed by comments from Karin Lissakers, former U.S. Executive Director of the IMF; Jean-Claude Milleron, former French Executive Director; and Carol Welch of Friends of the Earth.
(517 kb, pdf file)

Also in This Issue

Global Finance: Past and Present
Alan M. Taylor
Policymakers in two eras of globalization faced the same "trilemma" of difficult macroeconomic policy trade-offs. Comparing the early years of the 20th century with the current era of globalization, the author finds that it is not possible for a government simultaneously to peg the exchange rate, keep an open capital market, and enjoy monetary policy autonomy. He draws lessons for today's policymakers.
(165 kb, pdf file)

The Continuing Bipolar Conundrum
Andrea Bubula and Inci Otker-Robe
A study finds that countries have been moving away from more crisis-prone intermediate exchange rate regimes to regimes that are less susceptible to crises. But we need to await the evidence that will emerge as exchange rate regimes evolve before the bipolar view can be declared the victor.
(144 kb, pdf file)

Are U.S. Households Living Beyond Their Means?
Chris Faulkner-MacDonagh and Martin Mühleisen

The boom in consumer spending has weathered many shocks that have hit the U.S. economy, including terrorist attacks and heightened security concerns, a sharp decline in equity prices and the 2001 recession, and a series of corporate and financial scandals. How has U.S. household spending held up so well, and can the trend continue?
(280 kb, pdf file)


From the Editor
(441 kb, pdf file)

Letters to the Editor
Adult Education Is Key to Poverty Reduction; "Institutions, Institutions, Institutions"; Feet of Clay; Workers' Rights and the Washington Consensus.
(85 kb, pdf file)

In Brief

News from international agencies
Final push to eradicate polio in six countries; new fund to benefit poor countries under stress; Camdessus spotlights water "injustice"; ILO finds that phasing out child labor could boost developing country economies; a new exhibit on Money and Sovereignty opens in April at the IMF Center in Washington.
(119 kb, pdf file)

People in Economics

Getting There First
Prakash Loungani
profiles Martin Feldstein, an early proponent of tax cuts in the United States. Feldstein, President of the National Bureau of Economic Research, was a pioneer of the new field of health economics and has made a lifelong study of the effects of taxes and social insurance.
(219 kb, pdf file)

Back to Basics

Trading Places: Measuring Income Mobility
Prakash Loungani
How easy or difficult is it to move up the income ladder? The article discusses ways of measuring income mobility and interprets the results of some studies.
(84 kb, pdf file)

Book Reviews

In Defense of Globalization, Jagdish Bhagwati

Restructuring Sovereign Debt: The Case for Ad Hoc Machinery, Lex Rieffel

Real World Economic Outlook: The Legacy of Globalization: Debt and Deflation, Ann Pettifor (editor)

(138 kb, pdf file)

Country Focus

The United States
Near-term prospects for the U.S. economy are favorable, but the fiscal deficit poses long-term challenges. A graphical look at the U.S. economy, illustrated with eight charts.
(100 kb, pdf file)

Straight Talk

How Useful Are Clever Solutions?
In his first Straight Talk column, Raghuram Rajan, the IMF's new Economic Counsellor and Research Department Director, warns that "clever" solutions to economic problems aren't always truly useful.
(76 kb, pdf file)