The Unassuming Economist

From the 2018 IEO Dialogue:

“In January 2018, the Executive Board approved a Management Implementation Plan (MIP) prepared by IMF staff to follow up on the 2017 evaluation of THE IMF AND FRAGILE STATES. IMF staff will prepare a paper laying out a clear strategic framework to guide IMF involvement in social protection, for consideration by the Board in February 2019. This framework will discuss how to assess the macro-criticality of social protection and will lay out more effective approaches to program design for both concessional and non-concessional lending to mitigate adverse impacts of program measures on the most vulnerable.”

“In the last few months, the IMF has taken important actions to follow up on earlier evaluations. In February, the Executive Board approved general guidance on Fund engagement with currency unions when the policies of union-level institutions are critical to the success of Fund-supported programs—a step recommended in the 2016 evaluation of The IMF and the Crises in Greece, Ireland, and Portugal. Acting on recommendations of the 2016 IEO evaluation of Data at the IMF, the Executive Board approved an “Overarching Strategy on Data and Statistics at the Fund in the Digital Age” that sets a course for the IMF to better respond to the challenges and opportunities of digitalization.”

(From left to right) Prakash Loungani, IEO Advisor; Charles Collyns, IEO Director; Montek Singh Ahluwalia, former Deputy Chairman of the Planning Commission and former IEO Director; and N.K. Singh, Chairman of Fifteenth Finance Commission, participate in a seminar in New Delhi, India in February 2018.

The sales of Piketty’s book threaten to put him into the top 1% of earners. On tax day in the US, Piketty presented his book the IMF Book Forum (and Jobs & Growth Seminar). The event was chaired by George Akerlof and Martin Ravallion was the discussant. Here are the links to the slides by Ravallion and Piketty.

Piketty said “we live in a world where we have to rely on Forbes to know the wealth of billionaires. I would prefer to get these statistics from the IMF but apparently there isn’t a publication on the distribution on income. Perhaps one day there will be.”

The 42nd annual exhibit of the International Photographic Society (IPS) of the IMF and World Bank Group is on show in the HQ1 Gallery until June 8, featuring 112 photographs by 35 photographers.

Alex Hoffmaister-Metro Riding

Alex Hoffmaister-Pom Bottle

Alex Hoffmaister-Walking in the Square

Angela Lumanau-Scene from Kribi Beach, Cameroon

Carmen Machicado-Route A8

Gerda de Corte-On Hold

Gerda de Corte-Stars, stripes and a turban

Jean Boyd-Petals And Sky

Jean Boyd-Woodland

Kemal Cakici – A Jewel in Colors

Manorma Rani-Diagonal Lines

Mary Wilson-OMG

Michele Egan-Sad Captive in Miami Zoo

Pritthijit (Raja) Kundu-Blue Vortex

Stephan Eggli-Wrong Way

Yuan Xiao-Zebra Portrait

Taking first prize in this year’s exhibition is OED Administrative Assistant Gerde de Corte, for her work entitled “Stars, Stripes and a Turban.” The photograph shows a man in a turban against the background of an American flag taken outside a church in New York.

De Corte was among the 12 photographers who received awards at a reception held earlier this month. The jury consisted of three local photographers, including National Geographic magazine’s Sherry Brukbacher, who spoke briefly at the reception. The other two judges were Theo Adamstein, founder of FotoDC, and Ron Aira, a commercial photographer.

High praise

Praising the work of the IMF staff, Brukbacher said the judges “had walked a couple of miles” going around the exhibit several times to decide on the winners. The entries were so good that the jury decided to also give three special honorable mentions to photographs that they considered very close to the top three winners.

Outgoing IPS President Mary Wilson was among those winning an honorable mention for her picture of her father’s shocked expression after a ride on a roller coaster, while his grandsons roared with laughter. “He had no idea what he was getting into,” said Wilson. “I’m glad I was there with camera at the ready.”

Nature and animals loomed large as popular subjects of the prize-winning entries. Michele Egan’s “Sad Captive in Miami Zoo” is a haunting image of a gorilla, his sadness reflected in the faces of the young girls looking at him from the other side of the cage. In contrast Yuan Xiao’s “Zebra Portrait” presents a dignified zebra in the wild.

A winning combination

Founded in 1966 as the IMF Camera Club, the IPS is one of the oldest and most popular clubs of the IMF and World Bank Group. Veterans attribute its success to its combination of instruction, competition, and fun.

The format of the monthly meetings has remained much the same as in the early days. The group meets each month after work to socialize over wine and cheese and listen to a guest speaker. Then there is a friendly photo competition, with the guest speaker serving as the judge. Winning photographs from the monthly competitions are featured in the annual exhibition.

Photography prize winners at the IPS reception. From left to right: Raja Kundu, Michele Egan, Jean Boyd, Gerda de Corte, Mary Wilson (IPS President), Manorama Rani, Carmen Machicado, Angela Lumanau, and Stephan Eggli (IPS Vice President).

The talents of Menzie Chinn and Jeffry Frieden—a leading international economist and political scientist, respectively—have come together in a nice way in a new book on the U.S. financial crisis and the prospects for the country. The title of the book (“Lost Decades”) gives away what the authors think will happen.

A standing-room only audience at the IMF last month heard a presentation by Chinn and Frieden, along with comments from Diane Lim Rogers (Concord Coalition), Gail Cohen (Joint Economic Committee) and Simon Johnson (MIT and Peterson Institute). The forum was moderated by Nobel Prize-winner George Akerlof.

Two features of the book make it different from the many books on the crisis. The first is the authors’ position that this financial crisis was a typical foreign capital flow cycle in which money flowed in from abroad and was not used productively. In this respect, they say, the U.S. proved to be no different from Argentina in the 1990s or the U.S. in the 1880s.

The second distinctive feature is the book’s focus on the political tussle over who bears the costs of resolving the crisis. When “we turn to political economy,” Frieden quipped, “we’ll see that political economy is the truly dismal science.”

Frieden recalled that in 1985 the military dictator of Brazil made a famous speech in which he said Brazilians have to realize that the party is over. The next day on the streets of Sao Paolo and Rio, there were mass demonstrations and the banners read, “The party is over and we weren’t even invited.”

Frieden said that the demonstrations in the U.S. reflect the growing realization that “the benefits of the party [during the 2000s] were not equally shared while the burden is being unequally distributed.” Over the 2000-07 period, Frieden said, the top one percent of the U.S. population saw its income grow by 60 percent. But the bottom 99 percent of the population had income gains of only 6 percent and “of course that six percent [was] eaten away by the crisis.”

This was a theme picked up by Cohen in her remarks. “What I’m really concerned about,” she said, is that the lost decades that Chinn and Frieden fear “will only be for some segments of the population and that some people will do fine.” Simon Johnson concurred, noting that for some people decades have already been lost: “This is a continuation of losses.”

Cohen noted that long-term unemployment is at historically high levels: half of those unemployed have been out of work for over six months. African-American workers have been disproportionately hit, as have younger workers. The unemployment rate for younger workers is 20 percent. Her examples of the unequal distribution of pain supported Frieden’s assertion that some segments of the populations are “really almost at Depression levels of unemployment and underemployment.”

During the Q&A, the IMF’s Steve Phillips questioned the book’s focus on the international nature of the capital flows. Chinn and Frieden emphasize the “international aspects,” he said, “but you couldn’t have had the bubble without lax regulation. But you could have had a bubble and you could have had the crisis without international capital flows.” In his view, therefore, “the prerequisite was lax regulation.”

In response, Chinn acknowledged that it was difficult to distinguish between a capital flow boom-bust cycle and a credit boom-bust cycle and also agreed that the U.S. had “essentially disarmed ourselves in terms of regulation.” Nevertheless, he defended the book’s focus, saying that “it’s hard for me to think about a boom that doesn’t have some component of savings coming in from the rest of the world.”

The wisdom of the Bush tax cuts of 2001 and 2003 also generated some back-and-forth. In commenting on the book, Diane Lim Rogers noted that she and Menzie Chinn had “worked together at the end of the Clinton Administration on the Council of Economic Advisors and ever since then I became obsessed with the Bush tax cuts and the fiscal irresponsibility of them.”

Taking some issue with this, noted commentator Bruce Bartlett said that with hindsight it is easy to blame the tax cuts or other policy actions, but the main driving force behind the overborrowing was that “we had this huge increase in world saving that had to go somewhere … Even if [the U.S.] had kept the budget balanced, the money would have flowed into something else … Absent capital controls, what could we have done to keep the money out?”

Liaquat Ahamed, author of the 2010 Pulitzer Prize-winning book Lords of Finance, asked whether the debate over the short-run impacts of fiscal policy is really “a disagreement about how the economy actually works?” Frieden responded that “I think the conflicts here are not ideological and they’re not really theoretical … They’re really about who is going to pay the price.”

Event’s transcript and webcast.

The IMF Book Forum was launched in September 2003. Over the years, it has featured nearly 30 books on international economics, political economy, and business cycle analysis.

                       

Photos: Michael Spilotro/IMF

Featuring the authors: 
     
     Menzie Chinn (University of Wisconsin, Madison; Econbrowser blog)
     
     Jeffry Frieden (Harvard University)
 
Chinn and Frieden explore the origins and long-term effects of the financial crisis in historical and comparative perspective. By 2008 the United States had become the biggest international borrower in world history, with almost half of its 6.4 trillion dollar federal debt in foreign hands. The massive inflow of foreign funds financed the booms in housing prices and consumer spending that fueled the economy until the collapse of late 2008. The authors explore the political and economic roots of this crisis as well as its long-term effects. “The book is capable of dealing with some of the most complicated economic arguments about the crisis in a way that is straightforward and capable of being understood by its audience, says Mike Konczal of the Roosevelt Institute. “If you have time to read only one book on the crisis, read this,” says acclaimed economic historian Barry Eichengreen, University of California Berkeley. 

Discussants:

     Gail Cohen (Joint Economic Committee of the U.S. Congress)

     Diane Lim Rogers (Concord Coalition)

Closing Remarks:

     Simon Johnson (MIT and Peterson Institute; co-author of 13 Bankers)

Moderated by:

     George Akerlof (Senior Resident Scholar, Research Department, IMF; Winner of the 
     2001 Nobel Prize for Economics)