The Dog That Didn’t Bark: The Strange Case of Domestic Policy Cooperation in the “New Normal”
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Summary:
This paper examines domestic policy cooperation, a curiously neglected issue. Both international and domestic cooperation were live issues in the 1970s when the IS/LM model predicted very different external outcomes from monetary and fiscal policies. Interest in domestic policy cooperation has since fallen on hard intellectual times—with knock-ons to international cooperation—as macroeconomic policy roles became highly compartmentalized. I first discuss the intellectual and policy making undercurrents behind this neglect, and explain why they are less relevant after the global crisis. This is followed by a discussion of: macroeconomic policy cooperation in a world of more fiscal activism; coordination across financial agencies and with macroeconomic policies; and how structural policies fit into this. The paper concludes with a proposal for a “grand bargain” across principle players to create a “new domestic cooperation.”
Series:
Working Paper No. 2015/156
Subject:
Banking Financial crises Financial sector policy and analysis Financial sector stability Fiscal policy Macrostructural analysis Structural policies Structural reforms
English
Publication Date:
July 15, 2015
ISBN/ISSN:
9781513584607/1018-5941
Stock No:
WPIEA2015156
Pages:
22
Please address any questions about this title to publications@imf.org