Still under the interaction between climate change and inequality, another crucial set of questions relates to possible redress mechanisms to compensate poorer countries – and especially the poorer people in those countries – for the consequences of climate change on their lives and livelihoods. It is commonly accepted that many of those who will fall victim to some of the large costs of climate change – be it through cyclones; desertification; flooding; higher food prices; etc. – are people whose lifestyles benefitted very little from the comforts that carbon emissions have made possible. Yet, some of the obvious mechanisms to restore efficiency to this colossal coordination failure, which involve taxing carbon emissions, could generate massive revenues which, if centrally collected, could be used to make major investment in the lives of those people.

The barriers here are not technical or economic. They are predominantly political, and therefore all the more intractable. Whether we like it or not, it is not easy to convince miners in West Virginia; manufacturers in China; or cattle ranchers in Brazil to accept cuts to their living standards (which would ensue from the taxes), while the revenues are spent far away in Bangladesh, Vanuatu, or the Sahel. This is exactly why multilateral institutions, such as the Bretton Woods pair, are best placed to at least make the calculations and inform the global public of what could be achieved, both in terms of the efficiency consequences of the taxes (internalizing externalities and reducing emissions) and in equity terms (from spending the revenues on the poorest people on the planet).

The fourth and final area I will single out as meriting special attention from researchers at the Bank and Fund concerns the design and performance of policies that can assist individuals and households at the bottom of the distribution in escaping poverty in a durable and sustainable manner. Is this best achieved by giving people cash, or by investing in public services they use? If cash can help, should it be transferred conditionally on some behavior, such as school attendance, or unconditionally? Should it be transferred gradually - say, as a monthly payment - or in a large lump-sum all at once? Are there combinations of cash, assets, and services – such as in the so-called “graduation programs” – which do better than singleinstrument approaches?

This topic is, of course, a burgeoning subfield within development economics, perhaps beginning with many studies of conditional cash transfers but also including studies of large unconditional cash transfers (e.g. Haushofer and Shapiro, 2016), assessments of “intervention packages” such as BRAC’s Ultra Poor Graduation Programmes (e.g., Banerjee et al, 2021), and of basic (or minimum) income programs, whether in poor or rich countries (e.g., Verho et al. forthcoming). World Bank and IMF researchers have already contributed extensively to this area (a very small sample includes Baird, McIntosh and Özler, 2011; Coady and Le, 2020; Filmer et al. (2021); and Macours, Schady and Vakis, 2012) but much more is needed.

Which policies can reduce inequality by promoting the opportunities and achievements of those at the bottom of the global income distribution – poor citizens of poor countries – is a question that lies at the core of (certainly) the World Bank’s mandate, and we are still far from a consensus of what works best under what circumstances, particularly in the long run. Aside from original research on specific policies, which is critical, another role that is well-suited to these institutions – given that its policy importance vastly exceeds the rewards it attracts in academia – is that of systematic stock-taking of the evidence, for a broad assessment of what the balance of findings across studies implies. Fiszbein and Schady (2009) is a good example of how the research resources of these institutions can be usefully harnessed to produce excellent syntheses that are subsequently much used by researchers and policy makers elsewhere.

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