The IMF versus the World Bank

CAMBRIDGE: The IMF’s search for a new managing director will be attracting all the attention over the coming weeks and months, but the policies it follows are what matter most. A catfight is now underway about which institution has been right over the past few years, the IMF with its tough treatments or the World Bank and its alternative cures.

This debate has raged underground ever since Mexico’s collapse in 1995. Are IMF policies too tough, even perverse, pushing economies into bankruptcy? Are they to blame for the disastrous social fallout of the financial crises of recent years? That latter view was promoted across Asia, where governments, including that of Japan, called for an Asian IMF with alternative (softer) policies. They gained extraordinary and unexpected support from Joseph Stiglitz, the World Bank’s chief economist and senior vice president, who recently advised that China should practice competitive devaluation and beggar-thy neighbor policies.

For beleaguered governments, Stiglitz’s proposed cures were rose petals, fragrances and scented candles along with soothing sounds. Hard budget cuts and sky-high interest rates could be avoided. Stiglitz’s pronouncements offered formidable support to those who opposed IMF rigor, indeed, and at the very least they confused the public and policymakers alike. But this was music to a Japan trying to pursue its own agenda in Asia as well as to Dr. Mahatir, Malaysia’s ruler, who is on an anti-establishment kick.

To continue reading, please log in or enter your email address.

Registration is quick and easy and requires only your email address. If you already have an account with us, please log in. Or subscribe now for unlimited access.


Log in;
  1. Chris J Ratcliffe/Getty Images

    The Brexit Surrender

    European Union leaders meeting in Brussels have given the go-ahead to talks with Britain on post-Brexit trade relations. But, as European Council President Donald Tusk has said, the most difficult challenge – forging a workable deal that secures broad political support on both sides – still lies ahead.

  2. The Great US Tax Debate

    ROBERT J. BARRO vs. JASON FURMAN & LAWRENCE H. SUMMERS on the impact of the GOP tax  overhaul.

    • Congressional Republicans are finalizing a tax-reform package that will reshape the business environment by lowering the corporate-tax rate and overhauling deductions. 

    • But will the plan's far-reaching changes provide the boost to investment and growth that its backers promise?

    ROBERT J. BARRO | How US Corporate Tax Reform Will Boost Growth

    JASON FURMAN & LAWRENCE H. SUMMERS | Robert Barro's Tax Reform Advocacy: A Response

  3. Murdoch's Last Stand?

    Rupert Murdoch’s sale of 21st Century Fox’s entertainment assets to Disney for $66 billion may mark the end of the media mogul’s career, which will long be remembered for its corrosive effect on democratic discourse on both sides of the Atlantic. 

    From enabling the rise of Donald Trump to hacking the telephone of a murdered British schoolgirl, Murdoch’s media empire has staked its success on stoking populist rage.

  4. Bank of England Leon Neal/Getty Images

    The Dangerous Delusion of Price Stability

    Since the hyperinflation of the 1970s, which central banks were right to combat by whatever means necessary, maintaining positive but low inflation has become a monetary-policy obsession. But, because the world economy has changed dramatically since then, central bankers have started to miss the monetary-policy forest for the trees.

  5. Harvard’s Jeffrey Frankel Measures the GOP’s Tax Plan

    Jeffrey Frankel, a professor at Harvard University’s Kennedy School of Government and a former member of President Bill Clinton’s Council of Economic Advisers, outlines the five criteria he uses to judge the efficacy of tax reform efforts. And in his view, the US Republicans’ most recent offering fails miserably.

  6. A box containing viles of human embryonic Stem Cell cultures Sandy Huffaker/Getty Images

    The Holy Grail of Genetic Engineering

    CRISPR-Cas – a gene-editing technique that is far more precise and efficient than any that has come before it – is poised to change the world. But ensuring that those changes are positive – helping to fight tumors and mosquito-borne illnesses, for example – will require scientists to apply the utmost caution.

  7. The Year Ahead 2018

    The world’s leading thinkers and policymakers examine what’s come apart in the past year, and anticipate what will define the year ahead.

    Order now