Rethinking Macroeconomic Policy
IMF Staff Position Notes, February 12, 2010
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Bibliographic details
- Authors: Olivier J Blanchard, Giovanni Dell'Ariccia, Paolo Mauro
- Published: February 12, 2010
- Series: IMF Staff Position Notes
- DOI: https://doi.org/10.5089/9781455224982.004
Overview
- Authors: Olivier J Blanchard, Giovanni Dell'Ariccia, Paolo Mauro
- Publication date: February 12, 2010
- Summary: The paper reviews the main elements of the pre-crisis consensus, identifies where that framework was wrong and what tenets still hold, and takes a tentative first pass at the contours of a new macroeconomic policy framework.
Main analytical focus
- Review of the pre-crisis macroeconomic policy consensus.
- Identification of failings in the pre-crisis framework exposed by the crisis.
- Assessment of which tenets of the pre-crisis framework remain valid.
- Tentative proposal of the contours of a new macroeconomic policy framework.
Key findings and contributions
- The "great moderation" created a false sense of confidence among macroeconomists and policymakers about how to conduct macroeconomic policy.
- The crisis forces a reexamination of the pre-crisis consensus.
- The paper explicitly:
- reviews the main elements of the pre-crisis consensus;
- identifies where the pre-crisis assessment was wrong;
- identifies tenets of the pre-crisis framework that still hold;
- takes a tentative first pass at defining a new macroeconomic policy framework.
Policy implications and recommendations (tentative)
- Reassess established macroeconomic policy rules and doctrines in light of crisis experience.
- Retain and reaffirm tenets of the pre-crisis framework that remain valid, while modifying or discarding those proven inadequate.
- Begin development of a revised macroeconomic policy framework reflecting lessons from the crisis (presented as a tentative first pass).