The literature summary I just put out on balance-sheet recessions examines the recent April 2012 World Economic Report by the IMF. It is remarkable how important this report is. The relevant part is Chapter 3, Dealing with Household Debt. This IMF report is well to the Keynesian side of almost all major US debate, and its recommedations and observations are incredibly sensible. You should read it all, but I want to point out five few high-level arguments they make:Read it at Next New Deal | RortyBomb
The IMF Goes All-Out on Balance-Sheet Recessions, Providing Sanity on Economic Policy
by Mike Konczal
Don't get too happy with the IMF, because they are still deficit doves. They recommend reducing the deficit to 6.25% of GDP now, with more budget cuts in the distant future.
ReplyDeleteOur trade deficit is around 4% GDP.
Figure private savings need to be 3 - 5 %.
Sounds to me like we should target a government 8% of GDP just to tread water, and a little more if we want to grow.
But if nothing else, the IMF report will help shift the discussion.