The IMF said it is important to pair supply side reforms with fiscal stimulus measures to boost near term demand and cushion negative shocks
Christine Lagarde, Managing Director of the International Monetary Fund (IMF), and German Chancellor Angela Merkel attend a news conference following a meeting of the heads of international economy and finance organizations at the Chancellery in Berlin, Germany, April 5, 2016. Photo: Reuters/Hannibal Hanschke, photo: Reuters/Hannibal Hanschke
06 of April 2016 09:40:24
WASHINGTON — The International Monetary Fund offered a solution to persistently sluggish economic growth on Wednesday that included proposals to deregulate product markets and adopt policies to boost labor market participation.But the analysis in the IMF's annual World Economic Outlook acknowledged arguments from skeptics of such "supply side" reforms that deregulation can cause near-term falls in wages and price deflation and therefore need to be accompanied by fiscal stimulus aimed at boosting near-term.The IMF said new research shows that structural changes to labor makets and some more heavily regulated business sectors could help lift potential output over the medium term while also helping to strengthen consumer confidence in the near term.