Prospects and Challenges for Sustained Growth in Asia

Organized by Korea's Ministry of Strategy and Finance, Bank of Korea, IMF, and Peterson Institute of International Economics

Seoul, Korea

September 7-8, 2017

Wednesday, September 6, 2017

7:00 p.m. -    9:00 p.m

Welcome Reception

Thursday, September 7, 2017

8:30 a.m. -      9:00 a.m.

Registration

9:00 a.m. -      9:30 a.m.

Opening Session

Welcoming remarks

Hyoung-Kwon Ko, First Vice Minister, Ministry of Strategy and Finance

Juyeol Lee, Governor, Bank of Korea

"Asia and Pacific Region: Gearing Up for the Next Transformation"

Christine Lagarde, Managing Director, International Monetary Fund

9:30 a.m. -   10:30 a.m.

Session 1– Introduction

Since the Global Financial Crisis, low economic growth has sometimes been recognized as the “new normal” or “new mediocre”, especially for advanced economies. Discussions on the new mediocre have focused on concerns about a lack of aggregate demand, impediments to self-correcting forces in the economy, and the slowdown in productivity growth. This session will lay out issues and examine their relevance in the Asian context. Today’s perspective on sustained low growth will also be complemented with a historical perspective. Sustained growth was largely absent through most of human history, and answers to the question of what factors led to the past transition from a stationary economic state to one of sustained growth might provide useful insights for the future.

Session chair:
Maurice Obstfeld, Economic Counsellor, IMF

Introduction, Laying out the Main Issues and Questions

Adam Posen, President, Peterson Institute for International Economics

Changyong Rhee, Director, International Monetary Fund

A historical perspective on the secular stagnation hypothesis and its relevance for Asia 

Joel Mokyr, Professor, Northwestern University

10:30 a.m. -  10:50 a.m.

Coffee Break

10:50 a.m. -  12:50 p.m.

Session 2 The New Normal and Asia: Conceptual Issues

This session will consider the possible main drivers of low growth today and in the future, focusing on the three factors: demographic transition (population aging and declining population growth), productivity, and spillovers. What will be the likely macroeconomic impact of demographic transitions in a low interest rate environment? What countries will be most affected? With already high capital-labor ratios in some economies, and lower contributions to growth from labor supply, productivity would need to play a more prominent role in sustaining growth. Does Asia have the right institutional framework to foster innovation and productivity gains? Is Asia ready for the Fourth Industrial Revolution? Meanwhile, countries are highly interrelated in Asia, and it might be difficult for countries to insulate their economies from the spillovers of low growth elsewhere, in and outside the region.

Session chair:
Joon-Kyung Kim, President, Korea Development Institute

Demographics

Ranil Salgado, Assistant Director, IMF

Discussant: Sang-Hyop Lee, Professor, University of Hawaii at Manoa

Invention, productivity and the evolution of East Asia's innovation systems

Lee Branstetter, Professor, Carnegie Mellon University
Senior Fellow & Senior Fellow, PIIE

Discussant: Jong-Wha Lee, Professor, Korea University

International transmission and policy spillovers

Olivier Jeanne, Professor, Johns Hopkins University & Senior Fellow, PIIE

Discussants: Heenam Choi, Executive Director, IMF

12:50 p.m. -  2:00 p.m.

Luncheon 

2:00 p.m. -    3:40 p.m.

Session 3– Country Case Studies I

This session focuses on Japan and Korea. Low growth and inflation in Japan over the past two decades have motivated a broad literature on the zero lower bound on nominal interest rates and policies to escape the forces of stagnation. What are the lessons from the Japanese experience for other Asian countries? What has been the interaction between the labor market and low growth in Japan? Have institutional labor market features contributed to low growth? In Korea, lower growth over the past decade and prospects of an accelerated demographic transition have led to concerns about a low growth trend. How should policy makers respond?

Session chair:
Kyung Soo Kim, Professor, Sungkyunkwan University

Japanese lessons from the past 30 years

Adam Posen, President, PIIE

Discussant: Masahiro Kawai, Professor, University of Tokyo

Japan 

Kyoji Fukao, Professor, Hitotsubashi University

Discussant: Jonathan Woetzel, Director, McKinsey Global Institute

Korea 

Dongchul Cho, Member of Monetary Policy Board, BOK

Discussant: Tarhan Feyzioglu, Korea Mission Chief, IMF

3:40 p.m. -      3:50 p.m

Coffee Break

3:50 p.m. -      5:30 p.m.

Session 4– Country Case Studies II

In contrast to Japan and Korea, China, India, and Indonesia have continued to enjoy rapid growth since the global financial crisis on the back of supportive macroeconomic policies and strong convergence dynamics. How have the three economies managed to avoid a strong impact of the spillovers from low growth in advanced economies, including through lower external demand? What are the risks of low growth in the future in these economies: impending demographic transitions, or possibly recent slowdowns in productivity growth? Are they more permanent than expected?

Session chair:
Masaaki Kaizuka, Executive Director, IMF

China

Ma Jun, Chief Economist, People's Bank of China

Discussant: Alfred Schipke, Senior Resident Representative for China, IMF

India 

Prachi Mishra, Senior Economist, IMF

Discussant: Kenneth Kang, Deputy Director, IMF

Indonesia 

Mitali Das, Assistant to the Director, IMF

Discussant: Muhamad Chatib Basri, President Commissioner of Indonesia Infrastructure Finance

6:30 p.m. -    8:00 p.m

Dinner

Speech: Maurice Obstfeld, Chief Economist, IMF 

Friday, September 8, 2017

8:30 a.m. -      9:00 a.m.

Coffee

9:00 a.m. -  10:40 a.m.

Session 5– Policies I: Monetary Policy

This session will discuss the role of monetary policy in avoiding low inflation traps and the monetary instruments that can be used once nominal interest rates hit an effective lower bound. An important consideration will be the policy implications of the current global context of lower natural rates of interest and of asymmetric inflation risks in
that environment. Under this condition, what policy mix can exert the most impact in consideration of other policy constraints? Does monetary policy need to be redesigned in the new normal era?

Session chair:
Il Houng Lee, Member of Monetary Policy Board, BOK

Monetary policy

Joseph Gagnon, Senior Fellow, PIIE

Discussant: Seung-Cheol Jeon, Deputy Governor, BOK

Monetary policy in the New Mediocre

Douglas Laxton, Division Chief, IMF

Discussant: Shigenori Shiratsuka, Director General, Bank of Japan

10:40 a.m. -  11:00 a.m.

Coffee Break

11:00 a.m. -  12:40 p.m.

Session 6– Policies II (Fiscal and Structural Policy)

This session will discuss fiscal, trade and structural policies. What are the implications of low growth and low interest rates for fiscal policy frameworks and implementation? What structural and fiscal policy reforms are best suitable for long term potential growth? After several decades of trade growing faster than output, what can we expect from trade in the future? Is the recent slowdown in global trade growth fully explained by the slowdown in output growth, or is there any role of other factors, such as global rebalancing?

Session chair:
Yoon Je Cho, Professor Emeritus, Sogang University

Fiscal policy

Ana Corbacho, Division Chief, IMF

Discussant: Junghun Kim, Vice President, Korea Institute of Public Finance

Trade and investment

Caroline Freund, Senior Fellow, PIIE

Discussant: Davin Chor, Professor, National University of Singapore

12:40 p.m. -    1:30 p.m.

Luncheon

1:30 p.m. -      3:00 p.m.

Panel Discussion–  Perspectives on the New Mediocre and Asia

In the panel discussion, perspectives on the new mediocre, low economic growth, and its relevance to Asia will be discussed. Panelists will draw lessons from diverse country experiences across Asia. They will consider issues such as the risks of low growth in the future and how such risks can be mitigated. What does this mean for policy frameworks and strategies?

Moderator:
Changyong Rhee, Director, Asia and Pacific Department, IMF

Panelists:

Adam Posen, President, PIIE

Hiroshi Nakaso, Deputy Governor, Bank of Japan

Yoon Je Cho, Professor Emeritus, Sogang University 

Ma Jun (TBC), Chief Economist, People's Bank of China

Subir Gokarn, Executive Director, IMF

Muhamad Chatib Basri, Former Finance Minister of Indonesia