September 14, 2002
Michel Camdessus Is Not a Happy Camper...

Camdessus on Stiglitz http://www.imf.org/external/np/vc/2002/091202.htm Michel Camdessus Responds to Joseph Stiglitz A Commentary By Michel Camdessus, Honorary Governor of the Bank of France Nouvel Observateur Week of Thursday, September 12, 2002 - No. 1975 - Economics In our July 18 issue, the author of Globalization and Its Discontents, a former World Bank Chief Economist, had personally criticized Michel Camdessus, former Managing Director of the International Monetary Fund, in these terms: "In December 1997 in Kuala Lumpur, during a meeting of Ministers of Finance of the G-7 and leading Asian countries, I told Michel Camdessus, then the head (French) of the IMF, of my poor opinion of his recommendations. He replied that for a people to recover economically, "they must suffer..."" The following is Michel Camdessus' response: To confine myself to the facts, I would make the following points: the only G-7 meetings I-but not Mr. Stiglitz-attended in my official capacity at the International Monetary Fund were Ministers of Finance meetings. No such meetings were held in November or December 1997 in Kuala Lumpur. I did stop over for a few hours in Kuala Lumpur in early December 1997 to deliver a speech (the text of which I have located) to...

Posted by DeLong at 03:18 PM

Michel Camdessus Is Not a Happy Camper...

Camdessus on Stiglitz http://www.imf.org/external/np/vc/2002/091202.htm Michel Camdessus Responds to Joseph Stiglitz A Commentary By Michel Camdessus, Honorary Governor of the Bank of France Nouvel Observateur Week of Thursday, September 12, 2002 - No. 1975 - Economics In our July 18 issue, the author of Globalization and Its Discontents, a former World Bank Chief Economist, had personally criticized Michel Camdessus, former Managing Director of the International Monetary Fund, in these terms: "In December 1997 in Kuala Lumpur, during a meeting of Ministers of Finance of the G-7 and leading Asian countries, I told Michel Camdessus, then the head (French) of the IMF, of my poor opinion of his recommendations. He replied that for a people to recover economically, "they must suffer..."" The following is Michel Camdessus' response: To confine myself to the facts, I would make the following points: the only G-7 meetings I-but not Mr. Stiglitz-attended in my official capacity at the International Monetary Fund were Ministers of Finance meetings. No such meetings were held in November or December 1997 in Kuala Lumpur. I did stop over for a few hours in Kuala Lumpur in early December 1997 to deliver a speech (the text of which I have located) to...

Posted by DeLong at 03:18 PM

July 07, 2002
More Thoughts on Stiglitz's Globalization and Its Discontents

So I reread Globalization and Its Discontents, and I am more puzzled than ever. I cannot figure out what is going on inside Stiglitz's head. Part of it I think I have figured out. The repeated changes of position--"No! You should not have imposed any conditions on Suharto but lent freely respecting Indonesia's national sovereignty!" "No! You should not have loaned anything to Suharto at all!" "No! You should have loaned to Suharto, and encouraged capital to flow into Indonesia! And been very careful of his face! The longer Suharto stayed in power, the more order defeats chaos, and the better for Indonesia!" "No! Corrupt kleptocrats harm their countries! Clinton and Camdessus should have warned industrial-core companies against investing in Indonesia!" These repeated changes of position tell me that Stiglitz's main complaint against Summers, Fischer, and all is that they were sitting in the control seat where he wanted to be. He wanted to be the one making the decisions about when to lend in hope and when lending would be hopeless, when the current leader is the best that can be expected and when the best option is to cut off all economic contact and hope the current leader...

Posted by DeLong at 09:45 PM

July 02, 2002
IMF Chief Economist Ken Rogoff Unloads Both Barrels in the Direction of Joe Stiglitz

IMF chief economist Ken Rogoff unloads both barrels in the direction of Joe Stiglitz. The "nut" paragraphs are below. I think that, analytically, Rogoff has the better of the particular point he chooses for his argument. Following what appear to be Stiglitz's prescriptions--lend more with fewer conditions and have the government print more money to keep interest rates low--seems that it would have been overwhelmingly likely, in all the cases I know well, to end in hyperinflation or in a much larger-scale financial crisis as the falling value of the currency eliminated every firm's and bank's ability to repay its hard-currency debt and sent the entire country's financial and industrial system into bankruptcy. Stiglitz would have to argue that universal bankruptcy is not that bad: that legal deals would have been quickly struck to write down debts and get the flow of financial intermediation going again. I'm not that optimistic about what happens once the lawyers enter the picture. An Open Letter to Joseph Stiglitz, by Kenneth Rogoff, Economic Counsellor and Director of the Research Department, IMF. Let's look at Stiglitzian prescriptions for helping a distressed emerging market debtor, the ideas you put forth as superior to existing practice. Governments...

Posted by DeLong at 06:32 PM