Friday, May 24, 2013
IMF Searches Soul, Blames Europe
Wall Street Journal
May 24, 2013
The International Monetary Fund launched a mea culpa operation a few months ago as it sought to clean up its reputation and record the “lessons learned” from its involvement in the euro-zone crisis.
The process started with a research paper on so-called fiscal multipliers, which measure the effects of cuts in public spending on a country’s gross domestic product. As it turned out, the ones used to predict the effects of austerity on the euro zone’s troubled economies were a tad optimistic.
The second crucial step came in the form of a paper released Thursday on sovereign-debt restructurings. The study contains the strongest repudiation yet of some of the policy choices the fund helped make over the last three years.
The paper, under the yawn-invoking title “Sovereign Debt Restructuring — Recent Developments and Implications for the Fund’s Legal and Policy Framework,” is everything but boring (at least to euro geeks. And let’s face it, if you’ve read this includes you.).
Read the Paper