Stiglitz' loose talk again

Doug Henwood dhenwood at
Wed Jul 1 06:51:30 PDT 1998

World Bank top economist Joseph Stiglitz seems to be taking issue with his colleagues again. Last January, it was reported that he was virtually locked in a closet by his superiors after he was quoted in the Wall Street Journal criticizing the IMF's programs for East Asia. And now here he is saying that there's no vice, and maybe even virtue, in capital controls. Today's Financial Times reports (here's the lead and two grafs from the midsection - the story is not on their free website, but I snagged an e-version from their archive for a mere $2.50):

>Delegates agree the state has a role to play in the financial: sector -
>but what is it?: 07-01-1998
>When Joseph Stiglitz, the World Bank's chief
>economist, told a conference in San Salvador this week that mild
>government restraints in the financial sector might help economic
>growth, a contrary view was soon expressed.
>"I don't know how you can be
>sure that mild does not grow up and become severe," Manuel Guitian,
>director of the International Monetary Fund' s monetary and exchange
>affairs department, told delegates a few hours later, as he urged
>financial market liberalisation on Latin America' s governments.


>Mr Stiglitz pointed to a study showing no link between capital account
>liberalisation and economic growth. "The positive benefits. . . do not
>leap out from the data," he said.
>Attention has focused on the controls of countries such as Chile, which
>in effect deters short-term flows by imposing a reserve requirement. Mr
>Stiglitz said such rules had managed to lengthen the maturity profile of
>capital inflows without significantly reducing their total.



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