Macroeconomic Management When Policy Space is Constrained: A Comprehensive, Consistent and Coordinated Approach to Economic Policy


Vitor Gaspar ; Maurice Obstfeld ; Ratna Sahay ; Douglas Laxton ; Dennis P Botman ; Kevin Clinton ; Romain A Duval ; Kotaro Ishi ; Zoltan Jakab ; Laura Jaramillo ; Constant A Lonkeng Ngouana ; Tommaso Mancini Griffoli ; Joannes Mongardini ; Susanna Mursula ; Erlend Nier ; Yulia Ustyugova ; Hou Wang ; Oliver Wuensch

Publication Date:

September 28, 2016

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Disclaimer: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.


The recovery in GDP growth since the global financial crisis has been halting and weak. Concern is widespread that countercyclical policies have run out of space or lack the power to raise growth or deal with the next negative shock. This note argues that room exists for effective policies and that it should be used if appropriate. The most promising route involves a comprehensive, consistent, and coordinated approach to policy making. Comprehensive policy actions within a country exploit synergies, making the whole greater than the sum of parts. Consistent policy frameworks anchor long-term expectations while allowing decisive short- to medium-term accommodation whenever necessary. Coordinated policies across major economies amplify the helpful effects of individual policy actions through positive cross-border spillovers. The findings of this paper indicate that policy coordination adds particular value if the current approach falls short of reviving growth, or in the event of a further downward shock.


Staff Discussion Notes No. 2016/009





Publication Date:

September 28, 2016



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