Brad DeLong: Liveblogging Olivier Blanchard: The Global Outlook ...

MODERATOR: Olivier came to the IMF in the summer of 2008?

BLANCHARD: Euro area as of the end of 2013 now projected to be 2.9% lower than was projected in October 2012; 0.6% lower than the 2011:IV level?

BLANCHARD: Achieving fiscal consolidation while sustaining growth in advanced economies is not an easy task?

BLANCHARD: Churchill vs. Keynes: Britain runs 6% of GDP primary surpluses for the 1920s, but British debt rises from 120% to 200% of GDP: debt-increasing fiscal consolidation with a vengeance?

BLANCHARD: One accelerator, three brakes: monetary policy is the accelerator; fiscal consolidation, weak financial sector, and uncertainty are the brakes. (Household deleveraging and housing finance were but are no longer brakes?)

BLANCHARD: Growth forecast error vs. fiscal consolidation forecast: multiplier error of 1.2--multiplier of 1.7. (DELONG: Identification very clever?)

BLANCHARD: This has implications for the speed of fiscal consolidation. (DELONG: i.e., credit-worthy sovereigns should not do any final consolidation as long as i=0 if it is the case that ?>??)

BLANCHARD: Claim: financial intermediation failures a major brake to growth in Europe, but not in U.S. (DELONG: But what about housing??)

BLANCHARD: Japanese for "uncertainty": "one inch forward is darkness"?

BLANCHARD: In U.S., "uncertainty" produced not by Obama policies but by Lehmann, the debt ceiling, and the fiscal cliff. "Uncertainty" not present in the VIX?

BLANCHARD: Emerging markets: victims of the crisis; trade collapse much stronger than would infer from trade/GDP ratios; capital flow volatility;

BLANCHARD: Global imbalances--adjustment since 2007 by deficit but not surplus countries, and adjustment not structural but cyclical--driven by output declines?

BLANCHARD: We do not recommend further fiscal stimulus for any country?

BLANCHARD: Aim to hit structural deficit-reduction targets, not nominal headline targets?

BLANCHARD:

Source: http://delong.typepad.com/sdj/2012/10/olivier-blanchard-global-outlook-and-risks.html

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