OECD vs Fund's Relationship Management

OECD (2008) compares OECD peer reviews with IMF Board discussions and describes differences in focus, in methods of analysis and consequently, in the nature of interactions. The IMF process is characterized as a higher frequency exercise with a shorter-term focus and notes that the country is not necessarily expected to endorse the policy recommendations of a surveillance report, nor does it have much latitude to change or remove topics from a Staff Report. The OECD, on the other hand, engages in a much more intensive exchange with country authorities, both in missions and at headquarters when finalizing its Economic Surveys. It engages in a full day of discussions with the authorities joined by officials from other countries who contribute to the debate with their policy experience, after which the Secretariat works with the country subject to peer review over the course of a full day to finalize the document for publication. Thygesen acknowledges that this buy-in may result in a reduction of clarity in issues or key messages in the report. He also suggests that the peer review process only works well if there is a high and matched level of expertise brought by country representatives around the table so that the authorities undergoing the peer review can truly benefit from the discussion. OECD (2007) discusses the prerequisites of value sharing, mutual trust and credibility in the process adding that the peer review is as effective as the “peer pressure” stemming from the reviewer countries, and the willingness of the reviewed country to accept it

-A Comparative Study on Relationship Management

Another Practitioner- Rakesh Mohan's Eichengreen challenge

Monetary Policy in a Globalized Economy- A Practitioner's View

Rakesh Mohan

Ashok Mody review;

In a recent comment, Barry Eichengreen (2009) says that economists are subject to fads and trends because the penalties for departing from social norms are large. Hence, even though the tools and perspectives to question the prevailing normative view are available, the incentives to adopt them are minimal...

Rakesh Mohan sees such pragmatism as the key role of a practising economist. It is in the practice of economics that the rubber, so to speak, hits the road, the theories are tested, the validity of parameters is assessed, and the cold reality of politics is faced. He speaks of the recurring conflicts in objectives faced by policymakers. In resolving these conflicts, he questions and prods, often pushing back on views widely held by academic and other practising economists. In his practice, Mohan reports, the Eichengreen challenge was always present. But because the risk of being marginalised is high, bucking the orthodoxy requires clarity of perspective and determined persistence. Both of these are amply in view in this book, which brings the speeches Mohan delivered as deputy governor of the Reserve Bank of India (RBI) from the early years of this decade, along with an extensive introduction and an “after word” that reports on the ongoing global financial and economic crisis...

For students of the Indian economy who also seek a special understanding of India’s monetary and financial policies, this book will be an invaluable guide. It presents a careful and current account of developments with an analytical eye, placed in the context and language of ongoing international policy debates. For readers seeking to assess the pulse and rhythm of India’s ginger steps from the safety of domestic finance to the choppier waters of international finance, the book offers a calibrated prognosis.

Development Jobs

World Bank Job Offer: Public Financial Management Specialist

The closing date:February 14, 2010

MIGA Professionals Program (MPP)
Looking for a Risk Officer, Accounting Office, and Underwriter

Marco-Fiscal Advisor- Afghanistan
Deloitte
Apply By: 11 February 2010

The Advisor will:

* Review appropriateness of MOF macroeconomic model for macro-fiscal analysis and forecasting.
* Review the process for integrating the MOF macroeconomic model to the revenue projections model and medium term fiscal framework (MTFF)
* Document data requirements for model and assist MOF in developing MOU's with DAB and statistical agency for the periodic provision of updated data for the model.
* Develop manuals and training materials to assist in building the knowledge and expertise of MOF staff in use of the Macroeconomic model.
* Provide coaching, formal training and mentoring to MOF staff in the use of the model.

Institutional Development Expert - Sri Lanka
Sinclair Knight Merz
Apply By: 20 January 2010

Namibia - Support to the National Planning Commission Secretariat
ECORYS
Apply By: 11 February 2010

ADB has a lot of anticipated vacancies for economists and PFM experts

Blog of the Day

Running a Hospital- President and CEO of Beth Israel Deaconess Medical Center in Boston

Who is Chalmers Johnson?

The idea of the Developmental State is most closely associated with Chalmers Johnson and his seminal analysis of Japan’s very rapid, highly successful post-war reconstruction and reindustrialization. Johnson’s central contention was that Japan’s quite remarkable and historically unparalleled industrial renaissance was neither a fluke nor inevitable, but a consequence of the efforts of a Developmental State. A developmental state was one that was determined to influence the direction and pace of economic development by directly intervening in the development process, rather than relying on the uncoordinated influence of market forces to allocate resources. The developmental state took it upon itself the task of establishing substantive social and economic goals with which to guide the process of development and social mobilization. The most important of these goals, in Japan’s case, of course was the reconstruction of its industrial capacity, a process made easier by widespread consensus about the importance of industrial development.
The emphasis has to be placed on the influence over the direction and pace of development by directly intervening in the development process, rather than relying on the uncoordinated influence of market forces.

- Address by the Minister in The Presidency: National Planning Commission, Trevor Manuel, at the Wits Graduate School of Public Development Management

For Discussion: Where's South Africa heading?

Assorted

Landsburg's Heroes of All Time

66 percent of the time

And it also occurred me that while students see the professor while he or she is teaching, they only witness about 66% of what goes into teaching.

Medical Statistics Don't Always Mean What They Seem to Mean

Paul Romer's Errors

Experiments in industrial policy

As much as fixed costs matter, the real barrier to firm growth in poor countries could be management. A good manager is partly one with training, experience, and a sense of best practice. A lot of a factory’s success comes down to management as a technology, though. Organizing a production floor, ensuring quality and efficient production: these are less a product of a single manager’s talent and more the product of decades of trial and error in manufacturing plants around the world. The problem: if you are running a firm in India or Mexico or elsewhere, the best practices probably haven’t filtered through.

2009 Quality of Life Index

Balance of Payments

The Budget Director's Love Life

There is something that a lot of people in Washington find shocking about this story, which is why we keep talking about it,” Ms. Ein said. “This is a person who seems so controlled in his professional life.” Indeed, someone who carries neat to-do lists in his breast pocket and a copy on his desk of Epictetus, the Greek philosopher who preached self-discipline. “And yet he’s so messy in his private life. This is an a-ha moment.”

This goes to another obvious — and recurring — question: whether someone whose personal life has become so complicated is really fit to tackle one of the most demanding, important and stressful jobs in the universe. “Frankly I don’t see how Orszag can balance three families and the national budget,” wrote Joel Achenbach of The Washington Post.

-If Peter Orszag Is So Smart, What Will He Do Now?

Recently from World Bank

Malaysia economic monitor : repositioning for growth

Syrian Arab Republic - Electricity sector strategy note

Azerbaijan - Country economic memorandum : a new silk road - export-led diversification

Lithuania - Social sectors public expenditure review

Tanzania - Public expenditure review of the water sector

Mexico - Agriculture and rural development public expenditure review

Doing privatization right

Public-Private Partnership units : what are they, and what do they do

Reform teams

Seychelles - Public expenditure review

Legal frameworks for tertiary education in Sub-Saharan Africa : the quest for institutional responsiveness

Comparing European and U.S. securities regulations : MiFID versus corresponding U.S. regulations

Accounting for growth in Latin America and the Caribbean : improving corporate financial reporting to support regional economic development

Uzbekistan - Assessment of the primary health care reform : transparency, accountability, and efficiency

Organization of Eastern Caribbean States - Increasing linkages of tourism with the agriculture, manufacturing, and service sectors

The Afghanistan investment climate in 2008 : growth despite poor governance, weak factor markets, and lack of innovation

Costa Rica - Competitiveness diagnostic and recommendations

Assorted

Islamic Credit Default Swaps

Pop singer makes two excellent points on development

What’s the United States Worth? $1.4 Quadrillion

Soviet Growth & American Textbooks

The flow of economic thought – Jan Tinbergen vs Milton Friedman;

“It is a little superfluous for any foreigner to come to Rotterdam to lecture about economics at all. I feel a bit like a 17th century New England smuggler lecturing on seamanship to Admiral Tromp. The trade in economics nowadays is as much the other way: we send our young men to Rotterdam to learn, not our middle-aged professors to teach. Indeed some of our best middle-aged professors are named Koopmans and Houthakker! I suppose the logic of the situation is that I am not import at all; I am to be processed and re-exported, like cocoa beans.”
-Robert M. Solow in 1963 when visiting the Rotterdam School of Economics.

Books about Iceland

Why Iceland?: How One of the World’s Smallest Countries Became the Meltdown’s Biggest Casualty by Asgeir Jonsson

Frozen Assets: How I Lived Iceland’s Boom and Bust, by Armann Thorvaldsson,

Meltdown Iceland: Lessons on the World Financial Crisis from a Small Bankrupt Island
-Roger Boyes

BH Economics Blogs Awards 2009

It is out and congratulations to the winners.

Assorted

Everything is a project, even this

How to keep meetings short: 5 tricks

Life's trade-offs in 10 easy principles

Economics and voter irrationality: my review of The Myth of the Rational Voter

A bouquet of fallacies from Gary Becker and Stephen Dubner

According to the economic approach, therefore, most (if not all!) deaths are to some extent "suicides" in the sense that they could have been postponed if more resources had been invested in prolonging life.

The Prospects for Global Imbalances: A View from the IMF

Five questions on asset prices and monetary policy

On a Scale of One to Four, How Happy Are You?

Data Mining: Course Materials (Fall 2009)

A Way to Share in a Nation’s Growth

Learning from bad graphs and weak analysis

The Gospel of thrift

The Hidden History of the Health Care Bill

Best Development Idea of 2009

World Bank should take heed:

Paul Romer's Charter Cities

The Age of the Dashboard!

Assorted about Public Sector Dashboards.



Dashboards - A Downloadable "How To" Guide

Using Performance Measures

The Federal IT Dashboard-The Status Quo Is No Longer Acceptable !

OMB’s New Performance Principles;

He also noted the use of management dashboards, such as the IT Dashboard, and said “We plan similar dashboards for other common government functions, including procurement, financial management, and personnel management.” He also said OMB will look for ways to make agency Performance and Accountability Reports more useful. The Department of the Interior’s report may be a useful model.

Memo to IMF's Fiscal Affairs Department: You guys need to have a close watch over the innovative ways the new US administration is dealing with performance management- some of their ideas are replicable in many developing countries.

Performance Reporting Case Studies

Australia

The Australian government introduced an Outcomes and Outputs Framework as the basis for budgeting and reporting for public sector agencies in 1999–2000. Among the main elements of the framework are:
• Specification of what the government is trying to achieve (outcomes);
• Specification of how actual deliverables will assist in achieving the outcomes (outputs); and
• Annual performance reporting of agencies’ contribution to the achievement of outcomes and the delivery of outputs (Australian National Audit Office, 2007, p. 15). Annual reports to Parliament detail the degree to which plans for the coming budget year are realized and targeted performance is achieved.

Canada
Canada has had an Improved Reporting to Parliament project running since the 1990s. Thirteen broad Government of Canada outcomes are specified, and agencies must develop clearly defined and measurable strategic outcomes that link in to these over-arching outcomes. Departmental performance reports are intended to provide a comprehensive but succinct picture of departmental performance, as it compares against the strategic outcomes, through the reporting of program activities linked to the strategic outcomes (Treasury Board of Canada, 2007). An effort is being made to refocus reporting away from governmental out¬puts to higher-level outcomes that show how agencies make a difference to citizens.

Ireland
In Budget 2006, the Minister for Finance indicated that the government had decided that, starting in 2007, individual departments would publish an annual state¬ment on the outputs and objectives of their depart-ments, and from 2008, the actual out-turns. These statements (named output statements) are presented to the relevant parliamentary committee along with the department’s annual estimates. Guidance from the Department of Finance suggests that, with regard to reporting on performance, a small number of high-level goals per department—each with a macro level outcome indicator—should be complemented by a small number of more detailed output indica¬tors which should, where possible, be quantitative in nature; otherwise, qualitative.

United States
The Government Performance and Results Act of 1993 requires federal agencies to produce strategic plans, annual performance plans, and annual performance and accountability reports (PARs). These are aimed at establishing a system of accountability whereby agencies articulate what they are trying to achieve, how they will accomplish it, and how Congress and the public will know if they are succeeding (Breul, 2007, p. 313). Goals and objectives need to be stated as outcomes, and performance indicators must be valid indicators of the impact on outcome goals (Department of Energy, 2006).

For more read, a report by Richard Boyle, Head of Research for the Institute of Public Administration in Dublin, 'Performance Reporting: Insights from International Practice'

One lesson:

there is a clear distinction between performance reports in the US and those in other countries he examined. On the whole, indicators contained in US reports are more likely to report on outcomes, be quantitative in nature, meet data quality criteria, and have associated targets and multi-year baseline data.

Related;
Performance Reporting - Good Practices Handbook

PFM Books

The Many Faces of Public Management Reform in the Asia-Pacific Region;

During the past decade, globalization and democratization have been the major forces that helped transform the structures, functions, and processes of Asian public sectors. Nevertheless, these transformation efforts of Asian countries vary considerably depending on local context, and have met with different degrees of success. Some countries experienced smooth transformations. For others, the reform process has been more volatile. These issues were explored at a conference July 7-9, 2008 in Bangkok, Thailand, hosted by the Faculty of Political Science, Chulalongkorn University, and co-sponsored by the International Public Management Network, the Asia-Pacific Governance Institute, and Thailand Democracy Watch. This book presents some of the works contributed by participating scholars and practitioners at the conference. The contents fall into three categories: corruption and anti-corruption initiatives, public financial management reforms, and public management reforms with emphasis on performance and results.

Editor are Clay Wescott, Bidhya Bowornwathana, L.R. Jones,

Highly recommended:
World Bank, 2008. Public Sector Reform: What Works and Why? An IEG Evaluation of World Bank Support.

Risks of too Open Government? Not at all

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Theory v. Practice - TSA Leak
www.thedailyshow.com
Daily Show Full Episodes Political Humor Health Care Crisis

Related:
Task Force on Government Performance

Open Government Initiative

Assorted

2009 edition of the World Energy Outlook (WEO)

If Statisticians Could Turn Back Time

Effective Habits for writers?

I'm interested in doing very few things. I don't have a cell phone. Don't have a computer. Don't have a TV set. Don't go to movies. Don't read. I ignore the world so I might live obsessively.

New software makes it easier to fight corruption

Twenty questions for would-be MPs

Animal Spirits

International Trade Statistics 2009

Global Wage Report 2008/09: Minimum wages and collective bargaining: Towards policy coherence

Asia-Pacific Trade and Investment Report 2009 : Trade-led Recovery and Beyond

The Arab knowledge report 2009: towards productive intercommunication for knowledge

Catalysing Low Carbon Growth in Developing Economies: public finance mechanisms to scale up private sector investment in climate solutions

Addiction, Crime and Insurgency: The transnational threat of Afghan opium

Global health risks

Global Report on Human Settlements 2009: Planning Sustainable Cities


Improving Effectiveness and Outcomes for the Poor in Health, Nutrition and Population

Human development report 2009

Paying a Price for the Thrill of the Hunt

A Primer on Complexity

It's a complex world we live in.

Recently from GAO

International Monetary Fund: Lending Programs Allow for Negotiations and Are Consistent with Economic Literature;

IMF-supported programs in the four countries GAO reviewed--Liberia, Zambia, Hungary, and Iceland--include different sets of objectives, targets, and conditions that reflect country circumstances, based on negotiations between the IMF staff and country officials. In postconflict Liberia, the program focuses on rebuilding capacity and contains a target for maintaining a balanced budget with no borrowing. In Zambia--a country negatively affected by the recent economic crisis--the IMF-supported program is designed to increase economic growth, reduce poverty, and improve governance. Hungary, which faced a rising risk of default, has a program that focuses on restoring investor confidence while reducing debt and expenditures. A banking and currency collapse in Iceland precipitated the IMF-supported program, which contains some controversial approaches to monetary policy and banking reform. All four countries are making progress but face challenges in implementing conditions or achieving targets in their IMF-supported programs. The macroeconomic policies in IMF-supported programs are broadly consistent with the findings of the empirical literature GAO reviewed, although this literature lacks precise guidance for setting policy targets. For low-income countries, empirical evidence generally suggests inflation is detrimental to economic growth after it exceeds a critical threshold, which is broadly consistent with the inflation targets included in the IMF-supported programs we reviewed. For middle- and high-income countries, the literature identified specific policy weaknesses in advance of crises, including high inflation, high public indebtedness, and low international reserves. These weaknesses are consistent with the policies upon which the IMF focuses in the 13 programs in middle- to high-income countries GAO reviewed.

2010 Census: Census Bureau Has Made Progress on Schedule and Operational Control Tools, but Needs to Prioritize Remaining System Requirements

Operation Iraqi Freedom: Preliminary Observations on DOD Planning for the Drawdown of U.S. Forces from Iraq;

DOD has yet to fully determine its future needs for contracted services. Second, the potential costs and other concerns of transitioning key contracts may outweigh potential benefits. Third, DOD lacks sufficient numbers of contract oversight personnel. Fourth, key decisions about the disposition of some equipment have yet to be made. Fifth, there are longstanding incompatibility issues among the information technology systems that may undermine the equipment retrograde process. And sixth, DOD lacks precise visibility over its inventory of some equipment and shipping containers.

Millennium Challenge Corporation: MCC Has Addressed a Number of Implementation Challenges, but Needs to Improve Financial Controls and Infrastructure Planning

Industry best practices and past GAO work have shown that conducting design reviews and updating cost estimates prior to contract solicitation help to ensure that projects can be successfully bid and constructed.

Bureau of Prisons: Methods for Cost Estimation Largely Reflect Best Practices, but Quantifying Risks Would Enhance Decision Making;

BOP uses three general steps to estimate costs for its annual budget submission: (1) estimating cost increases to maintain service levels, such as inmate medical care and utilities; (2) projecting inmate population changes for the budget year and for several years into the future using a modeling program that incorporates data on the current inmate population and estimated incoming population and associated sentences; and (3) estimating costs to both provide additional capacity to house projected inmate population growth and implement new programs, such as activating new prisons. BOP's methods for cost estimation largely reflect best practices outlined in GAO's Cost Estimating and Assessment Guide

Troubled Asset Relief Program: Continued Stewardship Needed as Treasury Develops Strategies for Monitoring and Divesting Financial Interests in Chrysler and GM

U.S. Government Accountability Office: Performance and Accountability Report Fiscal Year 2009

New working papers on Budgeting

A Rule-Based Medium-Term Fiscal Policy Framework for Tanzania

Top-Down Budgeting - An Instrument to Strengthen Budget Management

The Consolations of Economics and other Podcasts

Princeton’s Dixit Discusses Nobel for Ostrom, Williamson

Calvo Sees Difficulty Unwinding Stimulus Packages

Bill Clinton Cites Discipline, Growth to Cut Deficit

Rogoff, Reinhart on Their Book `This Time Is Different'

Skidelsky Says Stimulus Debates Today Same as 1930s

Zandi Sees Little Traction for U.S. Recovery in 2010

Plosser Says No Bank Should Be Too Big to Fail

Sustainable Wealth: Achieve Financial Security in a Volatile World of Debt and Consumption

The Consolations of Economics
Speaker: Tim Harford

The Strange Friendship of Pauli and Jung: when physics met psychology
Speaker: Professor Arthur I Miller

Keynes and the Crisis of Capitalism
Speaker: Professor Lord Skidelsky

The current state of the economy
Speaker: Professor Edward C. Prescott

Building windmills not walls – Hungary's approach in the economic storm
Speaker: Gordon Bajnai

Optimal Financial Structure and Economic Development
Speaker: Dr Justin Yifu Lin

Islam: what I believe
Speaker: Professor Tariq Ramadan

The Future of Banking and Financial Regulation
Speaker: Eric Chaney, Professor Charles Goodhart

Predictioneer: How to predict the future with game-theory
Speaker: Professor Bruce Bueno de Mesquita

A Year after the Collapse of Lehmans: where does global capitalism go now?
Speaker: Professor Andrew Gamble, Will Hutton, Professor Danny Quah

Risk, Behaviour and Applications to Health Policy
Speaker: Dr Joan Costa-i-Font, Dr Caroline Rudisill

How to Control and Change Individual Behaviour: the world as installation
Speaker: Professor Saadi Lahlou

Human Rights in the 21st Century
Speaker: Professor Noam Chomsky

The Idea of Justice
Amartya Sen

Capitalism and Confusion
Amartya Sen

The Role of Political and Economic Ideas in Policymaking
Douglas Irwin, Professor of Arts and Sciences, Department of Economics, Dartmouth College
David Colander, Professor of Economics, Middlebury College
Murray Dry, Professor of Political Science, Middlebury College
James Morrison, Assistant Professor of Political Science, Middlebury College

Capitalism 3.0
Dani Rodrik

Natural Resource Management -Collier

A Conversation with Lord Nicholas Stern

Developing Rural Areas - Esther Duflo

The Life and Impact of Ayn Rand

It's Our Turn to Eat: The Story of a Kenyan Whistleblower

Create Your Own Economy: The Path to Prosperity in a Disordered World

The Return of Depression Economics

The Global Financial Crisis: Causes and Consequences - Greenspan

Controlling corruption
Out of the Fitzgerald Inquiry, the National Integrity System was born, and is now used by governments and authorities in most countries around the world. The latest is Kurdistan. Corruption, like death and taxes, is inevitable. Ian Townsend explores ways in which it can be managed and minimised.

Addiction, free will and self control

Gandhi and philosophy - the centenary of Hind Swaraj

Beethoven and the modern

How T.H. Huxley helped me teach my students how to write

The Better Buy Project

The Better Buy Project is an experiment dedicated to the belief that there’s a lot of room for improvement in the way government buys products and services. We’re testing this hypothesis by asking for your ideas on how to make acquisition process more open, transparent and collaborative.

By a Consultant for another Consultant?

Senior Budget Adviser- Timor Leste (deadline October 6)

From the scope of work;

-Where requested, report to and advise the Senior Management and on matters of budget design and execution;
-Develop the management and leadership skills of the National Director, focusing in particular on:
clear comprehension of his core roles and responsibilities;
identifying how directorate workflows fit into these roles and responsibilities;
effective delegation;
realistic workload assessment and planning; and
inculcating some basic concepts of team-building.
-Support the development and execution of the national budget in line with the budget guidelines;
-Assist in the integration of the services provided by the Ministry to Line Ministries in the areas of budgeting, planning, treasury functions and procurement.
-Build capacity within the budget and expenditure review units with a view to, over time, a greater percentage of the work of the units can be undertaken independently by national staff,
-Build the capacity of local staff to oversee the management of line Ministry budget processes;
-Support the development of new systems and processes as the budget design is gradually computerised onto the FMIS and devolved to line agencies;
-Provide advice and support to the implementation of the performance budgeting element of the FMIS;
-To instill and further develop a client focus culture in the budget and expenditure review units.
-Provide advice on the budgetary impacts of various government initiatives to the Minister for Finance;
-Provide holistic/ strategic advice on ministry issues, as requested; and,
-In consultation with the Professional Development Program director, identify training needs for staff in the National Directorate of the Budget and Planning and develop strategies to secure the necessary skills needed to ensure the long term viability of the National Budget Directorate.
-Perform such other technical and inline functions as may be required by the Program Services Directorate or the Ministry of Finance.

I've to say good luck to the Budget Adviser.

Related;
Timor-Leste PEFA

A Balancing Act: Implementation of the Paris Declaration in Timor-Leste

East Timor- AUSAID

Timor-Leste: Reflections on the 10th anniversary of independence

Timor-Leste-World Bank

Goolsbee defends Obama fiscal policies

GOOLSBEE: I think there's some conventional wisdom forming among opponents of the administration that the deficit is getting bigger primarily because Obama is spending like crazy, and it's totally wrong.

If you look at the 10-year budget, the reason that 10-year deficit is getting bigger, it's first and foremost because the economy has gotten substantially worse, and as the current economy gets worse, it makes the 10-year deficit numbers significantly worse also. And that's by far the biggest thing driving it.

The second is the President consciously came in and said, "We're going to stop engaging in a series of budget gimmicks that are used to artificially make the 10-year deficit look smaller," so things like, they put in zero dollars for natural disaster cost each year, even though there's a hurricane season. So you would think that this is a somewhat regular expense.

Each year, they say, "Oh, my goodness. How could we have predicted there would be a hurricane hitting South Carolina this year?" And so the president said, "Look, let's take the average cost for natural disasters. Let's put it in the budget every year. Let's stop saying the R&D tax credit is only temporary. Let's make it permanent because they renew it every year. Let's stop saying we're going to go cut all doctors' salary by 20 percent at the end of the year and then, at the end of the year, saying actually we're not going to do it this year, but we promised to do it all future years," thereby keeping the long-run deficit smaller.

None of those are spending. The president is not spending anything that people were not spending before for all of those budget gimmicks. He is instead saying, "Let's be honest about what the situation we're in," and so I would just encourage that people who are agitated about the spending to do two things.

The first is go look at the 10-year budget and ask how much of the increase in the 10-year deficit is actually due to new programs versus just being honest and just the state of the economy, and the second is, for this year and next year, while we're in stimulus and Recovery Act land, in the face of the stiffest recession since 1929, that is not when you try to tighten the belt. It is extremely dangerous to do that. That is exactly what Herbert Hoover did that got us into the Depression.

ROMANO: Well, why not? Now, see, that's counterintuitive for a lot of people listening to you. They're saying, "Well, we should be tightening our belt."

GOOLSBEE: We should tighten our belts in the sense of getting the savings rate up. Getting long-run fiscal responsibility is going to be quite important, but if you go at everybody and the savings rate went to 25 percent in a day and we went and massively cut government spending right now, it would drive the GDP downward. And this may be a paradox, but in a period of crisis, you can't do that. That's what Herbert Hoover did. They faced stiff recession, big financial crisis, and they said, "You know what we should do, we should try to balance the budget, and let's start raising taxes and cutting spending." And by doing that and by letting the financial systems collapse, they started the Great Depression, which was a spiral that they would not fix itself and really stuck with us for more than 10 years until World War II ends up getting us out as you know, as a big stimulus.

We faced a financial crisis bigger than the one in 1929. We faced a recession, the stiffest since 1929. The stage was set that if we engaged in a series of policy missteps, we're in the Great Depression, and the Fed deserves great credit and this administration deserves great credit as taking actions to prevent that. And one of the actions that was absolutely needed to prevent it was loosening the belt, not tightening the belt, in the face of those things.

-Voices of Power Transcript: Austan Goolsbee, Economic Adviser to President Obama

Need a motivation to study international development

"The greatest challenge for me is remaining hopeful and optimistic when the changes that you see are so small and they come so slowly," Meyer said. "It is a slow and incremental process, and it can be discouraging, but you must stay connected to your personal vision even if its realization may take long periods of time."

-Amy Meyer: Leading Efforts to Spur the Economy in a Volatile Region

The Contest to Find Government Waste

In his weekly radio address on April 25, Obama promised that the administration would establish a process for every government employee to submit their ideas on how their agency can save money and perform better. "Americans across the country know that the best ideas often come from workers -- not just management," Obama said in the speech.

The "SAVE Award," which stands for Securing Americans Value and Efficiency, is open to all federal employees, and only people with government e-mail addresses will be able to submit suggestions.

Entries will be judged by these questions, according to the Web site: Does the idea reduce costs in a way that is concrete and quantifiable? How does it improve the way that government operates? Does the idea have a tangible impact on citizens' lives or the environment? Is there a clear and practical plan for implementing the idea? Will it be possible to realize savings immediately?

-Search Is On for Best Cost-Cutting Ideas

Book Recommendation- for Predictioneers

The Predictioneer’s Game: Using the Logic of Brazen Self-Interest to See and Shape the Future

Assorted

From Poverty to Prosperity Watch

The Lord is my central banker, I shall not want…

Plastic fantastic

Global Development Finance 2009: Charting a Global Recovery


Selective extracting

The Impact of the Trilemma Configurations on Macroeconomic Performance

Why Pressure Cookers Are Big in the Netherlands

Fiscal Stimulus, Interest Rates and Crowding-Out

Combining findings at the Province and County Level from Iran's Election

Indian Capital Control Liberalization: Evidence from NDF Markets

Public libraries in India

For Father's Day: the IR guide to parenting

Roads to Success: Budget Consolidations in OECD Countries

Respinning the web

If the financial crisis has taught us anything,” says Michael Taylor, “it is that too much conventional wisdom can be dangerous.”

Laffer Curves Are Average Not Marginal Taxation

The Fragility of Economic Data

Was there Really a Hawthorne Effect at the Hawthorne Plant?

If you smell, here's a remedy

Bring Your Questions for White House Economist Austan Goolsbee

Books I am looking forward to reading

Grey hair may be protecting us from cancer

Podcasts Lectures- Paul Krugman

The Return of Depression Economics Part 3: The night they reread Minsky

The Return of Depression Economics Part 2: The eschatology of lost decades

The Return of Depression Economics Part 1: The sum of all fears

F & D is out

Finance and Development June 2009

Where Does the Public Sector End and the Private Sector Begin?

Where Does the Public Sector End and the Private Sector Begin?;

Summary: The boundary between the public and private sectors can be defined on the basis of ownership of institutional units. Nonmarket government-owned entities and corporations that are owned or controlled by government units belong to the public sector. “Economic ownership” is more important than majority ownership. Joint ventures, public-private partnerships, and social insurance funds (including for public employees) can be unambiguously allocated to the public or private sector on the basis of international public sector accounting standards. Boundary problems within the public sector are just as acute as those between the public and private sectors, mainly because of ambiguities in distinguishing “market” from “nonmarket” activities.

Assorted about budgets and transparency

Budget 2009: Lets Assume we have a Candle Opener (Australia)

OMB reveals transparency roadmap

The White House wants to make about 240,000 different sets of data available to the public over the next month. It took the first step Thursday by launching its Data.gov web site with 46 sets of data in 13 areas from 26 agencies.

New Zealand budget 2009: Downgrade alert?

Is Australia's Treasury independent?

The setting for the budget speech- India

Winners of the Indian Election!

India's massive general election

Assorted

Swine flu: why does it take so long to make a vaccine?

Cloud Computing

White House Launches ‘Open Government Initiative’

Sunday Function

How Pigs Replaced Economics


The IS curve

That Freshman Course Won’t Be Quite the Same

The problem with economists;

Incorporating the factors that created problems in the financial markets makes the theory complex. But to be effective in the real world, to be able to communicate economic ideas, you have to simplify. Sometimes, you start believing your simplifications as if they were the general theory.

An Economist Tries to Defend His Profession--and Fails

Foreclosures and Modifications for Beginners

Paper for Discussion next week on the blog

The following working paper from IMF;

The Challenge of Reforming Budgetary Institutions in Developing Countries;

Summary: The paper notes that the development of sound budgetary institutions in countries such as France, the U.K. and the U.S. has taken a very long time?200 years or more?and is still evolving. It discusses Douglass North's prediction 'which is supported by available data that institutional reform is also likely to be very slow in developing countries since the budget is especially prone to rent-seeking influences. Finally, the paper discusses the currently fashionable emphasis on complex, multiannual PFM reform strategies, which have been strongly promoted by the donor community; and advocates a simpler approach grounded on Schick's important principle of "getting the basics right." The paper identifies several areas where further research would be fruitful.

Idiots Guide to the US Budget System

The Budget System and Concepts

Budget Reform Proposals

And more by Peter R. Orszag

Assorted

Maybe we should put rats in charge of foreign aid research

Whither the Causation?

My Information Diet

Planning Commissions are supposed to disappear

Now South Africa's incoming President Jacob Zuma is moving Manuel to a new job, a cabinet-level post heading a National Planning Commission (NPC) that is key to Zuma's plans for overhauling much-criticised public services.

"The NPC will be responsible for strategic planning for the country to ensure one national plan to which all spheres of government would adhere," Zuma said in announcing the change.

"This would enable us to take a more comprehensive view of socio-economic development in the country."

Manuel's successor at the finance ministry, former tax boss Pravin Gordhan, is also a respected figure credited with improving tax collection during his time at the helm of the revenue service...

Appointed Nelson Mandela's finance minister without any formal economics training in 1996 at the age of 40, the trained civil engineer announced a budget surplus a decade later -- the first in 30 years.

Stringent fiscal policies under his watch are also credited with steering South Africa's banks safely through the global meltdown.

But while widely applauded, Manuel has not shied from unpopular choices and has frequently raised the ire of South Africa's powerful political left who criticise his tight controls over the budget and views on inflation targeting.

-Manuel handed S.Africa planning commission post

For Discussion: What do you think of the creation of this new planning commission in South Africa? In terms of PEFA ranking for medium term fiscal planning, the country gets a B grade- not a bad score?

Related; Development of central fiscal institutions;

Planning ministries are quite common in developing countries, but become less common as countries develop. Across the world, there has been a shift from traditional detailed planning, as reflected in 5-year plans and similar instruments, towards strategic coordination. This coordination is increasingly done by finance ministries or by prime ministers’ offices. This is often accompanied by a gradual integration of planning, strategy development and budgeting into a single, coordinated process, and a unified, strategic budget document. Planning ministries were often involved in project preparation, but this function is shifted to line ministries as their capacity develop. Macroeconomic forecasting is often transferred to the emerging macrofiscal and macroeconomic departments in the finance ministries, and statistics are increasingly produced by independent statistics agencies.

Should we encourage Swine Flu parties?

Infectious-disease specialists say they understand the logic: surviving the current, apparently mild strain of the virus may be protective if a more virulent strain emerges next fall. But they are generally against it.

Dr. Anne Moscona, a flu specialist at Weill Medical College of Cornell University, said she had been called by a reporter for a women’s magazine “asking if mothers should hold swine flu parties, like chickenpox parties.”

(Chickenpox parties, at which children gather so they can all be infected by a child who has the pox, are often held by parents who distrust chickenpox vaccine or want their children to have the stronger immunity that surviving a full-blown infection affords and are willing to take the risk that their child will not get serious complications.)

“I think it’s totally nuts,” Dr. Moscona said. “I can’t believe people are really thinking of doing it. I understand the thinking, but I just fear we don’t know enough about how this virus would react in every individual. This is like the Middle Ages, when people deliberately infected themselves with smallpox. It’s vigilante vaccination — you know, taking immunity into your own hands.”

The idea has arisen from the history of the 1918 Spanish flu. A mild spring outbreak was followed by two deadly waves in the early and late winter of 1918-1919. Some believe, although there is little evidence beyond anecdotal reports in old newspapers, that those who got sick in the first wave were less likely to get sick in the second and third.

Many cite as the source of their thinking the book “The Great Influenza,” a history of the 1918 pandemic by John M. Barry.

Mr. Barry, in a telephone interview, said he had never publicly suggested deliberate self-infection, “but I used to joke with my wife, and I may have jokingly said it in speeches, that if a virus emerged and looked mild, I’d be on an airplane to Indonesia.”

-Debating the Wisdom of ‘Swine Flu Parties’