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In an influential piece co-authored by Maurice Obstfeld, the IMF’s current chief economist, the Fund offers its latest reflections on ‘macroeconomic management’. It notes that globally ‘policy space is constrained’, that is, both monetary and fiscal policy tools lack ‘the power to raise growth or deal with the next negative shock’. Why? Monetary policy is subject to the ‘lower bound’ on policy interest rates. This means that the ‘room to loosen monetary conditions further is limited’. At the same time, ‘many countries have withdrawn fiscal stimulus out of concern for high and rising public debt’? What should one do in such circumstances?

The authors suggest a ‘comprehensive, consistent and coordinated approach to economic policy’. This is an attempt on their part to impart analytical substance to the proclamation by the IMF’s Christine Lagarde in April 2016 that one need a three-prong policy approach. Hence, the three ‘Cs’.

Comprehensive policy actions mean encompassing monetary, fiscal and structural policies. Short-term demand-management policies should be used to support growth-promoting long-term structural reforms and vice versa. Consistency means a continuing commitment to providing nominal anchors for long-term expectations that will guide the private sector in its spending and saving decisions. The two ‘Cs’ should then be complemented by international policy coordination.

Much of what is being said here is not new. The notion of three elements of a holistic policy framework – monetary, fiscal and structural – has been part of global policy discourse and numerous G-20 pronouncements at least since the Toronto Summit of 2010. Most importantly, the latest rendition of the IMF’s prescriptions on macroeconomic policy appear to suffer from an advanced country bias. The paper offers case studies from two advanced countries (Canada and Japan). Only a paragraph is devoted to the case of ‘emerging economies’. The authors simply claim that the insights they offer are ‘relevant for emerging economies as well’.

Well, one needs more than a paragraph to argue how, and in what circumstances, the current treatise on macroeconomic policy is applicable to the developing world. It is doubtful, for example, that the typical developing country suffers from a lower bound on policy interest rates or that, unlike the 1980s or even 1990s, sovereign debt crisis is a widespread phenomenon in the developing world. More importantly, key challenges pertaining to poverty reduction, climate change and structural transformation need to be addressed. Will the three ‘Cs’ be both necessary and sufficient in addressing these challenges?

Modern macroeconomics  reflects a strong proclivity to use targets to guide policy action. Two of the most well-known are low, single digit inflation targets and fiscal rules, most notably pertaining to debt-to-GDP ratios. Here is a thoughtful piece by non-economists on how a preoccupation with numerical targets leads to unintended consequences. Using a variety of examples, the authors show how targets might motivate agents to move in the wrong direction and thus distort the evolution of complex systems (of which a modern market economy is a solid exemplar). This does not mean that one should not have targets. It does mean that a lot of care needs to be taken when setting targets, especially when they pertain to macroeconomic aggregates. The current tendency to aim for point estimates entails a degree of confidence in such estimates that are not warranted. Given the uncertainty surrounding quantitative targets, one should aim for ranges (think of them as quasi-confidence intervals) rather than fixed numbers with their inflated sense of precision.

The  ‘Doing Business’ (DB) surveys are among the World Bank’s most downloaded documents. One of the latest reports, based on the DB surveys, claims that “economies with more business-friendly regulations tend to have lower levels of income inequality”? Critics have questioned that claim.

Through its annual Doing Business Report the World Bank always seeks new angles to justify its promotion of reduced regulation on business. A closer look at the 2017 report, subtitled: ‘Equal Opportunity for All’, reveals its deceptions and naked ideological bias. – See more at: http://www.newagebd.net/article/3857/deceptions-of-wb-doing-business-report-2017#sthash.AFCQolL9.dpuf

PUBLIC-PRIVATE partnerships are being promoted as a key instrument to fill the huge financial gap in infrastructure investment. But majority of the researchers found that claims in favour of PPPs are not backed up by evidence.