The IMF has made a concerted effort to engage more actively with civil society organizations in recent years. And, an emphasis on change at the 2010 IMF-World Bank Annual Meetings provided the perfect opportunity to break new ground in our relationship with civil society. More civil society representatives came to the meetings than ever before, and those that came participated in a wider range of events. Many of those events took on a different flavor: one more conducive to a meaningful exchange of views. Civil society is thirsty for information about what we do, why we do it, and how. But this is also a two-way street. There is a lot at the IMF we can learn from civil society and we have to start by listening.
The crisis has forced economists and policy makers to go back to their drawing boards. Where did they go wrong, and what implications does the crisis have for both macroeconomic theory and macroeconomic policy making? This was the topic of this year’s IMF Jacques Polak Research Conference. The twelve papers presented at the conference provided rich fodder for discussion. Here, Olivier Blanchard shares some flavor of the major themes, including: (i) the increased attention to fiscal policy; (ii) the scope for monetary policy to lessen the adverse ‘real economy’ effects of financial disruptions; (iii) the role of international capital flows in weakening financial stability; and (iv) the prominence of regulatory issues and the interplay with the real economy.
The breakdown of the short-term funding markets was one of the most striking features of the global financial crisis. Equally astonishing, and unexpected, was the central role that U.S. money market mutual funds played in contributing to this wholesale shut-down. For the October 2010 Global Financial Stability Report Jeanne Gobat and IMF colleagues examined the issue of systemic liquidity risk, including the role of money market mutual funds in the financial crisis and some concrete recommendations on how to fix it. Here, Jeanne reflects on their findings and shares some options for addressing industry risk.
How can governments have their cake and eat it too? How can fiscal policy provide sufficient support to economic activity, and reassure markets that fiscal solvency is not at risk? The poor state of fiscal accounts of most advanced countries calls for austere fiscal policies, before the confidence crisis that is now hitting a few small advanced economies spreads to the larger ones. But not right now: a frontloaded adjustment—that is a tightening that is not gradual but falls disproportionately early in the adjustment phase—could destabilize the recovery. But can countries limit frontloading and still achieve credibility? Yes, but baking the right fiscal pie is likely to require a number of ingredients. Of course, the exact recipe depends on country circumstances. If you want to know more about this we suggest you savor our newly released Fiscal Monitor. The proof will be in the eating.
Africa’s resilience to the global economic crisis owes much to good policy management in the region, both before and during the crisis. This includes that the countries in West Africa that also fared relatively well during the crisis. There has, however, been an intriguing longer-term difference in West Africa’s growth performance. While experience has varied, countries here haven’t been able to achieve and sustain the higher rates of economic growth needed to make serious inroads in job creation and poverty reduction. Writing from Dakar, Senegal—after traveling through the region for the launch of the IMF’s latest Regional Economic Outlook for sub-Saharan Africa—Mark Plant writes about issue of what matters for long-term growth in the eight countries of the West Africa Economic and Monetary Union—Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo. What’s holding back growth? And what actions are needed to raise growth?
Of all the things policymakers have had to worry about in the past couple of years, inflation wasn’t one of them. Some even heralded the end of inflation. Today, inflation still isn’t a ‘problem’ in Asia. For the most part, it remains relatively modest, but it is on the rise in some countries in the region. And understanding what is driving that inflation matters. Policymakers need to consider the sources of inflation in choosing policy actions and policy tools. The issue of what drives inflation—or so-called inflation dynamics—is examined in our October 2010 Regional Economic Outlook for the Asia and Pacific region. In this post, Anoop Singh discusses the findings.