In the early 1870s, the global monetary system transitioned from bimetallism—a regime in which gold and silver currencies were tied at quasi-fixed exhange ratios—to the gold standard that was characterized by the use of (only) gold as the main currency metal by the largest and most advanced economies. The transition ocurred against the backdrop of both large supply shifts in global bullion markets in the 1850s and 60s and momentous political events, such as the Franco-Prussian war of 1870/71 and the subsequent foundation of the German empire. The causes for the transition have long been a matter of intense debate. This article discusses three separate but interrelated issues: (i) assessing the robustness of the pre-1870 bimetallic system to shocks—which includes a discussion of the appropriate use of Flandreau’s (1996) reference model; (ii) analyzing the transition from bimetallism to gold as a multi-stage currency game played by France and Germany; and (iii) evaluating the monetary debates at the German Handelstag conferences in the 1860s, to present a more complete narrative of the German discussion in the run-up to the transition.
Mr. Tobias Adrian, Mr. Patrick Bolton, and Alissa M. Kleinnijenhuis
We measure the gains from phasing out coal as the social cost of carbon times the quantity of avoided emissions. By comparing the present value of the benefits from avoided emissions against the present value of costs of ending coal plus the costs of replacing it with renewable energy, our baseline estimate is that the world can realize a net gain of 77.89 trillion USD. This represents around 1.2% of current world GDP every year until 2100. The net benefits from ending coal are so large that renewed efforts, carbon pricing, and other financing policies we discuss, should be pursued.
This brief paper accompanies the Green Energy and Jobs tool, which is a simple excel-based tool to estimate the job-creation potential of greening the electricity sector. Specifically, it calculates the net job gains or losses from increasing the level of energy efficiency, and from increasing the share of clean and renewable electricity generation in the total electricity output mix. The tool relies on estimates of job multipliers in the literature, and adds evidence from firm-level data on the job-intensity of different energy sources. The paper illustrates applications of the tool using data from the IEA’s Sustainable Development Scenario compared to business-as-usual. This tool is intended to help country teams engage further on climate change issues in bilateral surveillance.
Surjit Bhalla, Karan Bhasin, and Mr. Arvind Virmani
The paper presents estimates of poverty [extreme poverty PPP$1.9 and PPP$3.2] and consumption inequality in India for each of the years 2004-5 through the pandemic year 2020-21. These estimates include, for the first time, the effect of in-kind food subsides on poverty and inequality. Extreme poverty was as low as 0.8 percent in the pre-pandemic year 2019, and food transfers were instrumental in ensuring that it remained at that low level in pandemic year 2020. Post-food subsidy inequality at .294 is now very close to its lowest level 0.284 observed in 1993/94.
This paper investigates the dynamic impact of natural resource discoveries on government debt sustainability. We use a ‘natural experiment’ framework in which the timing of discoveries is treated as an exogenous source of within-country variation. We combine data on government debt, fiscal stress and debt distress episodes on a large panel of countries over 1970-2012, with a global repository of giant oil, gas, and mineral discoveries. We find strong and robust evidence of a ‘fiscal presource curse’, i.e., natural resources can jeopardize fiscal sustainability even before ‘the first drop of oil is pumped’. Specifically, we find that giant discoveries, mostly of oil and gas, lead to permanently higher government debt and, eventually, debt distress episodes, specially in countries with weaker political institutions and governance. This evidence suggest that the curse can be mitigated and even prevented by pursuing prudent fiscal policies and borrowing strategies, strengthening fiscal governance, and implementing transparent and robust fiscal frameworks for resource management.
Ms. Mercedes Garcia-Escribano, Ms. Tewodaj Mogues, Marian Moszoro, and Mauricio Soto
South Asia has experienced significant progress in improving human and physical capital over the past few decades. Within the region, India has become a global economic powerhouse with enormous development potential ahead. To foster human and economic development, India has shown a strong commitment to the Sustainable Development Goals (SDG) Agenda. This paper focuses on the medium-term development challenges that South Asia, and in particular India, faces to ensure substantial progress along the SDGs by 2030. We estimate the additional spending needed in critical areas of human capital (health and education) and physical capital (water and sanitation, electricity, and roads). We document progress on these five sectors for India relative to other South Asian countries and discuss implications for policy and reform.
Patrick Petit, Mario Mansour, and Mr. Philippe Wingender
Fighting the obesity epidemic has so far proven a difficult challenge, given the diversity of natural and processed foods, the complexity of food supply chains, and the fact that targeting excessive caloric consumption is far trickier than reducing overall consumption (as for tobacco). Nevertheless, efforts to curb caloric intake are gearing up and the experience from tobacco control has drawn much attention on a potential role for excise taxes in fighting obesity. Many related questions have therefore been raised as part of the IMF’s capacity development work: Should excises on unhealthy food be used to fight obesity? If so, under what conditions? What are the product and market characteristics that would help identify the relevant tax bases and the rates at which to tax them? While acknowledging that the scientific evidence keeps evolving, this note summarizes the ongoing debate and practice on food excises and on their potential role as a policy tool to fight the obesity epidemic, with a view to assist policymakers in deciding whether to go forward, and if so, how.How to Apply Excise Taxes to Fight Obesity