David F. Ruccio — Three guys, a paper, and the IMF

Celebrating change too early.

As if to confirm my view yesterday, that the recent paper on neoliberalism by Jonathan D. Ostry, Prakash Loungani, and Davide Furceri, published in the IMF’s Finance and Development, did not signal a new set of IMF policies, here’s an extract from an interview with IMF Chief Economist Maury Obstfeld:

IMF Survey: Do you agree with some who have argued that a recent article in F&D(“Neoliberalism: Oversold?”) signifies a major change in Fund thinking? For example, is the IMF now saying that austerity does not work and, indeed, that it exacerbates inequality?

Obstfeld: That article has been widely misinterpreted—it does not signify a major change in the Fund’s approach.

I think it is misleading to frame the question as the Fund being for or against austerity. Nobody wants needless austerity. We are in favor of fiscal policies that support growth and equity over the long term. What those policies will be can differ from country to country and from situation to situation.

Governments simply have to live within their means on a long-term basis, or face some form of debt default, which normally is quite costly for citizens, and especially the poorest. This is a fact, not an ideological position.

OK, so much for that. The light at the end of the tunnel was a approaching freight train.

Morons rule! Go morons.

Occasional Links & Commentary
Three guys, a paper, and the IMF
David F. Ruccio | Professor of Economics, University of Notre Dame

Here is the whole interview:

IMF
CHIEF ECONOMIST INTERVIEW
Evolution Not Revolution: Rethinking Policy at the IMF
IMF Survey