IMF weighs financial crisis at D.C. conference
Markets aren't always efficient. Bubbles burst. Government intervention isn't necessarily bad, and government debt does, in the end, matter.
In the mid-2000s, the IMF promoted the vision of a healthy world economy of strong growth, low unemployment and low inflation, despite warning signs that pointed to a boom of mortgage-related investments and lax oversight. But two years ago, the world financial crisis shattered mainstream economic consensus, proving in real terms -- such as high unemployment and collapsing growth -- that the "great moderation" wasn't.
The process of picking up the pieces is still underway, and on Monday in Washington the International Monetary Fund kicks off a two-day conference of top economists to try to distill some lessons.
Is a new consensus in the making?
"The great moderation led many of us to underestimate risk. It's two years since Lehman. It's time to look at the lessons learned," said IMF managing director Dominique Strauss-Kahn. "The crisis highlighted flaws in the pre-crisis consensus."
Panelists include Nobel Prize winners, current and former government officials, and academics. Members of such a varied group may never agree. But expect some ideas -- such as government capital controls, once anathema to the IMF -- to come in from the cold.
| March 7, 2011; 10:04 AM ET
Categories: International Economics, International Monetary Fund, U.S. Economy, Unemployment
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