The Myth of IMF Macroeconomics

“… the Fund obviously has program expertise, expertise of dealing with crises, an expertise in seeing how the things add up and fit together… I do think that program design overall has benefited significantly from us working as a Troika and I know this view also shared by our two partners.”

Poul Thomsen, Greece Mission Chief, International Monetary Fund, April, 2012.

“…in retrospect, it was a very good thing that the IMF came, because they had the technology, they brought money, but first of all they had the technology of dealing with this kind of situation that the Europeans didn’t have…”

Jean Pisani-Ferry, Bruegel, 2012.

How many lies and how much gibberish are we expected to tolerate?

Announcing earlier this year a new “integrated policy framework” approach to emerging markets, International Monetary Fund (IMF) Managing Director Kristalina Georgieva suggested in a Financial Times Op-ed that the IMF’s current macroeconomic framework is inadequate as it is “grounded in more conventional economic thinking.” Thus, the new framework would unshackle the understanding of macroeconomic policy for EMs unlike anything employed before.

However, there is a problem. Georgieva’s understanding of IMF macroeconomics is nonsense—though she cannot be expected to know this. In fact, the IMF’s financial programming framework for thinking about macroeconomic challenges facing members is anything but “traditional.” Continue reading “The Myth of IMF Macroeconomics”