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A theory is appropriate as long as it fits into the fact; when a theory doesn't fit in the fact, it's wise to walk with the fact.

Sunday, January 1, 2012

World Economy in 2011

Olivier Blanchard, Economic Counsellor and Chief Economist at the International Monetary Fund writes on the performance of the world economy in 2011. Four major points he pointed out are:

First, post the 2008-09 crisis, the world economy is pregnant with multiple equilibria—self-fulfilling outcomes of pessimism or optimism, with major macroeconomic implications.

Second, incomplete or partial policy measures can make things worse.

Third, financial investors are schizophrenic about fiscal consolidation and growth.

Fourth, perception molds reality.

Here is the link of the article.

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