As JonathanOstry, oneof the paper's authors, points out, the fundnowappreciates thatfiscal retrenchment does little to restore confidenceunlessthereisanunderlying fiscal problem.
JonathanOstry, an economist at the IMF, reckons there is a theoretical case for limiting capital inflows to prevent a surge in currencies above fair value.
As JonathanOstry, one of the paper's authors, points out, the fund now appreciates that fiscal retrenchment does little to restore confidence unless there is an underlying fiscal problem.