Avoiding lazy prescriptions4 min read 28 Jan 2013, 05:49 PM IST
It's interesting that while Ken Rogoff and Joseph Stiglitz remain wedded to their positions, the IMF has changed
Bare Talk has been teaching second-year students of the post-graduate programme at the Indian Institute of Management in Bangalore for the last four days. Since Nobel laureate Joseph Stiglitz was in India in the first fortnight of January, the class discussed the famous exchange of letters between him and Ken Rogoff in 2002. Ken Rogoff, then at the International Monetary Fund (IMF), wrote to him that the laws of economics might be different in Stiglitz’s gamma quadrant but they were different in the real world and that his economic policy prescriptions were the equivalent of snake oil remedies. At the World Bank, Stiglitz had the opportunity to gauge the real-world impact of IMF “one-size fits all" policy prescriptions to Asian countries. He felt that IMF loan conditions not only were designed to benefit American financial institutions but also aggravated the economic contraction in Asian nations brought down by private sector balance sheet excesses and the resultant collapse of the currencies.