F&D Archives

I. The Big Picture

What Is Capitalism?

Sarwat Jahan and Ahmed Saber Mahmud

Free markets may not be perfect but they are probably the best way to organize an economy

What Is Keynesian Economics?

Sarwat Jahan, Ahmed Saber Mahmud, and Chris Papageorgiou

The central tenet of this school of thought is that government intervention can stabilize the economy

Micro and Macro: The Economic Divide?

G. Chris Rodrigou

Economics is split into two realms: the overall economy and individual markets

Econometrics: Making Theory Count

Sam Ouliaris

For economic theory to be a useful tool for policymaking, it must be quantifiable

Supply and Demand: Why Markets Tick

Irena Asmundson

When buyers and sellers get together, the key outcome is a price

Gross Domestic Product: An Economy’s All

Tim Callen

When it is growing, especially if inflation is not a problem, workers and businesses are generally better off than when it is not

Monetarism: Money Is Where It’s At

Sarwat Jahan and Chris Papageorgiou

Its emphasis on money’s importance gained sway in the 1970s

II. How Economies Function

What Is The Informal Economy?

Corinne Deléchat and Leandro Medina

Having fewer workers outside the formal economy can support sustainable developments

What Is Debt Sustainability?

Dalia Hakura

Many factors go into assessing how much debt an economy can safely carry

Does a Minimum Wage Help Workers?

Piyaporn Sodsriwiboon and Gabriel Srour

An overly generous wage may prompt employers to cut jobs

What Is Direct Investment?

Tadeusz Galeza and James Chan

Investors often seek profits from a long-term stake in a foreign operation

The Output Gap: Veering from Potential

Sarwat Jahan and Ahmed Saber Mahmud

Economists look for the difference between what an economy is producing and what it can produce

Structural Policies: Fixing the Fabric of the Economy

Khaled Abdel-Kader

Monetary and fiscal policies deal with short-term economic fluctuations, but an economy’s problems often go deeper

Money: At the Center of Transactions

Irena Asmundson and Ceyda Oner

Without it, modern economies could not function
"What Is Money?"

Price: The Language of Exchange

Irena Asmundson

A price is the amount of money a buyer gives a seller in exchange for a good or a service. But it can be more than that

Inflation: Prices on the Rise

Ceyda Oner

Inflation measures how much more expensive a set of goods and services has become over a certain period, usually a year

Unemployment: The Curse of Joblessness

Ceyda Oner

The number of people at work is generally closely related to whether an economy is growing at a reasonable rate

Recession: When Bad Times Prevail

Stijn Claessens and M. Ayhan Kose

It is a sustained period when economic output falls and unemployment rises
"What Is a Recession?"

Fiscal Policy: Taking and Giving Away

Mark Horton and Asmaa El-Ganainy

Governments promote stable and sustainable growth through their power to spend and tax

Externalities: Prices Do Not Capture All Costs

Thomas Helbling

GThere are differences between private returns or costs and the costs or returns to society as a whole

International Trade: Commerce among Nations

Brad McDonald

Nations are almost always better off when they buy and sell from one another

What Are Real Exchange Rates?

Luis Catão

What is the value of a country’s goods against those of another country, a group of countries, or the rest of the world, at the prevailing exchange rate?

Purchasing Power Parity: Weights Matter

Tim Callen

At what rate would the currency of one country have to be converted into that of another to buy the same goods and services in each country?

Capital Accounts: Liberalize or Not?

M. Ayhan Kose and Eswar Prasad

There are both benefits and costs to easing restrictions on capital that flows across a country’s borders

Current Account Deficits: Is There a Problem?

Atish Ghosh and Uma Ramakrishnan

There can be consequences when the amount a country spends abroad is wildly different from what it receives from the outside world

III. Finance

Risk and Return: The Search for Yield

Jay Surti

Low rates of return tempt investors to take risks, which can cause economic and financial instability

How Can Interest Rates Be Negative?

Vikram Haksar and Emanuel Kopp

Central banks are starting to experiment with negative interest rates to stimulate their countries’ economies

What Is Stress Testing?

Martin Čihák, Hiroko Oura, and Liliana Schumacher

Checking the health of banks is crucial to financial stability

What Are Cryptocurrencies?

Antoine Bouveret and Vikram Haksar

A potential new form of money offers benefits while posing risks

Shadow Banks: Out of the Eyes of Regulators

Laura E. Kodres

Many financial institutions that act like banks are not supervised like banks

LIBOR: World Reference Point

John Kiff

The London interbank rate is used widely as a benchmark but has come under fire

Banks: At the Heart of the Matter

Jeanne Gobat

Institutions that match up savers and borrowers help ensure that economies function smoothly

What Are Money Markets?

Randall Dodd

They provide a means for lenders and borrowers to satisfy their short-term financial needs

Markets: Exchange or Over the Counter

Randall Dodd

How securities are traded plays a critical role in price determination and stability

IV. Economics in Action

What Is Mitigation vs Adaptation?

Adam Behsudi

The world faces a two-front battle to halt global warming and address the effects of climate change

What Is Carbon Taxation?

Ian Parry

Carbon taxes have a central role in reducing greenhouse gases

Financial Services: Getting the Goods

Irena Asmundson

How consumers and businesses acquire financial goods such as loans and insurance

What Is Universal Basic Income?

Maura Francese and Delphine Prady

Proponents hail simplicity and equity; skeptics worry about fiscal cost and incentives

Subsidies: Some Work, Others Don’t

Benedict J. Clements and Ian Parry

Some government subsidies make sense, but often there are downsides

Strategic Thinking

Sarwat Jahan and Ahmed Saber Mahmud

Game theory analyzes behavior when decisions must take into account the potential actions of opponents

Taxes in Practice

Ruud De Mooij and Michael Keen

It is hard to design a fair and efficient revenue system

Taxing Principles

Ruud De Mooij and Michael Keen

Making the best of a necessary evil

Inflation Targeting: Holding the Line

Sarwat Jahan

Central banks use interest rates to steer price increases toward a publicly announced goal

Regressions: An Economist Obsession

Rodney Ramcharan

A basic statistical tool for distinguishing between correlation and causality

What Are Remittances?

Dilip Ratha

For many countries, money transfers from citizens working abroad are a lifeline for development