Re: RE: The IMF and the Presidential Candidates

[Brad DeLong <delong@xxxxxxxxxxxxxxxxx>]

> Stanley Fisher of the IMF has warned that the proposed tax cuts are too
> inflationary.  Which presidential candidate will buckle under?
>
> Do any poor countries not the hypocrasy of the US pushing the weak to
> follow IMF dictates.
>
> --
> Michael Perelman


Actually, Stanley Fischer of the IMF said something more complicated
on this issue. If I recall correctly, he said:

--That the questioner should have asked Marty Feldstein what
Feldstein thought of tax-cut proposals put forward by U.S.
presidential candidates, since Feldstein's advice would actually be
listened to by at least one candidate while his [Fischer's] advice
would be listened to by at most zero...

--That tax cuts would surely be accompanied by a tightening of
monetary policy to try to keep the real GDP growth path unchanged,
that such a shift in the policy mix would raise the value of the
dollar and increase the U.S. current account deficit.

--That no one looking back at the financial crises that hit countries
running large current-account deficits in the 1990s and looking at
today's value U.S. current account deficit could remain calm at the
prospect of policies designed to widen the U.S. current account
deficit further.

--That the combination in the U.S. of an extremely low private
savings rate and what looks like a relatively high marginal social
product of investment seemed to make the argument for budget
surpluses much stronger than usual.



Fischer also said a bunch of other interesting things, including:

--That it was time for the audience to get real. There was nothing in
the ILO that everyone couldn't live with, and very little in the ILO
that everyone shouldn't enthusiastically embrace. Labor standards and
environmental standards can be excuses for poverty-creating
protectionism, but were not intrinsically so.

--That everyone should listen very closely to the criticisms of the
current globalization process offered by Ugandan President Musaveni,
one of the true heroes of the 1990s and a man who deserves as much
credit as one individual can take for halting Uganda's downward
spiral.

--That one of the biggest dangers looking forward was that the
industrial core would refuse to open its markets to agricultural and
textile exports of developing countries that integrated themselves
into the world economy, while at the same time using the
vulnerability created by integration to impose high payments for
intellectual property and fierce restrictions on development paths.

--That increasing international economic integration was very close
to a Pareto-improving process: the principal beneficiaries in the
industrial core from the elimination of the multifiber agreement and
free trade in textiles would not be the wearers of Hermes scarves
bought those who bought their pants at Wal-Mart. But that it was
nearly irrelevant that the major sources of widening inequality are
to be sought elsewhere than in world trade. Policies cannot
ultimately be sustainable unless they not only are but are perceived
to be "inclusive."