What Have We Learned?: Macroeconomic Policy after the Crisis

428 Pages·2014·5.87 MB·English

by  Joseph E. Stiglitz, George A. Akerlof, Olivier J. Blanchard, David Romer

Macroeconomic Policy after the Crisis
edited by George Akerlof, Olivier Blanchard, David Romer, and Joseph Stiglitz
Introduction: Rethinking Macro Policy II-Getting Granular
Olivier Blanchard, Giovanni Dell'Ariccia, and Paolo Mauro Part I: Monetary
Policy
1 Many Targets, Many Instruments: Where Do We Stand?
Janet L.Yellen
2 Monetary Policy, the Only Game in Town?
Lorenzo Bini Smaghi
3 Monetary Policy during the Crisis: From the Depths to the Heights
Mervyn A.King
4 Monetary Policy Targets after the Crisis
Michael Woodford
Part II: Macroprudential Policy
5 Macroprudential Policy in Prospect
Andrew Haldane
6 Macroprudential Policy and the Financial Cycle: Some Stylized Facts and
Policy Suggestions
Claudio Borio
7 Macroprudential Policy in Action: Israel
Stanley Fischer
8 Korea's Experiences with Macroprudential Policy
Choongsoo Kim
Part III: Financial Regulation
9 Everything the IMF Wanted to Know about Financial Regulation and Wasn't
Afraid to Ask
Sheila Bair
10 Regulating Large Financial Institutions
Jeremy C.Stein
11 The Contours of Banking and the Future of Its Regulation
Jean Tirole
12 Banking Reform in Britain and Europe
John Vickers
13 Leverage, Financial Stability, and Deflation
Adair Turner
Part IV: Fiscal Policy
14 Defining the Reemerging Role of Fiscal Policy
Janice Eberly
15 Fiscal Policy in the Shadow of Debt: Surplus Keynesianism Still Works
Anders Borg
16 Fiscal Policies in Recessions
Roberto Perotti
Roberto Perotti
17 Fiscal Policy
Nouriel Roubini
Part V: Exchange Rate Arrangements 18 How to Choose an Exchange Rate
Arrangement
Agustin Carstens
19 Rethinking Exchange Rate Regimes after the Crisis
Jay C.Shambaugh
20 Exchange Rate Arrangements: Spain and the United Kingdom
Martin Wolf
21 Exchange Rate Arrangements: The Flexible and Fixed Exchange Rate Debate
Revisited
Gang Yi
Part VI: Capital Account Management 22 Capital Account Management:
Toward a New Consensus?
Duvvuri Subbarao
23 Capital Flows and Capital Account Management
Jose De Gregorio
24 Managing Capital Inflows in Brazil
Marcio Holland
25 Capital Account Management
Helene Rey
Helene Rey
Part VII: Conclusions
26 The Cat in the Tree and Further Observations: Rethinking Macroeconomic
Policy II
George A.Akerlof
27 Rethinking Macroeconomic Policy
Olivier Blanchard
28 Preventing the Next Catastrophe: Where Do We Stand?
David Romer
29 The Lessons of the North Atlantic Crisis for Economic Theory and Policy
Joseph E.Stiglitz
Contributors
Index
Olivier Blanchard, Giovanni Dell'Ariccia, and Paolo Mauro
The 2008-2009 global economic and financial crisis and its aftermath keep
forcing policymakers to rethink macroeconomic policy. First was the Lehman
crisis, which showed how much policymakers had underestimated the dangers
posed by the financial system and demonstrated the limits of monetary policy.
Then it was the euro area crisis, which forced them to rethink the workings of
currency unions and fiscal policy. And throughout, they have had to improvise,
from the use of unconventional monetary policies, to the provision of the initial
fiscal stimulus, to the choice of the speed of fiscal consolidation, to the use of
macroprudential instruments.
We took a first look at the issues a few years ago, both in a paper (Blanchard,
Dell'Ariccia, and Mauro 2010) and at an IMF conference in 2011 (Blanchard et
al. 2012). There was a clear sense among both researchers and policymakers
participating in the conference that we had entered a "brave new world" and that
we had more questions than answers. Two years later, the contours of monetary,
fiscal, and macroprudential policies remain unclear. But policies have been tried
and progress has been made, both theoretical and empirical. This introduction
updates the status of the debate. It was prepared for a second conference that was
hosted by the IMF on the same topic in spring 2013 and as a springboard for
further discussion.
A few observations on the scope of the analysis: our comments focus on the
design of macroeconomic policy after the global economy emerges from the
crisis rather than on current policy choices, such as the design of exit policies
from quantitative easing or the pros and cons of money-financed fiscal stimulus.
The two sets of issues are obviously related, but our objective is to analyze some
general principles that could be used to guide macroeconomic policy in the
future rather than to suggest specific measures to be taken today. We also take a