## Open Forum: Good Economics for Hard Times

_IMF News, December 2, 2019_

## Source details

**Canonical URL:** [Open Forum: Good Economics for Hard Times](https://www.imf.org/en/news/articles/2019/12/03/sp120219-open-forum-good-economics-for-hard-times)

## Other formats

- [Markdown version](/en/news/articles/2019/12/03/sp120219-open-forum-good-economics-for-hard-times/index.md)
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## Bibliographic details
- Published: December 2, 2019

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### Event and speaker introduction
- Opening Remarks by the First Deputy Managing Director, David Lipton.
- Date: December 2, 2019.
- Speaker introduced: professor Esther Duflo, winner of the 2019 Nobel Prize in economics.
- Nobel laureates in 2019: Esther Duflo, Abhijit Banerjee, and Michael Kremer.
- Notable biographical notes presented:
  - Esther Duflo is the youngest-ever and only the second woman to be awarded an economics Nobel.
  - Esther and Abhijit are professors at MIT; Michael Kremer is a professor at Harvard University.
  - Esther co‑authored Poor Economics (Financial Times’ book of the year in 2011), translated into 17 languages.
  - The IMF published a profile of Esther Duflo in 2003 when she had just founded the Poverty Action Lab.

### Research approach and methodological contributions
- Core methodological innovation highlighted:
  - Use of randomized controlled trials (RCTs) to identify effective policy interventions and establish counterfactuals.
- Complementary analytical tools used alongside RCTs:
  - Contract theory.
  - Behavioral economics.
- Example application:
  - Research on the “learning crisis” showing that providing textbooks, or building larger schools, does not by itself improve learning without better and more tailored teaching practices.

### Key empirical findings and challenges to conventional views
- Findings attributed to Esther Duflo and collaborators:
  - Increased immigration of workers does not result in lower salaries for native workers.
  - Trade is not always beneficial for developing countries.
  - Long‑held assumptions on growth, automation, and social media are challenged.
- Practical implication:
  - Experimental methods can reveal both whether an intervention works and why it works.

### Implications for the IMF’s work and policy design
- Relevance of experimental methods for the Fund:
  - Importance of incorporating counterfactual thinking to assess the impact of policies on people’s well‑being.
  - Recognition that Fund activities (surveillance, lending, monetary, fiscal, and structural policies) affect lives and interact with issues like inequality, corruption, gender discrimination, and climate change.
- Limitations noted:
  - Practical constraints prevent running Fund programs as controlled experiments (e.g., cannot implement a program in only part of an economy or in one country but not another).
- Areas for institutional learning and adaptation:
  - Better understanding of the political economy of reforms.
  - Taking lessons from one country’s experience to inform another’s policy choices.
  - Being open to new methods and fresh perspectives, especially when they challenge long‑standing assumptions.
  - Improving communication to regain public trust and make economic advice more effective in practice.

### Organizational and public‑policy questions raised
- Questions emphasized for further attention:
  - How can policymakers communicate more effectively?
  - How can experts regain the trust of an increasingly skeptical public?
  - How do we design policies that keep the people we serve in mind and ensure advice tangibly improves lives?

*Opening Remarks by the First Deputy Managing Director, David Lipton, December 2, 2019, IMF Communications Department.*

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## References

- [David Lipton](http://www.imf.org/external/np/omd/bios/dl.htm)
- [Speeches](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2019/12/03/sp120219-open-forum-good-economics-for-hard-times_