“More generally, Gorincha has been providing great leadership in guiding the Fund’s long-term research program, whose mission is not just to deal with short-term crises, but to look at problems that others have not yet thought about.” The professor says.
Olivier Blanchard was chief economist while Gourincha was editor-in-chief of the IMF Economic Review. Blanchard, now a professor of economics at the Massachusetts Institute of Technology, says his successor is “doing a great job.”
“The quality of the World Economic Outlook is as good as it can be,” he says. “To be immodest, as was the case when I was there.”
It was Blanchard who said George Osborne was “playing with fire” by having such a tight grip on the public purse.
This experience taught him the dangers of commenting directly on British government policy.
“Making statements about UK politics is dangerous,” says Blanchard. “Ironically, I got into trouble with the British press and the UK Treasury by sending the opposite message [to Gourinchas] In early 2010, fiscal austerity at the time was not the best idea.
Gorincha’s comment this week that he would “advise against further discretionary tax cuts” may on the surface seem like the exact opposite of Blanchard’s criticisms of austerity. But the former IMF economist supports his successor.
“In my view, it is absolutely correct to say that given the spending needs that have been identified — defence, health, global warming — cutting taxes is not the best idea,” Blanchard says. “The idea that tax cuts lead to much higher growth has been consistently refuted empirically: sometimes they help a little, but the effect is rarely noticeable.”
He says that Gorinsha is “not an idealist, but a pragmatist.” “He is not a politician.”
For MPs in Westminster, that will be uncomfortable.