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 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. Continue reading
Filed under: Economic Crisis, Economic research, Financial Crisis, Financial regulation, Fiscal policy, growth, International Monetary Fund | Tagged: Adair Turner, agency theory, Andrew Sheng, Behavioral economics, capital controls, cross-border linkages, Dani Rodrik, Financial regulation, inflation targeting, Joseph Stiglitz, liquidity, macroeconomic policy, macroprudential regulation, Michael Spence, Olivier Blanchard, Paul Romer, policy instruments, policy targets, Robert Solow, SDRs, Special Drawing Rights, systemic crisis, Washington Consensus | 23 Comments »
Posted on February 10, 2011 by iMFdirect
By Dominique Strauss-Kahn
(Version in Español Français 日本語)
The international monetary system (IMS) is a topic that encompasses a wide range of issues—reserve currencies, exchange rates, capital flows, and the global financial safety net, to name a few. It is one of the key issues on the G-20’s work agenda for 2011, and a topic that is eliciting lively discussion—for instance the recent, insightful report of the group chaired by Michel Camdessus, called the “Palais-Royal Initiative”.
Some are of the view that the current system works well enough. While not perfect, they point to its resilience during the crisis, citing the role of the U.S. dollar served as a safe haven asset. And now that the global recovery is underway, they see little reason to worry about the IMS. In other words, “if it ain’t broke, don’t fix it”.
I take a less sanguine view. Continue reading
Filed under: Advanced Economies, Economic Crisis, Emerging Markets, G-20, Global Governance, Globalization, International Monetary Fund, Low-income countries, Multilateral Cooperation | Tagged: capital controls, capital flows, early warning exercise, exchange rates, Flexible Credit Line, FSAP, G-20 mutual assessment process, global financial safety net, global imbalances, international monetary cooperation, international monetary system, macrofinancial linkages, policy coordination, precautionary credit line, regional financing mechanisms, reserve currencies, Special Drawing Rights, surveillance | 17 Comments »
Posted on February 24, 2010 by iMFdirect
By Marek Belka
(Version in ελληνικά)
Let’s think now about some of the lessons from the global economic crisis for Europe’s policymakers. In my previous five blogs, I’ve discussed the challenges faced by both advanced and emerging European economies as we emerge from the acute phase of the crisis. The questions I attempted to answer have included: In what shape and form will European integration survive the crisis? Will eastern Europe be able to sustain its remarkable catching up with living standards in western Europe?
For my final blog in this series on iMFdirect, I have decided to add a personal touch and draw on my experience as a former policymaker. So while this article builds on the previous five posts, it goes beyond them and includes some highly subjective comments on what lessons I believe the reformers in eastern Europe should take away from the crisis. And, although my primary focus is on countries outside the eurozone, it is clear that the eurozone will need to address long-term challenges, as I pointed out in my post After the Crisis, Much Still at Stake for Eurozone.
Filed under: Economic Crisis, Emerging Markets, Europe, Financial Crisis, growth, IMF | Tagged: banks, capital controls, capital flows, crisis lessons, Czech Republic, Estonia, eurozone, Marek Belka, Poland, Romania | 1 Comment »
Posted on February 19, 2010 by iMFdirect
By Marek Belka
Conventional wisdom has been that capital flows are a blessing to emerging economies, bringing needed funds to countries where investments are most productive. But if history is any guide, capital flows have proven to be highly volatile—surging in good times and collapsing in gloomy ones.
The global financial crisis has renewed the debate over the desirability of capital flows to emerging economies. Adding fuel to this debate is the fact that two of the world’s largest emerging economies—China and India—have experienced strong growth and relatively limited fallout from the crisis, all the while maintaining hefty restrictions on the flow of foreign capital.
What can be done to ensure that emerging economies still benefit from productive foreign capital, while reducing the risks associated with highly volatile flows? Can we throw out the bathwater, but keep the baby?
Filed under: Advanced Economies, Economic research, Emerging Markets, Europe, Financial regulation | Tagged: capital controls, China, European Union, exchange rates, fiscal policy, foreign currency lending, G-20, India, Marek Belka, Poland, reserves | 5 Comments »