Wall Street Journal
May 24, 2013
The International Monetary Fund launched a mea culpa operation a few months ago as it sought to clean up its reputation and record the “lessons learned” from its involvement in the euro-zone crisis.
The process started with a research paper on so-called fiscal multipliers, which measure the effects of cuts in public spending on a country’s gross domestic product. As it turned out, the ones used to predict the effects of austerity on the euro zone’s troubled economies were a tad optimistic.
The second crucial step came in the form of a paper released Thursday on sovereign-debt restructurings. The study contains the strongest repudiation yet of some of the policy choices the fund helped make over the last three years.
The paper, under the yawn-invoking title “Sovereign Debt Restructuring — Recent Developments and Implications for the Fund’s Legal and Policy Framework,” is everything but boring (at least to euro geeks. And let’s face it, if you’ve read this includes you.).
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