I had one major source of unhappiness with last week’s conference on macroeconomic policies in the wake of the financial crisis: the participants were largely silent about the dismal outlook in the advanced economies for the next several years. With the exception of that one critical omission, I was impressed by the discussion. One striking feature was the consensus that there is no consensus. The crisis has, appropriately, made macroeconomists and policymakers humble about what we know. There were, however, some specific issues on which there was, if not unanimity, considerable agreement.
The IMF resource base needs to be adequate to deal with most shocks. Some observers, however, worry that a large IMF with beefed-up financing instruments would add to moral hazard, encouraging reckless lending or unsafe policies. This is less of an issue when IMF lending is targeted to deal with “exogenous” shocks, i.e., shocks that cannot be influenced by the behavior of the individual country or its creditors.