Friday, September 19, 2014

Everything Must Change so that the IMF Can Remain the Same

Recent paper reviewing the role of the IMF after the Global Crisis and the supposed changes in its theoretical views and policy stances, co-authored with the late Kirsten Ford. We concluded that: "The IMF remains fundamentally an instrument of advanced and creditor countries, to force contractionary adjustments on poor, indebted countries."

On the theoretical front, it is worth remembering what Blanchard, the current IMF economic counsellor, said back in 2010:
"It is important to start by stating the obvious, namely, that the baby should not be thrown out with the bathwater. Most of the elements of the pre-crisis consensus, including the major conclusions from macroeconomic theory, still hold. Among them, the ultimate targets remain output and inflation stability. The natural rate hypothesis still holds, at least to a good enough approximation... Stable inflation must remain one of the major goals of monetary policy. Fiscal sustainability is of the essence." [Emphasis added]
So the whole change is a slightly higher inflation target, and a bit more expansionary fiscal policy, when the rate of interest is close to zero. You can read the rest, but if you have doubts about policy check what are the ones promoted by the IMF in the European periphery. As we argue: "If there is any change in the IMF policy advice it is difficult to find in its policies."

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On Argentine debt restructuring proposal (in Spanish)

Short interview for an Argentinean radio show, in Spanish.