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


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.

Continue reading

Convergence, Crisis, and Capacity Building in Emerging Europe


by Nemat Shafik

Central, Eastern and Southeastern Europe has been through a lot. In two short decades, the region moved from a communist planned system to a market economy, and living standards have converged towards those in the West.

It has also weathered major crises: first the break-up of the old Soviet system in the early 1990s, then the Russian financial crisis in 1998, and finally the recent global economic crisis. How did these countries do it?

From the Baltic to the Balkans, the region’s resilience and flexibility are the result of hard work and adaptability. But more than anything, it is the strong institutions built over the last two decades that have enhanced the region’s ability to deal with the momentous challenges of the past, the present—and those to come.

Continue reading

A Spotlight on the IMF’s Technical Assistance


By Nemat Shafik

(Version in عربي)

Of the three main pillars of the IMF’s work, technical assistance has been a sort of middle child; it doesn’t get the attention of the oldest and youngest children, yet in many ways is the glue that holds the family together.

The other two pillars are well known: we lend money to countries in times of need and crisis, and conduct annual check-ups of their economies and financial systems, known as surveillance.

As countries around the world cope with the global economic crisis, the IMF’s technical assistance is a vital part of the work that we do to help countries prevent, prepare for and resolve crises.  Technical assistance also helps countries master the form and details to govern themselves in an effective and legitimate way. Continue reading

Haves and Have Less—Why Inequality Throws Us Off Balance


Jeremy CliftBy Jeremy Clift

We used to think that overall economic growth would pull everyone up. While the rich might be getting richer, everyone would benefit and would see higher living standards. That was the unspoken bargain of the market system.

But now research is showing that, in many countries, inequality is on the rise and the gap between the rich and the poor is widening, particularly over the past quarter-century.

With taxpayers footing the bill for troubles in the financial industry in advanced economies during the global economic crisis, this discrepancy seems particularly galling to wage-earners who have seen their pay stagnate or worse. Inequality has started to attract more research by economists.

The September 2011 issue of Finance & Development (F&D) looks at income inequality around the world and how it matters. Continue reading

Rethinking Economic Principles: Join the Debate


By iMFdirect

The global financial crisis caused immense hardship and suffering all over the world. To prevent a repeat, we need to rethink…

… what we know about economic theory …. We need to rethink, following this, the policies … coming from the analytical work. And then we will need also to rethink multilateralism.

IMF Managing Director Dominique Strauss-Kahn (April 16, 2011)

A wholesale reexamination of macroeconomic principles in the wake of the crisis was the goal of a conference at the IMF in early March.

But, for Olivier Blanchard and others, the conference was merely “the beginning of a conversation, the beginning of an exploration.”

Here is our list of recommended reads to help you be part of the conversation. Continue reading

South Africa’s Unemployment Puzzle


By Abebe Aemro Selassie

Among the havoc wrought by the global financial crisis, unemployment ranks at the top. This discussion often focuses on the situation in advanced countries. Unemployment in the United States, for example, continues to hover around 9 percent.

Take that and double it. Then you can begin—yes, just begin—to get a sense of the magnitude of the problem in South Africa. Unemployment in South Africa now stands at some 24 percent. Youth unemployment is phenomenally higher still at some 50 percent. Continue reading

New Policy Ideas for a New World: Interview with Robert Solow


By iMFdirect

There has been plenty of reflection, during the past few years, on the causes of the global financial crisis. But, last month’s conference at the IMF focused on taking what we’ve learned from the crisis and looking toward the future of economic policy.

Robert Solow—Professor Emeritus at Massachusetts Institute of Technology and Nobel Prize winning economist—was among those who brought interesting perspectives and a wealth of experience to the conference discussions.

Watch Professor Solow’s interview and hear more about what he has to say on… Continue reading

Follow

Get every new post delivered to your Inbox.

Join 804 other followers

%d bloggers like this: