After a Golden Decade, Can Latin America Keep Its Luster?

Posted on May 6, 2013 by iMFdirect

Alejandro WernerBy Alejandro Werner

(Versions in Español and Português)

Latin America continues to be one of the fastest growing regions in the world, even though growth slowed down a bit in 2012. Many economies in the region are operating at or near potential, inflation remains generally low, and unemployment is at historically low levels.

In the near term, the region will continue to benefit from easy external financing and relatively high commodity prices. In our May 2013 Regional Economic Outlook, we project that the region will expand by about 3½ percent in 2013. In Brazil—the region’s largest economy—economic activity is strengthening, driven by improving external demand, measures to boost investment, and the impact of earlier policy easing. In the rest of Latin America, output growth is expected to remain near potential.

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Filed under: Economic Crisis, Economic outlook, Economic research, Finance, growth, International Monetary Fund, Latin America | Tagged: , , , , , , , | 2 Comments »

The Lessons of the North Atlantic Crisis for Economic Theory and Policy

Posted on May 3, 2013 by iMFdirect

Joseph_E._StiglitzGuest post by: Joseph E. Stiglitz
Columbia University, New York, and co-host of the Conference on Rethinking Macro Policy II: First Steps and Early Lessons

(Versions in 中文, Français, 日本語, and Русский)

In analyzing the most recent financial crisis, we can benefit somewhat from the misfortune of recent decades. The approximately 100 crises that have occurred during the last 30 years—as liberalization policies became  dominant—have given us a wealth of experience and mountains of data.  If we look over a 150 year period, we have an even richer data set.

With a century and half of clear, detailed information on crisis after crisis, the burning question is not How did this happen? but How did we ignore that long history, and think that we had solved the problems with the business cycle? Believing that we had made big economic fluctuations a thing of the past took a remarkable amount of hubris.

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Filed under: Advanced Economies, Debt Relief, Economic Crisis, Emerging Markets, Europe, Finance, Financial Crisis, growth, IMF, International Monetary Fund | Tagged: , , , , , , , , , , , , , | 8 Comments »

Preventing The Next Catastrophe: Where Do We Stand?

Posted on May 3, 2013 by iMFdirect

David RomerGuest post by David Romer
University of California, Berkeley, and co-host of Rethinking Macro II: First Steps and Early Lessons

(Versions in 中文, 日本語, and Русский)

As I listened to the presentations and discussions, I found myself thinking about the conference from two perspectives. One is intellectual: Are we asking provocative questions? Are interesting ideas being proposed? Are we talking about important issues? By that standard, the conference was very successful: the discussion was extremely stimulating, and I learned a great deal.

The second perspective is practical: Where do we stand in terms of averting another financial and macroeconomic disaster? By that standard, unfortunately, I fear we are not doing nearly as well. As I will describe, my reading of the evidence is that the events of the past few years are not an aberration, but just the most extreme manifestation of a broader pattern. And the relatively modest changes of the type discussed at the conference, and that in some cases policymakers are putting into place, are helpful but unlikely to be enough to prevent future financial shocks from inflicting large economic harms.

Thus, I believe we should be asking whether there are deeper reforms that might have a large effect on the size of the shocks emanating from the financial sector, or on the ability of the economy to withstand those shocks. But there has been relatively little serious consideration of ideas for such reforms, not just at this conference but in the broader academic and policy communities.

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Filed under: Advanced Economies, Economic Crisis, Economic research, Emerging Markets, Europe, Finance, Financial Crisis, Financial regulation, Fiscal policy, growth, IMF, International Monetary Fund, Latin America, Public debt | Tagged: , , , , , , , , , , , , , , , , , , , | 5 Comments »

The Cat in the Tree and Further Observations: Rethinking Macroeconomic Policy

Posted on May 1, 2013 by iMFdirect

akerlofGuest post by George A. Akerlof
University of California, Berkeley
Senior Resident Scholar at the IMF, and co-host of the Conference on Rethinking Macro Policy II: First Steps and Early Lessons

(Versions in عربي, 中文, Français, 日本語, and Русский)

I learned a lot from the conference , and I’m very thankful to all the speakers.  Do I have an image of the whole thing?  I don’t know whether my image is going to help anybody at all, but my view is that it’s as if a cat has climbed a huge tree. It’s up there, and oh my God, we have this cat up there.  The cat, of course, is this huge crisis.

And everybody at the conference has been commenting about what we should do about this stupid cat and how do we get it down and what do we do.  What I find so wonderful about this conference is all the speakers have their own respective image of the cat, and nobody has the same opinion.  But then, occasionally, those opinions mesh.  That’s my image of what we have been accomplishing.

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Filed under: Advanced Economies, Economic Crisis, Economic research, Employment, Finance, Financial Crisis, G-20, IMF, International Monetary Fund, recession | Tagged: , , , , , , , , , , | 4 Comments »

Rethinking Macroeconomic Policy

Posted on April 29, 2013 by iMFdirect

blanchBy Olivier Blanchard

(Versions in عربي, 中文, Français, Русский, and Español)

The IMF has just hosted a second conference devoted to rethinking macroeconomic policy in the wake of the crisis. After two days of fascinating presentations and discussions, I am certain of one thing:  this is unlikely to be our last conference on the subject.

Rethinking and reforms are both taking place.  But we still do not know the final destination, be it for the redefinition of monetary policy, or the contours of financial regulation, or the role of macroprudential tools. We have a general sense of direction, but we are largely navigating by sight.

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Filed under: Advanced Economies, Asia, Debt Relief, Economic research, Europe, Finance, Financial Crisis, Financial regulation, Financial sector supervision, Fiscal policy, IMF, International Monetary Fund, Politics, Public debt | Tagged: , , , , , , , , , , , , , , | 7 Comments »

Emerging Asia: At Risk of the “Middle-Income Trap”?

Posted on April 29, 2013 by iMFdirect

ASinghBy Anoop Singh

(Versions in 中文 and 日本語)

Emerging economies in Asia have weathered the global financial crisis relatively unscathed and appear to be on track for continued strong growth this year and the next. Perhaps because the region has been doing rather well, policymakers’ concerns have increasingly shifted towards medium-term risks: could growth and fast convergence to living standards in advanced economies—come to an end?

In fact, while the economic performance of emerging economies in Asia remains undoubtedly strong in international comparison, it has already shown signs of gradual weakening.

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Filed under: Advanced Economies, Asia, Economic Crisis, Emerging Markets, Financial Crisis, growth, IMF, International Monetary Fund | Tagged: , , , , , , , , , , , , | Leave a Comment »

How to Sustain Recent Financial Gains: Fix Old Risks and Meet New Challenges

Posted on April 17, 2013 by iMFdirect

GFSRBy José Viñals

(Versions in  عربي ,日本語, Español)

Policymakers’ decisive actions  since our last report in October have increased global financial stability by reducing acute risks.

  • In the euro area, policymakers averted a financial cliff.
  • In the United States, the worst fears of the fiscal cliff had been averted, while balance sheet repair and continued monetary easing have supported financial markets and the recovery.
  • In Japan, new policy initiatives have caught the imagination of global markets that Japan may finally leave its deflation valley.

But our latest Global Financial Stability Report concludes that improved financial markets and gains in financial stability will not be sustained—and new risks are likely to emerge—unless policymakers address key underlying vulnerabilities.

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Filed under: Economic Crisis, Europe, Finance, Financial Crisis, growth, International Monetary Fund | Tagged: , , , , , , , , , | Leave a Comment »

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