In order to combat poverty, researchers have increasingly focused their efforts on randomized controlled trials — an experimental approach commonly used in medical research — to determine the effectiveness of anti-poverty programs and interventions. One question that remains, though, is how much overall reduction in the poverty rate one can expect from projects, programs or policy interventions that raise the well-being of those in absolute poverty at a given level of income, versus how much poverty reduction comes from broad-based economic growth.
Broad-based growth, defined as the process that raises median income, is far and away the most important source of poverty reduction. There is no instance of a country achieving a headcount poverty rate below 1/3 of its population (at moderate poverty line of $5.50) without achieving the median consumption of that of Mexico. This is not to say that there do not exist anti-poverty programs that are cost-effective and hence should be expanded, or, conversely, that there are anti-poverty programs that are not cost-effective (or even have zero impact on poverty) and should be cut back or eliminated. Analyses of these types of programs would enable a more efficient use of resources devoted to poverty reduction. But large and sustained improvements in global poverty will almost certainly have to focus on how to raise the productivity of the typical person in a poor country, which is a key source of national income growth.
The Congressional Budget Office (CBO) forecasts that the U.S government budget deficit will average more than 5 percent of GDP in the last three years of this decade. In contrast, the Trump Administration forecasts the budget deficit being 1.5 percent of GDP in 2028 and 0.6 percent of GDP in 2029. Why are the projections so different? And, why does it matter?
Large government budget deficits may be warranted at times when the economy is in a downturn in order to stimulate spending and mitigate economic weakness. But large deficits that occur when the economy is at or near its full-capacity raise concerns of increasing costs of borrowing, reduced private capital formation, and potential financial and economic destabilization. Deficits can shrink with strong economic growth, but the combination of likely policies and plausible GDP growth rates for the United States point towards rising deficits over the next decade.
Two areas that the Trump administration has consistently targeted for reform at the World Trade Organization (WTO) are its dispute settlement mechanism and its special treatment for developing countries.It is not clear, however, that addressing these issues will provide significant net economic benefits to the U.S.
After the U.S. renegotiations of the U.S.-Korea and NAFTA/USMCA free trade agreements, one might be forgiven for wondering whether the changes that the Administration is demanding of the WTO will be as dramatic as advertised, and whether they will have significant economic effects. But it will be politically important to address U.S. concerns. There is room for some reasonable amendments to WTO dispute settlement and WTO rules relating to developing countries. It is unclear what concessions Director-General Azevêdo can deliver. While reforms of dispute settlement and developing country status would not have great economic significance, the WTO needs to make progress on digital commerce, global warming, fisheries subsidies, state-owned enterprises, and a host of other issues of much greater significance.
The Trump administration’s “public charge” guidance aims to discourage non-citizen participation in federal safety net programs and to deny admission to the country to those deemed likely to become a burden on the state. Under the new guidance, the administration will factor in the use of non-cash safety net programs (notably Medicaid and SNAP) in determining admission to the United States and changes of status.
Even though immigrants represent a small share of beneficiaries of the SNAP and Medicaid programs, “chilling effects” from the public charge rule could generate noticeable reductions in program participation and costs. Almost half of those affected would be U.S.-born citizens (mainly children) living in households with immigrants.
Although the worst predicted impacts of climate change are still far away in the future, some financial risks associated with climate change and climate change mitigation efforts are more imminent.
Recognizing transition risks would allow for more gradual divestment from assets that are subject to repricing or may become stranded, which by itself will help transition to carbon-free economy. The importance of transition risks is just beginning to be recognized by the financial industry and policymakers.