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.

(more…)

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 »

Top 20 — iMFdirect’s Top 20 list

Posted on August 23, 2012 by iMFdirect

Three years after the launch of iMFdirect as a forum for discussing economic issues around the world, we look back at some of our most popular posts.

The IMF blog has helped stimulate considerable debate about economic policy in the current crisis, on events in Europe and around the world in Asia, Africa, Latin America, and the Middle East, on fiscal adjustment, on regulating the financial sector, and the future of macroeconomics–as economists learn lessons from the Great Recession.

As readers struggled to understand the implications of the crisis, our most popular post by far was IMF Chief Economist Olivier Blanchard’s Four Hard Truths, a look back at 2011 and the economic lessons for the future.

Here’s our Top 20 list of our most popular posts by subject (from more than 300 posts):

1.  Global Crisis: Four Hard Truths; Driving With the Brakes On

2.  Financial Stability: What’s Still to Be Done?

3.  Fiscal Policy:  Ten Commandments ; Striking the Right Balance

4.  Macroeconomic Policy: Rewriting the Playbook;  Nine Tentative Conclusions ; Future Study

(more…)

Filed under: Advanced Economies, Africa, Asia, Economic Crisis, Economic research, Emerging Markets, Employment, Europe, Finance, Financial Crisis, Financial regulation, Financial sector supervision, Fiscal policy, Fiscal Stimulus, Global Governance, Globalization, growth, IMF, Inequality, International Monetary Fund, Investment, Latin America, LICs, Low-income countries, Middle East, Multilateral Cooperation, Politics, Public debt, recession | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 2 Comments »

Closer, Ever Closer

Posted on May 17, 2012 by iMFdirect

By Anoop Singh

(Version in 中文)

Here’s the good news: thanks to relatively strong fundamentals and good policies,  Asian economies have coped well with the global market turbulence of recent years. Now the bad: a major financial shock—say, of type ignited by the bankruptcy of U.S. investment bank Lehman Brothers in 2008—is likely to have a substantial impact on Asia.  The reason: Asia’s increasing financial interconnectedness.

Over the past two decades—in line with the region’s growing role in the global economy—Asia’s equity markets have become increasingly sensitive to global financial developments.   More specifically, we have discovered that equity returns in Asia generally now move in tandem with those in systemic economies.  (By systemic economies, we are talking here about those countries—such as the United States and the United Kingdom which are home to major, global, financial centers such as Wall Street and the City of London.)

How do we measure that degree of financial interconnectedness?  Or put another way, how do we measure the relationship—if any—between those Asian equity returns and the performance of systemic economies?

(more…)

Filed under: Advanced Economies, Asia, Economic research, Europe, Financial Crisis, Globalization, International Monetary Fund, Investment, Politics | Tagged: , , , , , , , , , , , , , | 2 Comments »

Keeping Asia from Overheating

Posted on May 19, 2011 by iMFdirect

By Anoop Singh

Asia’s vigorous pace of growth has seen the region play a leading role in the global recovery. But, there are also now growing signs of price pressure across the region’s goods and asset markets.

Headline inflation in Asia has accelerated since October 2010, mainly owing to higher commodity prices. There are, of course, variations in how much this has affected inflation across Asia, partly reflecting differences in the shares of food and energy items in expenditures.

But there are signs that higher commodity prices are spilling over to a more generalized increase in inflation. (more…)

Filed under: Asia, Economic outlook, IMF, International Monetary Fund | Tagged: , , , , , , , , , , , , , , , , | 5 Comments »

Rethinking Economic Principles: Join the Debate

Posted on May 2, 2011 by iMFdirect

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. (more…)

Filed under: Economic Crisis, Economic research, International Monetary Fund | Tagged: , , , , , , , | 7 Comments »

South Africa’s Unemployment Puzzle

Posted on April 4, 2011 by iMFdirect

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. (more…)

Filed under: Africa, Economic Crisis, Economic research, Emerging Markets, Employment, Inequality, International Monetary Fund, Politics, Public debt | Tagged: , , , , , , , , , , | 7 Comments »

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

Posted on April 2, 2011 by iMFdirect

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… (more…)

Filed under: Economic Crisis, Economic research, International Monetary Fund | Tagged: , , , , , , , , , , | Leave a Comment »

A Balanced Debate About Reforming Macroeconomics

Posted on March 22, 2011 by iMFdirect

Guest post by Joseph E. Stiglitz, Columbia University, and
co-host of the Conference on Macro and Growth Policies in the Wake of the Crisis

The most remarkable aspect of the recent conference at the IMF was the broad consensus that the macroeconomic models that had been relied upon in the past and had informed major aspects of monetary and macro-policy had failed. They failed to predict the crisis; standard models even said bubbles couldn’t exist—markets were efficient. Even after the bubble broke, they said the effects would be contained. Even after it was clear that the effects were not “contained,” they provided limited guidance on how the economy should respond. Maintaining low and stable inflation did not ensure real economic stability. The crisis was “man-made.” While in standard models, shocks were exogenous, here, they were endogenous. (more…)

Filed under: Economic Crisis, Economic research, Financial Crisis, International Monetary Fund | Tagged: , , , , , , , , , , , , , , , | 15 Comments »

The Future of Macroeconomic Policy: Nine Tentative Conclusions

Posted on March 13, 2011 by iMFdirect

By Olivier Blanchard

(Version in Français, Español)

The global economic crisis taught us to question our most cherished beliefs about the way we conduct macroeconomic policy. Earlier I had put forward some ideas to help guide conversations as we reexamine these beliefs. I was heartened by the wide online debate and the excellent discussions at a conference on post-crisis macroeconomic policy here in Washington last week. At the end of the conference, I organized my concluding thoughts around nine points. Let me go through them and see whether you agree or not. (more…)

Filed under: Economic Crisis, Economic research, Financial Crisis, Financial regulation, Financial sector supervision, Fiscal policy, growth, International Monetary Fund | Tagged: , , , , , , , , , , , , , , , , , , , , , , | 23 Comments »

IMF Draws Lessons from the Crisis, Reviews Macro Policy Framework

Posted on February 12, 2010 by iMFdirect

As the crisis slowly recedes, the IMF has started to reassess the conduct of macroeconomic policy.

The Fund has just published a paper, “Rethinking Macroeconomic Policy,” part of a series of policy papers prepared by IMF staff reassessing the macroeconomic and financial policy framework in the wake of the devastating crisis. Several of the papers will be discussed at a conference to be held in Seoul, Korea, later this month.

IMF Survey magazine has interviewed the Fund’s Chief Economist Olivier Blanchard on the reason for the rethink. “It was tempting for macroeconomists and policymakers to take much of the credit for the steady decrease in cyclical fluctuations from the early 1980s on and to conclude that we knew how to conduct macroeconomic policy. We did not resist temptation. The crisis naturally forces us to question our earlier conclusions and that’s what we are trying to do in this paper,” he’s quoted as saying.

Paul Krugman dubbed the paper “interesting and important ” in his New York Times blog, while Richard Adams in the Guardian described it as a “break with years of economic orthodoxy” and a “stunning turnaround.”

(more…)

Filed under: Advanced Economies, Asia, Economic Crisis, Economic research, Financial Crisis, Fiscal Stimulus, growth, International Monetary Fund, recession | Tagged: , , , , | 5 Comments »

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