Friday, May 20, 2011

That anti-inflation obsession: from Bundesbank to the ECB and now to the IMF?

Would the appointment of a former Bundesbank governor at the head of the IMF "export" Bundesbank's anti-inflation "obsession" philosophy to the IMF too (after the ECB)?

For context, see my April 7, 2011 "Eurozone: That 2% obsession" post

Let us keep in mind that in effect the IMF lends money to economies in trouble but in return for those loans dictates the socio-economic policies of the recipient country. Thus the IMF is not a mere "fund" or even a mere "bank". In return for loans, it almost runs a country's economic governance (that is why DSK will be missed and why IMO Christine Lagarde, France's Minister of Finance and and ex-businessperson, is the best candidate for the job).

It is not a good time to export dogmatic Economic thinking to the IMF.

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