BackMonetary policy should be linked to growth: Joseph Stiglitz
Stiglitz says India should reject pacts like the transpacific partnership treaty to be a counterweight to the WTO process
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New Delhi: Monetary policy should be linked to employment and growth as well and not just target inflation, Nobel-laureate economist Joseph Stiglitz said on Tuesday.
Because of the persistent price rise in India, Reserve Bank of India governor Raghuram Rajan has said containing inflation is the regulator’s top priority, though this limits the government’s ability to boost economic growth.
Stiglitz, in a column in December, wrote, “India’s downturn was attributed to political problems and a central bank worried about price stability (though there was little reason to believe that raising interest rates would do much about the price of onions and the other items underlying Indian inflation)."
Retail inflation slowed to a three-month low of 9.87% in December, data released on Monday showed.
Stiglitz, speaking at an event organised by the United Nations Economic and Social Commission for Asia and the Pacific, said India should reject pacts like the transpacific partnership treaty (TPP) designed by the US to be a counterweight to the World Trade Organization process.
Trade liberation and financial integration has contributed to undermining democracy and increasing inequality, he said, adding that trade agreements reach a lot of other areas and so trade ministers are not equipped to figure out what a good agreement is. Citing the example of cigarette firms suing governments under trade treaty provisions for market access, Stiglitz said bilateral investment treaties restrict domestic policy and regulatory space.
Intellectual property rights are another sticky aspect of trade negotiations. Stiglitz said intellectual property rights are not for promoting innovation.
Incentives for innovation are not the key issue with provisions such as those protecting these rights for 70 years after a patent holder’s death, he said.
On what needs to be done to strengthen the global economy, Stiglitz said hardly anything of the agenda laid out after the 2008 global slowdown has been completed.
Nothing has advanced on plans for a reserve currency system reform, a system for restructuring government’s sovereign debt, a global regulatory system for financial markets, global transparency for taxation, and on creating a global economic coordination council, he said.
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