Posted on March 16, 2011 by iMFdirect
Guest post by David H. Romer,
University of California, Berkeley, and
co-host of the Conference on Macro and Growth Policies in the Wake of the Crisis
I had one major source of unhappiness with last week’s conference: the participants were largely silent about the dismal outlook in the advanced economies for the next several years. The current outlook for unemployment in the United States, Europe, and Japan is probably worse than it was in late 2008. Then, mainstream forecasts for 2009–2011 showed unemployment rising sharply—but generally to levels below what we are experiencing today—and then returning toward normal at a moderate pace. Today, not only is unemployment higher than most 2008 forecasts of its peak levels, but the expected pace of recovery is weaker.
Despite this deterioration, the dire sense of urgency in late 2008 has not increased. Indeed, it has largely disappeared. I find this complacency in the fact of vast, preventable suffering and waste hard to understand. Continue reading
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Fiscal policy, growth, IMF, International Monetary Fund | Tagged: capital controls, central bank swap lines, David H. Romer, equality, exchange market intervention, financial market, financial risk, fiscal policy, Liquidity support, macroeconomic stability, macroprudential regulation, monetary policy, policy instruments, policy targets, regulation, unemployment | 9 Comments »
Posted on April 22, 2010 by iMFdirect
By Reza Moghadam
Let’s rewind the tape to October 2008. Barely a couple of weeks have passed since Lehman filed for bankruptcy, and emerging markets are selling off like crazy. The vaunted “decoupling” theories—hailed as visionary only a few months before—lie in tatters as investors flee in droves. With its mandate to foster global economic stability, the IMF comes under the spotlight: many observers question whether the institution has what it takes to stop contagion and help emerging markets cope with global deleveraging.
With strong support from its membership, the IMF did not hesitate to come to the rescue. It provided large and upfront financial assistance to help countries weather the crisis. It overhauled its lending toolkit, notably by establishing the Flexible Credit Line (an instrument allowing countries with very strong policies to tap IMF resources unconditionally). And, importantly, its membership, building on the political momentum of the G-20, committed to tripling its resource base. These actions helped put out the fire, setting emerging market spreads on a downward trajectory.
Filed under: Economic Crisis, Economic research, Financial Crisis, Financial regulation, International Monetary Fund | Tagged: capital flows, central bank swap lines, contagion, countercyclical lending, Decoupling, deleveraging, emerging market spreads, Flexible Credit Line, moral hazard, reserves, systemic shocks | 1 Comment »