Interview with Gian Maria Milesi-Ferretti

The Fall/Winter 2020 issue looks at the economic effects of the COVID-19 Pandemic on society and the economy.


The Fall/Winter 2020 issue looks at the economic effects of the COVID-19 Pandemic on society and the economy.

Gian Maria Milesi-Ferretti is the retiring Deputy Director of the IMF’s Research Department, who has long overseen the IMF’s most influential publication, the World Economic Outlook.

You just fnished presenting the latest World Economic Outlook (WEO). That must be a very intense process. Could you tell us what it feels like to prepare for and present the WEO?

There is a fantastic mechanism in place, and the WEO has an amazing team. I think this was my 27th WEO press conference. Of course, there are always challenges, and we are in very unusual times, but by now I sort of know the drill.

The World Economic Outlook always gets plenty of attention all around the world. But this time the stakes are as high as they have ever been. Overseeing the IMF’s forecasts, how do you grapple with the fact that COVID-19 is a crisis for which we have little precedent and which, as economists, takes us far out of our usual knowledge base?

I think a lot of humility is important, because, in an unprecedented situation like the current one, you are going to get things wrong. You need a lot of flexibility and creativity, very good people around you, and a willingness to talk to experts in areas that are far away from your own expertise, like epidemiology. You also need to make sure that IMF country teams are fully cognizant of the general picture that is shaping up at the world level.

Throughout your long career at the IMF, you have seen many crises. Not long after you joined the institution, Mexico was rocked by the first in a long list of major crises that occurred during your first years as an IMF economist. Looking back, do you feel that the Fund has changed, and approaches crises differently than it once did?

I think we learn from mistakes. We learn from the way new crises materialize. I would say that the institution has become more flexible in its response. We cannot address every single occurrence of an external crisis the same way, and there are many factors that need to be taken into account. The strategies we once thought were appropriate may not be appropriate in the environment in which we live now. I think the Fund also absorbs the progress of knowledge in the profession and in policymaking more generally.

During your career you have seen many different aspects of the Fund and held various positions, including mission chief for the United States. But the Research Department has really been your home base, to which you always returned. What do you love about working in the Research Department?

I love research, so that is clearly the main driving force. I think it is a fantastic department with first-rate economists, and it has this wonderful blend of analytical work, grounded in very concrete and real economic problems. As your career advances, you move from targeting academic publications and growing your CV to really thinking about influence and about what matters to the institution you are working for and to the policymakers who come to ask for policy advice. That is what shaped my thinking and my interests over time.

All through your IMF career, you have published a lot of research, including in leading academic journals. Did you find that the policy work you were involved with also fertilized your own research agenda? And, conversely, in what ways has your research affected the way you think about economic policy problems?

The types of economic problems I have seen countries face since I came to the IMF have shaped my research a lot. You mentioned the Mexican crisis earlier, which was followed by the Asian crisis. During that period, I really started working in earnest on external sustainability and the drivers of large current account deficits. At that time, we saw a lot of foreign direct investment and portfolio equity investment flowing to emerging and developing economies. We realized back then that tracking external debt dynamics was going to be a very imperfect way of examining what was happening to the external position of a country. From there, I started to grow a project with Philip Lane that eventually became the External Wealth of Nations. As for how my research influenced the way I think about policy problems, I can say that I have become a data person. I look at data very carefully and try to find patterns. That really became the way I have thought about problems during the past 20 years.

For nearly three decades, your research has played an important role in shaping the academic agenda on financial globalization and external imbalances. Can you tell us a bit about how your work in this field has evolved over time?

It is still evolving. As you grow older, you realize that the world is much more complicated than we make it out to be and that you need a much broader approach to economic problems. You should dabble in economic fields that may not exactly be up your alley. Taking a more holistic view of what is happening in the external sector is one way in which I have changed the way I look at the problem. I try to think about a country’s overall balance sheet and how its external position is driven by individual sectors in the country.

You have had many achievements overall, both in policy work and research. Could you tell us about an achievement that made you especially proud?

I am proud of many. Clearly, your first acceptance letters for academic journals are just very special. So is recognition by people you hold in very high esteem, like an e-mail I once received from Stanley Fischer, who was First Deputy Managing Director at the time, complimenting the work Philip and I were doing on our wealth of nations database. Most recently, I would say I am especially proud of the WEO team’s achievements. It is the work of an amazing group of people that put their souls into it. Seeing the attention that the world pays to this is great, because you know how hard people have worked.


Gian Maria Milesi-Ferretti looks back at his career at the IMF and talks about how economic research and policy inform each other.

What do you expect you will miss the most about working at the IMF?

My friends. I have many friends at the IMF, spanning all grades. I ran the IMF soccer team for a very long time, and the stars were often the Research Assistants. So I have many friends in all career and all age ranges at the Fund. I think that is the beauty of working with a team: you are really in touch with everybody. That team spirit is something I will miss.

And what are you particularly looking forward to in the coming years?

Flexibility in my life. The ability to decide when to do things and what to do. But I really do hope to stay engaged with policymaking institutions and to participate in policy debates, just from a different vantage point.

Seeing the attention that the world pays to the WEO is great, because you know how hard people have worked.