What Have We Learned?: Macroeconomic Policy after the Crisis

What Have We Learned?: Macroeconomic Policy after the Crisis

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Overview

Top economists consider how to conduct policy in a world where previous beliefs have been shattered by the recent financial and economic crises.

Since 2008, economic policymakers and researchers have occupied a brave new economic world. Previous consensuses have been upended, former assumptions have been cast into doubt, and new approaches have yet to stand the test of time. Policymakers have been forced to improvise and researchers to rethink basic theory. George Akerlof, Nobel Laureate and one of this volume's editors, compares the crisis to a cat stuck in a tree, afraid to move. In April 2013, the International Monetary Fund brought together leading economists and economic policymakers to discuss the slowly emerging contours of the macroeconomic future. This book offers their combined insights.

The editors and contributors—who include the Nobel Laureate and bestselling author Joseph Stiglitz, Federal Reserve Vice Chair Janet Yellen, and the former Governor of the Bank of Israel Stanley Fischer—consider the lessons learned from the crisis and its aftermath. They discuss, among other things, post-crisis questions about the traditional policy focus on inflation; macroprudential tools (which focus on the stability of the entire financial system rather than of individual firms) and their effectiveness; fiscal stimulus, public debt, and fiscal consolidation; and exchange rate arrangements.

Product Details

ISBN-13: 9780262027342
Publisher: MIT Press
Publication date: 05/09/2014
Series: The MIT Press
Pages: 368
Product dimensions: 6.00(w) x 9.10(h) x 1.10(d)
Age Range: 18 Years

About the Author

George Akerlof, a 2001 Nobel Laureate, is Guest Scholar at the International Monetary Fund and Daniel Koshland, Sr. Distinguished Professor Emeritus of Economics at the University of California, Berkeley.

Olivier Blanchard is C. Fred Bergsten Senior Fellow at the Peterson Institute for International Economics in Washington, DC. He was Chief Economist at the International Monetary Fund from 2008 to 2015.

David Romer is Herman Royer Professor of Political Economy at the University of California, Berkeley.

Joseph Stiglitz, a 2001 Nobel Laureate, is University Professor at Columbia University.

Olivier Blanchard is C. Fred Bergsten Senior Fellow at the Peterson Institute for International Economics in Washington, DC. He was Chief Economist at the International Monetary Fund from 2008 to 2015.

Claudio Borio is Head of Research and Policy Analysis at the Bank for International Settlements in Basel, Switzerland.

Stanley Fischer is former Governor of the Bank of Israel and has been nominated as Vice Chair of the Federal Reserve]. He is the author of IMF Essays from a Time of Crisis: The International Financial System, Stabilization, and Development (MIT Press).

Jean Tirole, the 2014 Nobel Laureate in Economics, is Scientific Director of IDEI (Institut d'Economie Industrielle), Chairman of the Board of TSE (Toulouse School of Economics), and Annual Visiting Professor of Economics at MIT.

Sir John Vickers is Drummond Professor of Political Economy at Oxford University.

Adair Turner, Chairman of Britain's Financial Services Authority from September 2008 to March 2013, is a Senior Fellow of the Institute for New Economic Thinking. He is Visiting Professor at the London School of Economics and at Cass Business School, City University London, and the author of Just Capital: The Liberal Economy.

Jay C. Shambaugh is a Visiting Associate Professor at the McDonough School of Business at Georgetown University and was the Senior Economist for International Economics and then Chief Economist at the White House Council of Economic Advisers from 2009 to 2011.

George Akerlof, a 2001 Nobel Laureate, is Guest Scholar at the International Monetary Fund and Daniel Koshland, Sr. Distinguished Professor Emeritus of Economics at the University of California, Berkeley.

Olivier Blanchard is C. Fred Bergsten Senior Fellow at the Peterson Institute for International Economics in Washington, DC. He was Chief Economist at the International Monetary Fund from 2008 to 2015.

David Romer is Herman Royer Professor of Political Economy at the University of California, Berkeley.

Joseph Stiglitz, a 2001 Nobel Laureate, is University Professor at Columbia University.

Table of Contents

Introduction: Rethinking Macro Policy II-Getting Granular Olivier Blanchard Giovanni Dell'Ariccia Paolo Mauro 1

Part I Monetary Policy

1 Many Targets, Many Instruments: Where Do We Stand? Janet L. Yellen 31

2 Monetary Policy, the Only Game in Town? Lorenzo Bini Smaghi 37

3 Monetary Policy during the Crisis: From the Depths to the Heights Mervyn A. King 45

4 Monetary Policy Targets after the Crisis Michael Woodford 55

Part II Macroprudential Policy

5 Macroprudential Policy in Prospect Andrew Haldane 65

6 Macroprudential Policy and the Financial Cycle: Some Stylized Facts and Policy Suggestions Claudio Borio 71

7 Macroprudential Policy in Action: Israel Stanley Fischer 87

8 Korea's Experiences with Macroprudential Policy Choongsoo Kim 99

Part III Financial Regulation

9 Everything the IMF Wanted to Know about Financial Regulation and Wasn't Afraid to Ask Sheila Bair 129

10 Regulating Large Financial Institutions Jeremy C. Stein 135

11 The Contours of Banking and the Future of Its Regulation Jean Tirole 143

12 Banking Reform in Britain and Europe John Vickers 155

13 Leverage, Financial Stability, and Deflation Adair Turner 165

Part IV Fiscal Policy

14 Defining the Reemerging Role of Fiscal Policy Janice Eberly 179

15 Fiscal Policy in the Shadow of Debt: Surplus Keynesianism Still Works Anders Borg 183

16 Fiscal Policies in Recessions Roberto Perotti 193

17 Fiscal Policy Nouriel Roubini 209

Part V Exchange Rate Arrangements

18 How to Choose an Exchange Rate Arrangement Agustin Carstens 225

19 Rethinking Exchange Rate Regimes after the Crisis Jay C. Shambaugh 229

20 Exchange Rate Arrangements: Spain and the United Kingdom Martin Wolf 245

21 Exchange Rate Arrangements: The Flexible and Fixed Exchange Rate Debate Revisited Gang Yi 257

Part VI Capital Account Management

22 Capital Account Management: Toward a New Consensus? Duvvuri Subbarao 265

23 Capital Flows and Capital Account Management José De Gregorio 271

24 Managing Capital Inflows in Brazil Márcio Holland 289

25 Capital Account Management Helene Rey 307

Part VII Conclusions

26 The Cat in the Tree and Further Observations: Rethinking Macroeconomic Policy II George A. Akerlof 317

27 Rethinking Macroeconomic Policy Olivier Blanchard 321

28 Preventing the Next Catastrophe: Where Do We Stand? David Romer 327

29 The Lessons of the North Atlantic Crisis for Economic Theory and Policy Joseph E. Stiglitz 335

Contributors 349

Index 351

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