 We're missing one of our speakers. Yeah, yeah. Without Uri, we are moving right along. We're a little bit late. We're trying to catch up. I'm Richard Cooper from Harvard University. And we're going to talk about the world economy in this session. 10 days ago, there was the annual meeting of the World Bank and the IMF. And on such an occasion, the IMF comes out with its world economic outlet. Over the past 10 years, the IMF has typically been too optimistic in assessing the near term next two years' outlook. And regularly, they've had to revise downward their estimates. So this past 10 days was noteworthy for one of the very few times they revised upward their forecasts. And there's a general sense of buoyancy about the world economy at the present time. And at the same time, however, the IMF comes out with the second less publicized report called Global Stability. And there, they said, things look fine in the short run, but all of the risk, not all, most of the risks in the medium to long run are on the downside. That particular report got less attention, but they point out a number of indicators, particularly rising debt around the world. So we have here a marvelous panel, well-experienced. I'm not going to go through them. You have their names and bios in your book. And I'm just going to follow the order on our program. I've asked each speaker to talk just for eight minutes. And I hope that leaves some time for questions. And before we have to yield our time. So I'll just turn it over right away. We'll go right down the order. Start with Uri Dadoosh. Thank you very much, Richard. Pleasure to be here. So as Richard intimated already, the world economy is in the midst of a broad-based expansion. According to consensus forecasts or the IMF forecast, which is actually very close to the consensus, we're seeing 3% real growth in 2017 using market exchange rates as weights. And this implies a half a percent acceleration, which is really quite notable for the world economy compared to 2016. And it also marks, for the first time since the financial crisis, a return to the 20-year trend of world economic growth. So I agree I've been doing this for a long time, looking at the world economy in various contexts. I agree that 2017, 2018 will be good years. And I also agree that there are big risks when you look further out, although my focus is going to be on the real economy rather than the financial issues raised by the stability report. I'm sure others will cover financial issues. So 2017, 2018, good years. Why? Four elements, just very quickly. These are well known. Steady growth across all the large economies. Accelerations of economies that have been in trouble, Russia, Brazil, Japan, and Italy. Less trouble in the past, but very sluggish growth. You're actually seeing decent growth in these large economies. The second element is policies are helpful. Monetary policies remain very stimulatory. Fiscal policy plays a large and neutral role. The tax package announced in the US suggests that there will be some fiscal stimulus coming in the United States, so it could be even from the short term point of view a good thing. The third element is we've had very slow growth. We've had 10 years, terrible time really in the world economy. There's a lot of pent up demand. And there's also a lot of underutilized capacity. So in half of the 60 largest economies in the world, unemployment is still over 5% at the moment. That's a good indication of underutilized capacities. And finally, inflation is very subdued. Oil and commodity prices are still very moderate. And so inflation is under the 2% benchmark. That's at the headline level. If you look at the underlying inflation, it's even lower than that. So these are the elements, essentially, of the optimism for the short term. If you look at imbalances, there's actually relatively few imbalances in the advanced countries. People will challenge me on that. The big exception that I see is Germany's gigantic current accounts surplus. But it seems like the other countries, particularly European countries, have learned to live with that. So actually, when I look at risks, I'm not being politically correct. I actually see relatively little by way of short term downside risk in the course of the next year, year and a half. When I was running the forecast at the World Bank, I would have been more cautious. I don't see much downside risk. In fact, I see some upside risk. In 2018, it could be closer to 3 and 1 half percent than 3%. Essentially, because from my experience when the world economy gathers momentum like that, there is a self-feeding mechanism. And that's also one of the reasons why when I go into 2019, I think people might be surprised by the there will be some pick-up in inflation and markets may be underestimating the rising interest rate that will be needed, not necessarily in 2018, but going into 2019. And that could cause some issues. But as I look at the long-term, then I want to talk about the long-term, because for me it's the most important at the moment. The, there are, so if you look at the long-term, we've had a slowdown, big slowdown in the labor force across the world. We also have had relatively low investment in recent years. And productivity growth has been relatively slow. So it would be imprudent to assume that you're going to get more than about 3% growth over the next 20 years, as we did over the last 20 years. But I want to make two qualifications on the optimistic side. One is that we don't really understand what drives productivity. Total factor productivity is measured by economists as a residual from a regression, which essentially means we don't know what is driving it. And there could be a lot of innovations coming down the pike. There's a lot of indications that there will be. So we may be seeing accelerated productivity. But the other factor, which is perhaps just as important, is that regardless of what's happening at the technology frontier, developing countries are so far behind the technology frontier. And they now account for about 40% of world GDP at market exchange rate. And they're growing about 2 and 1 half times faster than advanced countries. Developing countries can do even better than what they have been doing in recent years. And that, together with the possibility of a productivity acceleration, could make us quite optimistic about the medium term. A lot depends. And in fact, it is very important what the policies that are pursued in developing countries will be with regard to whether they're going to fulfill that potential. And that is where I go now in the long term and tell you about my pessimism, why I'm very worried about the policy picture. And I could mention two or three things, but I'm going to focus on one since we have very short time. And the issue I focus on is protectionism. I don't mean to pick on the United States. I live in the United States. I admire the United States. The United States is the most open, large economy. And protectionism today is a much more prevalent feature outside the United States than in the United States. However, the fact that the United States is turning inward is profoundly significant. Furthermore, I see US protectionism as not just a temporary Trumpian aberration, but the result of the US economy's failure to adjust to stagnant wages and rising inequality caused by technology and globalization. And Kemal, to my left here, and I wrote about this risk long before Mr. Trump came on the scene like several years before. And unfortunately, current US policies I'm finishing, current US policies such as tax cuts and reductions in health coverage are not only failing to deal with the underlying problem, but they're making it worse. Protectionism in the United States is bound to be profoundly destabilizing both at home and abroad. And it's going to give a very bad example to the developing countries that we hope would be the future of our long-term prosperity. And if it persists, if we don't have some unexpected event, and of course there could be, given what's happening in the US at the moment, if it persists, then we may soon be looking at the 3% global growth rate of 2017 with some nostalgia. Thank you very much. I think we will come back to the question of protectionism later, but now I'd like to call on Kemal Dervis to make his presentation. Thank you, Richard, and I will not repeat things that have been said because the IMFs, WEO, most of us have read it. And it is indeed the long time, the first time that the IMF has become more optimistic than it was in the past editions. I want to focus on really two points. One is this issue of debt and interest rates and whether that is a major risk. Clearly, the amount of total debt, private and public jointly, and of course, in terms of gross debt, I mean, there is a netting out process, but gross debt to GDP has increased, is higher today, significantly higher, depending on the measurements, the exact figure, but it's about a third higher than it was at the beginning of the 2008 crisis. This debt is carried and is feasible and doesn't create too much of a problem because of extremely low interest rates. So if there was a chance for interest rates, if there was a probability of interest rates rising, the overall debt situation in the world would be a problem. However, I don't foresee these interest rates to rise for various reasons, both supply side and demand side reasons. Urey has mentioned the low inflation. And so at least in the next few years, I don't see that that is a real risk, despite the fact that debt is so high. If this hypothesis about interest rates is wrong, then we could enter a major crisis situation because debt really is very high. The second point I want to make, and I think that is about the productivity paradox. Most of us must have been here for the last session about digital communication, news, and we've entered a world, artificial intelligence, a booming technology world. And if you look at these technology stories at the micro level, you would think as a macro economist that productivity growth would be rising very rapidly. But in fact, the opposite is the case. Both labor productivity and total factor productivity are rising much more slowly than they have in a long time. And that is pretty much a global phenomenon. It's true in the US, it's true in Europe, it's true in the major emerging market. So this is a very strange situation. On the one hand, you have this booming technology, innovation, and on the other hand, you have measured productivity in terms of GDP statistics that is actually slowing down and it is slower than it has been in the last, you know, for a very, for decade, the decade trend has been much, much faster. Now, quickly, two points in our time is very limited. Is this a measurement problem? Some people will immediately say, this is a measurement problem. There are some measurement issues, but there are important papers that have been written that actually show that measurement only explains a very small part of the problem. And of course, we have to remember one thing. Productivity measured by GDP does not try to measure consumer surplus. I mean, I don't want to get too technical. Consumer surplus is a different concept from GDP. And it may well be that consumer surplus is rising, but there's also been research on that. And even if you adjust for consumer surplus, again, you don't find that technology is rising total factor productivity or labor productivity is rising rapidly. So this is a paradox. This is a strange situation, which is a real puzzle. And we've done some research, which is not finished, but the story that comes out is very interesting and has to do with something that we wrote together also some years ago, income distribution. What's happening is that the firms, the best firms on the frontier are actually increasing their productivity quite well. So there is rapid total factor productivity growth and labor productivity growth among frontier firms, among the best firms, but they are a small minority and their weight in the overall economy is small. The other firms, the median firm or the low median firms is showing, in most cases, negative total factor productivity growth. So it's not that innovation is not happening and is not translating itself into the productive sphere. It is, but only by a minority of high-performing firms. And this has, of course, one that has many implications. One can be hopeful because the diffusion might occur and that would solve the problem, although there's data that shows that the diffusion is actually slowing down, but it has one very important consequence also. It is making the income distribution even more unequal. It is one more factor of why the income distribution is becoming more unequal and I think I ran out of time. Thank you. Mr. Young, thank you very much for inviting me. To this very excellent conference and it's a very big earner for me to be with these excellent speakers and professor. And today, I'd like to talk about two parts of my presentation. In the first part, I will review the current economic developments in major countries for our discussion. And in the second part, I will talk about some cross-cutting downside risk factors for the global economy. So as you know, and as IMF forecasted, the global economy is obviously recovery these days. But I think the world economy is yet to make a complete recovery from the 2008 global economic crisis. It is still suffering from a long period of a weak economic activity. But from the beginning of this year, the world economy started to show some different landscapes. Let's see the U.S. economy. The U.S. economy I think entered a cyclically very new phase. You know, the U.S. Fed is expected to raise its policy rate once again within this year. And it has already announced the balance sheet normalization program. It started from October this year. And so we project the U.S. economy to grow at 2.1% in 2018. It is a little bit higher level than this year's growth rate. The driving force of the U.S. economy is I think the strong pickup in private consumption and investment and based on the improving labor market and the weak dollar. Thanks to the weak dollar, the U.S. export to the other countries has recovered these days. However, I think there are two main downside risks for the United States. The first one is the policy uncertainty under the Trump administration. For example, yesterday the Trump administration announced the new tax cut program. If the tax cut program actually be implemented, then that action will have some big impact on the long-term interest rate and the U.S. dollar exchange rates. So there are still a lot of uncertainty surrounding the Trump administration's economic policy. This is the first downside risk factor. And the second one is, as you know, the normalization of the monetary policy. Yesterday, President Trump nominated Jerome Powell for the next Fed chair and maybe he will still maintain the monetary policy stance in the coming years, but there remains still a lot of uncertainty surrounding the monetary policy in the United States. And the second is the Eurozone. The Eurozone is also picking up this year and the inflation rate of Eurozone has moved to around one and a half percent, which is very closer to the 2% target. But the unemployment rate is still very high. It remains at 9.1% in recent months. Record low, still for the last eight years, though. The increase in growth in 2017 reflects an acceleration in exports and continued the strength in domestic demand. But there are still downside risks. We are very concerned by the two major downside risks. The first is the Brexit negotiation and the second is the weak growth in real wage. The real wage growth is very, very weak in the European economies and that is, I think, the main barrier to the active recovery of the United and the European economies. For Japan, we see a very similar economy recovery process, but Japan's economy has the same problem, very weak growth in real wage. This is a very big problem and I think this is the main reason why we cannot anticipate the longer term economic recovery in Japan. And for China, we expect still very high level of economy growth next year, 6.7%, a little bit lower than this year's expected growth rate, 6.8%. But I think the Chinese economies, the biggest problem is it is kind of that few old economy, that few old economy. So I think the issue should be addressed if the sustainable economic growth is to be maintained for a longer term in the future. And we expect further economic recovery in some large emerging economies, especially in Russia and Brazil. You know, these economies have suffered from recession for the last three years due to the drastic fall in oil, gas, and other commodity prices. These economies are, however, showing an upturn recently and this trend is expected to continue in the next year. But the problem in these economies is that they are too dependent on oil, gas, and other commodities. So they need to diversify the economy much stronger. I will briefly mention the cross-cutting potential negative factors for the global economy. The first risk factor is, which is already mentioned, inward-looking protectionism in the advanced economies. This is very big problem for many countries. For example, the South Korea is facing very big problem with the US because the US government asks the renegotiation of the Korea-US FTA, big issue in South Korea. So I think we have to be careful of the proliferation of the inward-looking protectionism in advanced economies. And the second risk factor is, as I mentioned, the very weak real wage growth rate in advanced economies, especially in the European countries and in Japan. That's a big problem for those two big economies. And lower inflation rate is also a very big problem. Lower inflation rate tends to lead weaker consumer confidence, weaker business confidence. So the world economy has not succeeded yet in completely ending the deflation mindset, which is very, very prevalent in many advanced economies. And finally, I'd like to mention the changes in international financial conditions. The US Fed has already begun to raise its policy rate and there is a mood of tapering in the European central banks. There are many emerging economies propelled by capital inflow from the advanced economies. That fueled emerging economies, I think, should normalize their balance sheet. Before, accommodative financial conditions are ended. This is a very big, powerless task for the emerging economies. Thank you. Thank you very much. Professor Ito. Thank you. I echo many points just made by previous speakers, so I tried to be selective. But it is obvious just the world economy is in expansionary process. If you look at stock prices, or employment number, or growth rate, or even just rising long-term interest rate, it all shows just world economies expanding. But probably this is not the place where just speaking only optimistic picture. So let me just raise three maybe concerns or problems. Some have already said by other people. One is just very low growth rate. Not just growth rates, very low potential growth rate. So this may be very much related to what people call the secular stagnation. And behind is the very low productivity. I don't know how technology is related. It may be too early to speaking about just the influence of AI or IoT to the productivity. Because if you look at the previous innovation, there's some long time lag between the introduction of technology and growth. But I think maybe I agree to you that there's some substantial structure problem in the economy which just makes the growth rate is very low. So in Japan, we have a lot of discussion about just increasing importance of reform to just accelerate the reallocation of resources, especially reforming labor market is very important. We are just reallocation of labor. It is very difficult to just raise the growth rate. And also in the case of Japan, perhaps maybe many other countries, just investment in human resources is very weak in the past. And so that may just provide another reason why productivity is growth. And trade is very important. There are many discussions about the increasing protectionism. And yes, that is the concern. But at the same time, still we can have some perspective about the increasing the free trade regime. In the case of Japan, for example, the economic partnership with Europe, I hope will be concluded by the end of this year. And also even TPP, although United States is out, but we still try to just finish the TPP-11, I mean excluding United States by the end of this year. But this kind of, I think, just in the stepping forward is very important in order to just get more profit by suppressing the allocation. The second concern, which is also talked by some other people, very low inflation rate and wage rate. And usually low inflation rate is very good. But we have to remember just major countries just implemented very, very expansion in monetary policy and very stimulative economic policy and very low interest rate. But still the inflation rate and wage rate is very low, especially in the case of Japan. If you look at Japanese case, as you know, we just introduced very expansionary monetary policy and unemployment rate is the lowest in the last 20 years and the stock price is the highest in the last 20 years. Still inflation rate is just around 0.5%. And wage is increasing very slowly because nominal GDP is increasing. That means very dramatic drop of the wage share in GDP. So there must be some kind of structure problem here again. I don't know technology, maybe measurement, but we have to think more seriously about this low inflation rate. And third, I think Kim had just mentioned the importance of the risk of debt, like I agree. But I want to just emphasize the other side, risk of the asset. You have to look at just the price of the stocks and real estate because of the maybe low, very, very low interest rate. In most countries probably the stock price and the real estate price is among the highest in the past. And it's very difficult to say whether this is bubble or not because of the low interest rate. But however, in the process of the increasing interest rate from now on, I hope, it is very possible that there's some drop of the asset price after the interest adjustment. And increasing interest rate is very important process for normalization of the global economy. However, increasing interest rate is very difficult process if we just expect some kind of reaction of the asset price. So we have to watch very carefully about the response to the asset price to the interest rate. Thank you. Thank you very much. Now, last, Mr. Zhao. Yi. Yeah. I'm the last presenter for this panel. Obviously, I guess I have some disadvantage because so many issues have been covered by previous panelists. Now I'm going to try to turn this disadvantage into advantage. So I decided to do as the following. I based on what panelists say, based on my understanding, I tried to summarize four issues currently international community are much concerned. There is some question on these important issues we are facing. First issue regarding the recovery of world economy. It's obviously everybody recognize now world economy under the recovery. The question people raise is, these recovery can be sustainable or not? Also, so-called secure stagnation claimed by Larry Summers still exist or not? Furthermore, we see the sign, the monetary policy in advanced country has already started to change. People summarize maybe different speed in same direction. That means the QE will gradually exist. These QE exist. What's the impact on the global liquidity, particularly on developing countries? That's kind of question people raised on the first issue. Second issue is how to deal with possible negative part of globalization. Even people support globalization, recognize some possible negative outcome from globalization. Particularly, although globally the income equality has been reduced, I mean, among the different countries, the equity will be reduced. But in each of countries, no matter advanced or developing countries, income equality, the gap wide, how to solve the issue. Some people propose to take a day called UBI, universal base income. That means every citizen can get a minimum income from government. Of course, people argue whether these can be affordable to do that. So some people propose to maybe take another measure, tax credit, encourage people hardworking, but at least give some minimum income. That's the second issue. Third issue, what's the impact of new technology, particularly artificial intelligence, FinTech? The second panelist described maybe not necessarily, obviously, have some positive impact or benefit in terms of labor productivity or total productivity. Furthermore, even people argue maybe AI itself will threaten the human being existence, whether it's the exaggerate or not. Some people are very much concerned of these positive or negative impact of new technology. The last issue I guess, how to prevent in the future against financial crisis, people mentioned almost 10 years past since the auto break global financial crisis. People argue, what's the next time for Minsky time come? So some sign people worry about. For example, people mention still we have a very high leverage level. Also, in fluctuation of cross-border capital, yes, you can see immediate before and after global financial crisis, the fluctuation of cross-border capital is very dramatically. Later on, after the auto break of global financial crisis, yes, the fluctuation will come down. But among the developing countries, the fluctuation is still very high. So people still worry about that. The next part of my presentation, I wonder because I'm Chinese, I want to talk about some Chinese economy, although some panel have already touched upon. I guess one or two years, so many people, international community worry about the possibility of hard landing for Chinese economy. But now nobody talk about that because so far, Chinese economy perform relatively well. Last year, the GDP growth was 6.9%. In the first third quarter this year, also GDP growth reached same 6.9%. The IMF raised their forecast four times this year. Now they forecast maybe at the end of this year, GDP growth of China can reach 6.8%. But don't forget the target for Chinese government set at the beginning of this, only 6.5%. So I don't see any problem for growth rate. That means generally the Chinese economy have already stabilized even next year, I guess, is the same situation. Obviously, another issue people raised many times about debt ratio in China. Even SP downgrade of Chinese sovereign rating. Generally speaking, the debt ratio in China generally is OK, particularly government debt and household debt relative to other countries is low. The issue people worry about is the debt ratio of non-financial sector. Probably now they reached 160% of GDP, which is very high. The issue, yes, we should be taking care of that issue. At the same time, I don't think we should exaggerate the issue. Because in China, there is some difference with other countries. First of all, these business or corporate debt high, one of the reason is the SOE, stay on enterprise, has a very high debt issue. But among them actually is the local government use these SOE as a platform to raise, to get money. That we have to understand that the local government in China, they have a lot of resources. They have an asset. So they can cover these debt. That's the first reason. Second reason is that some people calculate in terms of size of financing for these corporations. Almost same with the United States, with the EU. Because China, we use more indirect financing, rather than direct financing. So it's hard for Chinese corporations to get funding from the store market, rather than just bottoming it from the bank. So the example, it's a very interesting example, I guess last week, I guess one week ago, Chinese governments in many years issued a US dollar sold in Hong Kong for $2 billion US dollars. Actually, at the end, the year is very low. Only a little bit higher than US schedule, I guess, by 0.1 to 5. That means the market still treats solving debt of China is high. So I guess that's the general description on Chinese current situation. Of course, tomorrow we have another workshop. I'm going to talk about long-term, what's the outcome of the National Congress of Communist Party from economic interpretation. That's tomorrow. I stop here. Thank you very much. So you've heard wide-ranging presentations. The world economy is a big topic. We haven't covered all of them issues, but you have an excellent panel here who's capable of covering almost all issues. And so let me open it for questions. We have about 25 minutes, I'm told, and I need some lights out there so I can see hands someplace. Okay, so let's start here. Please say who you are briefly, and if you have a question to direct to a particular person, do so, or to the panel as a whole. Thank you. I'm Meyo Shitrit from Israel. I would like to raise the question of debt which Mr. Dervis spoke about it, the fact that the situation today of the interest is so low, sometimes even negative, pushes the people to invest their money or even to take loans in order to buy stock market because they're going up. What is your expectation on the future of the stock markets? Because I'm afraid that if it falls, it's not only falling of the stocks, but it will be full of the big debt and create a big crisis even bigger than 2008. I'd like to know what you think about it. Okay, let me collect several questions and then we'll turn to the panel. Mr. Johnson. Thank you very much. I've got two quick questions. First to come out, Dervis, his comments reminded me, I think back to the solo paradox of the late 1980s when it was argued that there are computers everywhere, but it's not being reflected in productivity. And I'm wondering if there's an analogy to be drawn there and also you, Professor Cooper, because I remember reading and using a lot of the work you did on stagnant wages, which also started during that same period. So I'm just wondering if there's not an analogy to be drawn from the what we experienced and what we're experiencing now. I don't know, so I'm just asking a question. The second one is the question of these trade deficits and protectionism in the United States. President Trump and his team, including Ross and Lighthauser, seemed to focus almost exclusively on currency manipulation and so on. Now, is this fair? I mean, you've got a $356 billion deficit, I think it is, with China. These numbers, I think there are about four major ones that jump out of Germany, China, Japan, I think Mexico, but South Korea thereafter and Canada who were actually lower. But I'm wondering, is this correct? Should they not be focusing more on American consumption habits, on investment? Because it seems exclusively at that level to be focused on currency manipulation and on fair trade practices. Let's collect a couple more, yes, there. I'm Salim Demesh, a researcher from Central Bank of Morocco. If I would like to thank you for the quality of your presentations. I have a remark from the fiscal monitor of the IMF, which is inequality. We learned from this last edition that if inequality declined between countries, it was waiting within countries. And here, I want to ask you, do you share the recommendation to enhance the tax progressivity? And also, if you can recommend this proposition of enhancing investment in education and health, because it's an ex-anti-treatment and there is also taxation, which is an exposed treatment. Thank you. Any further, yes, right here. Thank you very much. Tatsuo Masa from NECB Business School in Japan. I have a question to probably, former minister Kemal Derbis. Hearing all these great stories and together with the current fashionable talk about industry for industrial revolution, I fear social divide or economic divide. Companies and individuals who can write on all these quick changes can take advantage of those. But companies and individuals who are left behind could have no chance of taking fruit of this. The result could be social or economic divide within community, within the country, within the region. How do you foresee the risks of this divide expanding or shrinking? Thank you. Okay, let me turn to the panel and ask for solicit responses and then I'll go back to the audience. Kemal, a few were addressed to you. Why don't we start with you? Totally agree, and in fact, that was one of the key points, I think of my quick presentation that inequality is a major, major issue. And the past trends, which have made intra societies very unequal, although between countries, because of the growth of developing countries, global inequality may not have increased as maybe even decreased, but inequality inside the countries is increasing everywhere. And one of the reasons that I tried to, it's not the only reason, but one of the reasons is that those who are doing well are doing better. And those who are not doing so well are doing less well even than before. So today it matters a lot in which firm you work. Education also matters, of course, and your health systems and so on. But there is a concentration of power and wealth and productivity growth in a small number of firms, many of them global firms, whereas a lot of other firms are being left behind in the dust. And this will create social problems, I think of a major magnitude which we are seeing happening all over the world. So I think that the inequalities side of the equation in looking at the world economy has to be underlined very strongly. Now the question on asset prices, because of the low wage growth, low inflation, I don't see any major push towards any rapid normalization of monetary policy. So I think asset prices may perhaps have overshot, but I don't see a major collapse of asset prices in the global economy. I think income distribution and the social consequences of income distribution is a much more serious problem than the asset price problem. And I do congratulate the IMF for having taken on this problem. In the old days it was just a footnote maybe in an IMF report. But today the IMF is actually addressing this issue as a major overall microeconomic issue, microeconomic issue, which gives me some hope that policies will be addressed. One final thing, I think it is in line with President Macron's policy also. You have to attack the problem before transfers and taxes. Transfers and taxes can correct things, but if the primary distribution is very unequal, it's very difficult to make it more equal with transfers and taxes. So the real issues are competition, entry, small enterprise access to credit, education, health coverage and things of that sort. Taxes and transfers are important, but if you don't solve these problems, you will not be successful in reducing inequality. Thank you. Others want to comment, Marie? Just follow up obviously, Kamala and I agree on these issues. Particularly on the inequality question. Just a couple of kind of elaborations. One is the wage stagnation is very important when coupled with inequality, but there's a big difference between advanced and developing countries. The developing countries that are growing fast are seeing wages rise even as inequality gets worse. So at least people feel, even the people who are losing out, so to speak, in relative terms, are gaining in absolute terms. And that's very, very important for social cohesion. The problem in the United States, particularly in the United States, but it's also true in other countries, is that you have a combination of wage stagnation and wage declines for some parts of the population like white males at the same time as you have rising inequality. So that's very important. The second is on education, yes, of course I believe in the importance of education. Education as a cure for inequality, we have to be very careful because it depends where the money for the education goes. In the United States, there's a superb educational system, but in many respects, it's also been a desequalizing educational system with huge differences in quality between the very top and what is available at the base, which has to do with the way a lot of high school and elementary education is financed at the local level in the United States. So education, yes, but it has to be targeted. One point also quickly on asset prices, Mr. Shatreet's point. Historically, a big adjustment in the stock market by itself has not actually induced, typically has not resulted, we've had many examples of very large adjustments in the stock price, which have had relatively minimal effects on the real economy. And I agree with Kemal that the adjustment to date has been gradual. If you see inflation pick up in the course of about a year from now or so, then I think we should be worrying more. Final point is insofar as a lot of the stock market purchasing is by private institutions, people who can take risks, even individuals who can take risks. There's only so much that they'll allow you to borrow margin. For example, I can tell you from personal experience. Then I think the effect is less. It's when you have very highly leveraged institutions like the banks that are taking all sorts of risks, which could include the stock market, but typically doesn't, that you can get a major financial cataclysm. Professor Ito. I have a comment about the relation between technological development and economic growth. Someone just mentioned Solos Paradox, where we can't see any of the result of the technological advantage to the macroeconomic growth. But if you just read, for example, this study by Robert Gordon, he just showed there's some kind of increase of the productivity, say, between, say, 1990 to 2000. So there was some kind of effect on productivity. Maybe technological development is not strong enough to just have a continued technological development. And another very important area, as I already mentioned, there's a very serious big timeline between the timing of the technological introduction and the result on the economic activity, because industrial structure have to respond to absorb the result of technological progress. Now just remember, major technological development we often discuss today, like a deep learning of AI, or just expansion of international things, just happened in the last maybe five years. So we have to be very patient to just wait for just result of the technology to be just reflected in the macroeconomy. And also I just thought of a very brief comment on the bilateral trade deficit surplus with the United States and exchange rate. I have to just only comment. This is not the first time. Japan just suffered a lot of this discussion in the 1980s and 1990s. So when the trade issue becomes very serious, the United States is always just mentioned trade deficit and exchange rate. And of course this is very dangerous, but at the same time we have to be very patient to negotiate and discuss the issue. So I think the trade issue is very important, but I'm just very pessimistic at this moment. I might comment on the last point. I'll make a strong statement, which may not be true. It needs to be tested. I do not think our new president, Donald Trump, is a protectionist. For reasons that I find obscure, he has a particular animus against countries that have big surpluses with the US. China, Germany, Canada, has even been added to the list, Mexico, and so forth. But I don't think he's intrinsically protectionist. There are two ways to eliminate a bilateral surplus, which is the wrong policy to focus on, but it seems to be in his mind. One is to restrict imports, and the other is to raise exports. And I think he'd be happy with either, probably maybe preferably raise exports. He has appointed some people who are protectionists, but I consider that a major question mark in the Trump administration, whether he's protectionist or not. He's talked around it, and he's so far taken no actions, apart from abandoning TPP. And even in the renegotiation of NAFTA, the guidelines which were published, remember this is a 25 year old agreement, were perfectly reasonable in terms of bringing it up to date. They were drawn ironically from much of the TPP negotiation. Now, I've been around long enough to know that with trade negotiations, they're not done until they're done. And so we have to wait to see what's gonna come out of these negotiations, but just to comment on that, it's certainly a source of uncertainty and the tone is very different from previous American administrations. So that's concerning. But I would not write him off yet as a protectionist and is leading the world down the road of protection. But let me ask you the question regarding the low interest rate, which I remind me and think that one very important, very interesting speech made by Stanley Fish in July. The speech is specifically targeting the low interest rate. He described the negative of low interest rate. Also identified the reason behind the low interest rate. I recall he mentioned a couple of things. First of all is the aging population. Population become older and older, which will create demand very soft. That's the first. Second is technology advance also creates some income equality. I can record one figure. When Facebook got IPO, the market value equivalent to GM. But Facebook only had 7,000 employees. While GM had 250,000 workers. You can see the asset concentrate on small people. That's also created some low demand. Here I want to add one factor. Not many people mentioned because I recall before the global financial crisis, one term be used frequently. So-called great modulation. That means that time growth rate very fine. It's good in advanced country. Also low inflation rate. The one of reason behind that is at the end of 70 of last century, China started to take open door policy. 10 years in India take that. Also that time Soviet Union collapse. Almost two billion people get more or less get into global integration. Which great demand for advanced countries. Now these dividends have been dramatically reduced or disappear. I guess that's the very important factor. Then I answer the question regarding the trade deficit. I guess the trade deficit of US, the reason is very complicated. But one factor we don't forget. US had a trade deficit with 100 countries. Not only with China with German. Yes, China and the German occupy large share. But US have trade deficit with more than 100 countries. So yes, I don't deny there's some room for US negotiate some deal with some country. Which can be reduce the deficit. But another factor is we understand saving and the investment. The difference between saving and the investment equal the difference between export and the import. That mean the saving rate in US relative to investment is very low. That mean the investment need in US in some way create trade deficit. That's something I guess we should locate little bit comprehensively. Not only focus trade deficit. That's my thinking. I'd like, sorry, Mr. Young. Okay, I'd like to add one more comment about the trade deficit with South Korea. So the keyword is aging population. So we conducted a empirical study about reasons. Why many economists enjoy the trade surpluses. And we examine the relationship between the surplus and the population aging. So the two variables have very strong positive relations. So the Korean society is experienced in very, very rapid aging problems these days. And so I think in 10 or 20 years maybe Korean economy will suffer from kind of trade deficit because of the aging issues. Okay, thank you. I'd like to make one further comment about the trade issue. It's another identity. Zhao drew our attention to the identity between a trade surplus or deficit and excess savings over investment. Another identity is that for every trade deficit, I'm using trade in a comprehensive way, including services, there's a capital account surplus. And you think about that for a minute. If we want to reduce the US trade deficit significantly, which Trump says he does, it means also reducing the US capital account surplus by an equivalent amount apart from measurement errors. And that means less foreign investment in the United States. The US has an enormous amount of foreign investment in the US net. Summit goes into US corporate bonds and US government bonds. A lot of it goes into equities, including the very companies we've been talking about, Facebook, Google, and so forth. And one way of putting it, which economists have not absorbed yet in my judgment, is that the US has a comparative advantage in producing new firms. And the new firms are, if they succeed, of course many of them don't, but if they succeed, they're attractive around the world, not just in the United States. And as long as this process continues, there's gonna be a net capital inflow into the United States and with a floating exchange rate, air go, trade deficit. Now I don't know if any of Trump's advisors have pointed out to him that eliminating the trade deficit means eliminating the net capital inflow into the United States. We have enough time for one question. I see from the clock up there. Anyone? Way back there. For Yuri and Kamal, I'm a little puzzled by your... Identify yourselves, please, Jeff. Yes, Dick. Jeff Frieden from Harvard. For Yuri and Kamal, I'm a little puzzled by your view on the debt issue. It seems to me that the question is not whether nominal interest rates are low. It's what the relationship is between the growth in debt and asset prices. The fact that interest rates are low is irrelevant to the asset liability mix. The fact that interest rates are low in fact means that the central banks may have lost a lot of the bullets in their arsenal. So can you say a little bit more about why you think this is not a problem? And then a second question for Kamal. I'm a little confused about your notion that we should focus as a policy variable on pre-tax, pre-transfer income distribution. That's a 40-year process. Reversing it is probably a 20-year process. It seems to me that if the problem is income distribution, saying that what we should focus on is pre-tax, pre-transfer is a formula for not being able to do anything in the short and medium run. I'll give it to Tank. I do believe it is very important to focus on the pre-tax and transfer distribution issues and what creates it. For example, monopolies are an issue here. Pre-tax, pre-transfer. If you put all the burden of correcting the maldistribution of income or the very unequal income distribution on taxes and transfers, you run tremendous political problems and also inefficiencies in the whole system of tax taxes and transfers. So I do believe that real wage growth, competition, productivity growth that is much wider, more widely shared, these are things that will create a healthier income distribution. I'm not saying one shouldn't work on taxes and transfers, but I don't think one should put the whole burden of it on taxes and transfers. And I think this is really a very crucial point because in Europe, for example, you already have 50, 55% of GDP worth of expenditures by the government. I mean, how can you reach 70% without creating major inefficiencies? On the other hand, if you democratize the production process and allow small firms to do well, allow easier entry, put barrier to monopoly profits and monopolies, you can do all these things with much more and efficiency characteristic to it than via just taxes and transfers. The other question, I don't know, Uri, do you wanna answer the... I'm not sure I understood it, honestly. Can you repeat the question, Jeff? No, no. Oh, sorry, sorry. I'm gonna, we're gonna have a discussion over dinner in which Jeff can clarify his question. I'm gonna bring this session to a close and it just remains me, I hope, on behalf of all of you to thank our panelists very much for a very interesting conversation.