The world economy is more stable today in the past, it is growing faster than at any time except the 1960s, deep recessions have disappeared in the industrial economies and emerging markets have grown stronger since the east Asian crisis. Facts worth emphasising when there are long faces over the sub-prime crisis in the US and its possible impact on the world economy.
The IMF's World Economic Outlook makes the point that better economic management has helped in a big way- monetary management especially, based on the insights developed in monetary theory, has had huge pay-offs. The WEO does not mention the role of central bank coordination in dealing with economic crises- I believe this too has been a big factor. As a result, central banks are better placed today to deal with the fallout of crises in financial markets of the sort we are facing now and to limit their impact on the real economy.
More on this in my ET column, Good times last longer.
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