Is there a role for international policy coordination?
AbstractAs the U.S. struggles with its first economic slowdown in a decade, so do most of the major industrialized countries. Japan is sliding again into recession, with third quarter GDP growth of -2.2%. Europe also seems to be slowing, with a third quarter growth rate of 0.4% for the euro area as a whole, and -0.6% for Germany in particular. ; This concurrent slowdown may not seem so surprising, given the increasing globalization and integration of the world's economies. For example, it may be that countries now face common shocks, such as a change in oil prices or a productivity slowdown; or, it is possible that the U.S. recession is spilling over to our major trading partners, as our demand for imports flags. ; In light of these possibilities, some have argued that macroeconomic policymakers need to take such common shocks and spillovers into consideration--and some even argue that it is appropriate to coordinate economic policies among countries. This topic of policy coordination, which received fairly little attention from researchers in the last ten years or so, has re-emerged as an important area of study. This Economic Letter examines the literature in this field, especially the recent and influential work of Obstfeld and Rogoff (2001). Their paper offers a very different perspective from the older literature on the topic, showing that increasing economic integration may not, ironically, mandate greater policy coordination.
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Bibliographic InfoArticle provided by Federal Reserve Bank of San Francisco in its journal FRBSF Economic Letter.
Volume (Year): (2002)
Issue (Month): feb8 ()
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- Philip R. Lane & Giovanni Ganelli, 2002.
"Dynamic General Equilibrium Analysis: The Open Economy Dimension,"
Trinity Economics Papers
200212, Trinity College Dublin, Department of Economics.
- Ganelli, Giovanni & Lane, Philip R., 2002. "Dynamic General Equilibrium Analysis: The Open Economy Dimension," CEPR Discussion Papers 3540, C.E.P.R. Discussion Papers.
- Lane, P.R. & Ganelli, G., 2002. "Dynamic General Equilibrium Analysis: The Open Economy Dimension," CEG Working Papers 20026, Trinity College Dublin, Department of Economics.
- John Huston & Roger Spencer, 2005. "International Monetary Policy: A Global Taylor Rule," International Advances in Economic Research, Springer, vol. 11(2), pages 125-134, May.
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