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Economy Banking Featured tax World

How much of a threat to US debt sustainability is Trump’s One Big Beautiful Bill Act?

The US should start fiscal adjustment as soon as it can if it wants to head off the risk of exploding debt related to Trump’s tax and spending plan. On 4 July 2025, President Donald Trump signed into law the One Big Beautiful Bill Act (OBBBA) . It contains tax and budgetary provisions and is projected […]

Economy Featured News World

How real-time data misled policymakers during the post-COVID recovery

Preliminary data releases can diverge significantly from subsequently revised figures, complicating economic policy decisions made in real time. This column shows how real-time GDP releases understated the strength of the post-pandemic recovery in both the euro area and the United States. This distorted view painted a more pessimistic picture than subsequently revised data revealed, masking […]

Development Economy Featured Finance

Sparking the investment miracle developing economies need to create jobs

Developing economies today face an investment shortfall of historic proportions.  Meeting even the most modest development goals will require a huge investment push—equal to about 5 percent of global gross domestic product (GDP) per year. For low-income countries, the financing gap is about 8 percent of GDP annually. It’s a prohibitive price tag that runs into trillions of […]

trade Featured News World

Economic impact of US tariff hikes: Significance of trade diversion effects

The 2025 US tariff increases varied significantly across most economies. This column argues that the economic impact of these tariffs will also not be uniform. Using a multi-sector, multi-region computable general equilibrium model, it estimates that US real GDP will decrease by around 4%, and that larger adverse impacts are expected in Canada and Mexico. […]

World Economy Featured trade

Easy money, easy spending: A new take on the resource curse

When wealth or income suddenly increases (‘easy money’), this may be directed towards unproductive ‘easy spending’. This column explores the relationship between conspicuous consumption and revenue windfalls using country-specific variations in commodity export prices, and finds that the responses are bigger for luxury than for non-luxury imports. Countries that have higher inequality, weaker control of […]

Economy Development Featured News World

Economic development, carbon emissions and climate policies

If economic activity is considered the primary driver of climate change through emissions of carbon dioxide, then supporting economic growth and fighting emissions would appear to be at odds. However, the process of economic development may itself foster complementarity between GDP growth and emissions reductions. Such complementary in the relationship between economic development and emissions […]

Development Climate Environment Featured World

How dirty air hurts economies in Europe and Central Asia and what can be done

Worldwide, air pollution is an “equal opportunity offender” impacting high-, middle-, and low-income countries. While low- and lower-middle-income countries bear the brunt of air pollution, middle- and upper-middle-income countries in Europe and Central Asia are also significantly affected. With growing urbanization, they face increasing public health impacts caused by dirty air. Across the region, in cities […]

Economy Featured Finance News World

A Three-Pronged Strategy Can Help Developing Economies Attract FDI and Unlock its Full Potential

Foreign direct investment (FDI) plays a critical role in the world economy. Global FDI flows averaged almost $2 trillion per year during the past decade, up to one-half of which have been directed to emerging market and developing economies (EMDEs) in recent years (figure 1.A). FDI inflows are an important source of private capital, especially for […]

Featured Climate Environment News World

How developing countries can measure exposure to the EU’s carbon border adjustment mechanism

In January 2026, the European Union will require importers of certain carbon-intensive goods to pay for their products’ embodied carbon emissions. The policy, known as the Carbon Border Adjustment Mechanism (CBAM), could raise the cost of exporting these goods to the EU market, potentially affecting the competitiveness of exporters.   To help developing countries assess the potential […]