IMF Weekend Read

 

Dear MARIA, In today's edition, we highlight: How Artificial Intelligence can boost productivity in Latin America New global standards for macroeconomic statistics F&D magazine: how animal spirits affect the economy Amory Gethin measures the economic value of education The insurer channel of monetary policy ARTIFICIAL INTELLIGENCE How AI Can Boost Productivity in Latin America (Credit: AFP IMF Photo/Ernesto Benavides) Countries with higher numbers of what economists call informal workers—like street vendors, taxi drivers, domestic workers, and artisans—may avoid more immediate economic disruptions from AI, but also risk missing out on AI’s full economic benefits. This might especially affect economies in Latin America and the Caribbean, a region that has long had one of the most informal labor markets in the world, with more than half of all jobs in this category. This is according to a new “Chart of the Week” blog and related working paper by the IMF’s Bas Bakker, Sophia Chen, and Dmitry Vasilyev, who found that fewer than half of the region’s jobs are likely to be highly affected by AI. Among jobs exposed to AI, the authors write, “about half, such as those in healthcare, would gain from AI-enhanced productivity without major job losses. Others, like call center jobs, would face a high risk of displacement.” Increasing the availability of formal jobs and expanding digital access may help increase economic productivity. Providing enhanced education, training and social safety nets, the authors write, will equip workers to adapt to an AI-driven economy and ensure that they are not left behind. Read the Blog IMF STATISTICS IMF and the Statistical Community Release New Global Standards for Macroeconomic Statistics (Credit: IMF) The IMF has released an update to global statistical standards to reflect economic changes that have taken place in the global economy since 2009, such as increasing economic interconnectedness, digitalization, and innovations in financial markets. The Integrated Balance of Payments and International Investment Position Manuals (BPM7) serves as a key framework for member countries, guiding the preparation of internationally comparable statistics and the production of high-quality data that reflects economic realities. Find out more about the updated standards in the BPM7. Read the Press Release F&D MAGAZINE How Animal Spirits Affect the Economy (Credit: Getty Images/WLDavies) Storytelling is central to how we interpret economic events. We recall economic history through haunting images of anxious crowds waiting to take money out of banks during the Great Depression. We grapple with the consequences of artificial intelligence by channeling our hopes and fears into science fiction. But do stories themselves influence the economy? John Maynard Keynes said that “animal spirits”—instincts and emotions that influence behavior—can explain economic booms and busts. The economist Robert Shiller has pushed for more research into the contagious narratives that shape people’s economic decisions. Writing in F&D magazine, Yale University’s Joel Flynn and Princeton University’s Karthik Sastry present new natural-language-processing tools for measuring economic narratives and their importance for the US business cycle based on companies’ conference calls and Form 10-K filings. “Viral narratives could be the missing link between emotions and economic fluctuations,” they say. Read the Article Economists have long surmised that people’s knowledge and skills contribute significantly to economic development, but to what degree can access to an education change lives? Amory Gethin has compiled data from surveys from more than 150 countries to measure what economists have never measured before: the correlation between education and individual incomes. Gethin is an economist in the World Bank Development Research Group working on growth and inequality and has sought to quantify the economic value of education as it relates to global poverty reduction. In this podcast, Gethin says investing in education advances those who pursue degrees and those who don’t. Weekly Roundup STAFF PAPER The Insurer Channel of Monetary Policy This new IMF staff paper explores the role of life insurers in the transmission of US monetary policy. Insurers have uniquely long-term liabilities; authors Divya Kirti and Akshat V. Singh posit that they face a trade-off between matching liability duration exposure by investing in long-term government debt and earning higher yields by shifting to risky—but shorter-term—private debt. Due to this tradeoff, long-term risk free rates play a critical role in shaping insurers' demand for risky private debt. Contractionary monetary policy shocks that raise long-term risk-free rates reduce insurers' demand for private debt, raising risk premia. The authors use granular, high frequency data and regulatory changes to trace how insurers' investment behavior transmits monetary policy shocks to risk premia. Thank you very much for your interest in the Weekend Read! Be sure to let us know what issues and trends we should have on our radar. Miriam Van Dyck Editor IMF Weekend Read mvandyck@IMF.org

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