Gita Gopinath

Gita Gopinath is the first woman to hold the position as Chief Economist at the International Monetary Fund. The Harvard professor is a leading scholar in exchange rates, sovereign debt and capital flows.

Interview

Can imposing tariffs tackle trade imbalances?

Talking international trade, Gita Gopinath has pointed out how trade barriers destabilise the global economy and have to be considered harmful especially at times of already slowing growth. She explains how times have changed in recent years, after a decades-long push by many countries to lower trade barriers. “The global trading system was moving towards much greater integration, and for the first time we saw a reversal,” Gopinath explains. “Countries stepping back, unsure about the gains from international trade. That’s a sense in which these times are quite unique.”

How can countries grow sustainably?

As part of her work to foster sustainable growth, Gita Gopinath emphasises how countries need to ensure that all people can benefit from new growth opportunities. Taking action that boosts economic growth while at the same time improving inclusiveness is needed across all economies, according to Gopinath. “How do you continue to raise income levels and improve the livelihoods of people while at the same time not creating increased inequality? How do we get people who have otherwise not been big participants in the global economy to play a bigger role? All of this is important for sustainability.”

The dominance of the US dollar in trade and finance

Together with her research colleagues, Gita Gopinath developed the Dominant Currency Paradigm. Unlike other standard economic models, it takes into account that prices in global trade are predominantly not set in either the producer’s or destination’s currency but are set in dollars. The economists found that when most transactions are dollar denominated, a currency depreciation is rather unlikely to increase exports. “When you’re in this world of dominant currency pricing, you don’t really see a big export boost that comes immediately after your currency weakens,” says Gopinath. At the same time, a currency depreciation relative to the dollar leads to an increase in the price of imported goods, which means high pressures on inflation.