December 2008: IMF research summaries on global herding in financial markets (by Marco Cipriani) and on fiscal decentralization (by Lusine Lusinyan); article on the experiences of IMF staff at the Nobel Laureate Meetings in Lindau, Germany (by Chris Crowe); listing of visiting scholars at the IMF during August–December 2008; listing of contents of Vol. 55 No. 4 of IMF Staff Papers; listing of recent IMF Working Papers; listing of recent external publications by IMF staff; and a Call for Papers for an upcoming conference on structural reforms.

The events of the past six months have demonstrated the fragility of the global financial system and raised fundamental questions about the effectiveness of the response by private and public sector institutions. the report assesses the vulnerabilities that the system is facing and offers tentative conclusions and policy lessons. the report reflects information available up to March 21, 2008.

An empirical investigation of financial crises during the last 800 years.

The Q&A in this issue features seven questions about emerging markets and the financial crisis (by Ayhan Kose); the research summaries are "Tax Revenue Response to the Business Cycle" (by Cemile Sancak, Ricardo Velloso, and Jing Xing) and "Banking Crisis Resolution: Was this Time Different?" (by Luc Laeven and Fabian Valencia). The issue also lists the contents of the second issue of the IMF Economic Review, Volume 58 Number 2; visiting scholars at the IMF during October-December 2010; and recent IMF Working Papers and Staff Position Notes.

IMF Research Perspective (formerly published as IMF Research Bulletin) is a new, redesigned online newsletter covering updates on IMF research. In the inaugural issue of the newsletter, Hites Ahir interviews Valeria Cerra; and they discuss the economic environment 10 years after the global financial crisis. Research Summaries cover the rise of populism; economic reform; labor and technology; big data; and the relationship between happiness and productivity. Sweta C. Saxena was the guest editor for this inaugural issue.

The Fund has recognized in recent years that one cannot separate issues of economic growth and stability on one hand and equality on the other. Indeed, there is a strong case for considering inequality and an inability to sustain economic growth as two sides of the same coin. Central to the Fund’s mandate is providing advice that will enable members’ economies to grow on a sustained basis. But the Fund has rightly been cautious about recommending the use of redistributive policies given that such policies may themselves undercut economic efficiency and the prospects for sustained growth (the so-called “leaky bucket” hypothesis written about by the famous Yale economist Arthur Okun in the 1970s). This SDN follows up the previous SDN on inequality and growth by focusing on the role of redistribution. It finds that, from the perspective of the best available macroeconomic data, there is not a lot of evidence that redistribution has in fact undercut economic growth (except in extreme cases). One should be careful not to assume therefore—as Okun and others have—that there is a big tradeoff between redistribution and growth. The best available macroeconomic data do not support such a conclusion.

We evaluate and partially challenge the ‘household leverage’ view of the Great Recession. In the data, employment and consumption declined more in states where household debt declined more. We study a model where liquidity constraints amplify the response of consumption and employment to changes in debt. We estimate the model with Bayesian methods combining state and aggregate data. Changes in household credit limits explain 40 percent of the differential rise and fall of employment across states, but a small fraction of the aggregate employment decline in 2008-2010. Nevertheless, since household deleveraging was gradual, credit shocks greatly slowed the recovery.