Inequality and Growth

The IMF takes a new tack on Inequality, this is for an organization that many in government think means “Its Mostly Fiscal”.   An article in the New York Times today points out a shift in policy that could have far reaching effects.

The IMF’s long stated goals:

1)      Sustained economic growth;

2)      Low inflation;

3)      A balanced budget;

Has been joined by a fourth goal:

4)      Distribution of Income

As the managing Director Christine LaGarde says “In a broad sense, the mandate is financial stability, and anything that is likely to rock the boat financially and macro-economically is within our mandate.”

This policy suggests a new consensus:  Economic policy cannot only be about promoting low inflation and robust growth.  Healthy, stable economies also depend on a reasonably equitable distribution of the awards.

An IMF staff paper recently concluded: Income equality can be of macro-economic concern for country authorities.

See full article by Eduardo Porter here:  http://nyti.ms/1qhvL3Q