Doin' the IMF hokie pokie

The IMF have been long associated with the principles outlined in what has become to be known as the Washington Consensus which include but are not limited to reduction of govt spending and deficits, deregulation, privatisation of public assets and market based interest rates.

"Fiscal consolidation" is defined as the reduction of government deficits and debt accumulation.

Recently the IMF reviewed data associated with fiscal consolidation and found that

Using this new dataset, our estimates suggest fiscal consolidation has contractionary effects on private domestic demand and GDP.

More recently the IMF director Olivier Blanchard likened fiscal consolidation to driving with the brakes on and

With those brakes on, the recovery cannot be very strong,

resulting in

decreased growth, leading to a dangerous downward spiral. 

and

If not contained, this downward spiral can lead to even worse outcomes

It may be of use to look back at what is meant by "Washington Consensus" - from its originator John Williamson

Where did the term "Washington Consensus" come from?

I think I dreamt it up.

In the original paper, you wrote that "left-wing believers" in Keynesian stimulus are "almost an extinct species." They certainly don't seem extinct today. Has Washington or the world tilted left?

The world has changed. We are now in a Keynesian situation, which we weren't in 1989.

If you had to identify one country that is implementing the Washington Consensus and benefiting from it, which would it be?

I think Chile has implemented that type of policy over the years, in a very non-dogmatic way since the return of democracy.