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The IMF Calls for Job Creation

As Paul Krugman noted, the OECD has "climbed down" from its recommendation that advanced nations begin cutting spending and raising interest rates right away. The IMF seems to be tempering its message as well:

I.M.F. Calls for Countries to Focus on Creating Jobs, by Liz Alderman, NY Times: Rising long-term unemployment, especially among young people, poses the next big threat to the global economic recovery, the International Monetary Fund warned on Monday. ... Dominique Strauss-Kahn, the managing director of the I.M.F., said the financial crisis “won’t be over until unemployment significantly decreases.”
Mr. Strauss-Kahn urged governments to start factoring back-to-work policies into their overall equation for stoking growth. He added ... that a failure to halt persistent high joblessness could fan social tensions in several countries and restrain growth over time. ...
While governments hit by the financial crisis have had to tighten their belts, in part to address investor concern about rising debt, countries that need to rebuild credibility should first reallocate spending to get the long-term unemployed and young people back into the labor market, said Olivier J. Blanchard, the I.M.F.’s chief economist. ...
Countries that have so far avoided the harsh judgment of financial markets could afford a small increase in debt to ward off persistent joblessness, Mr. Blanchard said. He added that such a move could pay for itself in the form of increased economic activity. ...
Policy makers at the conference referred to the prospect of rising long-term unemployment as a crisis... Mr. Blanchard ... said the United States, too, should consider subsidies to help the long-term unemployed...
Reposted from02myEcon-01 02myEcon-01
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