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 η>ρ…)
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…
