Globalisation and the Macroeconomic Policy Environment

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Globalisation and the Macroeconomic Policy Environment

Author Info

Karine Hervé
Isabell Koske
Nigel Pain
Franck Sédillot ()

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Abstract

This paper investigates the macroeconomic policy challenges associated with a prospective continuation of international trade and financial integration over the next two decades, making use of a global macroeconomic model newly developed by the OECD. The analysis has several important policy implications. First, with the shares of non-OECD economies in world output, trade, and capital markets rising substantially, global economic developments would become much more dependent on developments in these economies than they used to be. Second, the sustainability of existing global current account imbalances will depend in part on the future build-up and composition of international assets and liabilities. While the imbalances could be sustainable for some time if economic integration continues at its current pace, a slowdown of the globalisation process would raise the likelihood of a disruptive adjustment in financial markets. Third, the increase in trade and financial linkages implies that macroeconomic shocks in a given country or region have a larger impact on other economies in the future than they do today. Policymakers in the OECD may have to act more promptly and more vigorously to economic 'shocks' in the non-OECD economies in order to limit the impact on OECD economies.

Mondialisation et environnement de politique macroéconomique
Ce papier étudie les défis de politiques économiques posés par la poursuite éventuelle au cours des deux prochaines décennies de l’intégration commerciale et financière internationales. Cette étude est fondée sur l’utilisation d’un modèle macroéconomique mondial récemment développé par l’OCDE. L’analyse conduit à plusieurs implications politiques importantes. Tout d?abord, avec une part croissante des économies non membres de l’OCDE dans la production mondiale, le commerce et les marchés financiers, les changements économiques mondiaux deviendront beaucoup plus dépendants de ceux de ces économies. Ensuite, la soutenabilité des déséquilibres mondiaux des comptes courants existants dépendra en partie de la construction et de la composition futures des avoirs et engagements internationaux. Alors que les déséquilibres devraient être soutenables un certain temps si l’intégration économique continue à ce rythme, un ralentissement du processus de mondialisation augmenterait la possibilité d’un ajustement brutal des marchés financiers. Enfin, l’accroissement des liens commerciaux et internationaux implique que les chocs macroéconomiques affectant un pays ou une région donnée auront dans le futur un impact plus fort sur les autres économies que maintenant. Les décideurs politiques des pays de l’OCDE devraient donc agir plus rapidement et plus fortement aux chocs économiques affectant les économies non membres de l’OCDE afin d’en limiter l’impact sur les économies membres.

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Paper provided by OECD Economics Department in its series OECD Economics Department Working Papers with number 552.

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Date of creation: 04 May 2007
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Handle: RePEc:oec:ecoaaa:552-en

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Find related papers by JEL classification:
E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation
E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
F01 - International Economics - - General - - - Global Outlook
F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation

This paper has been announced in the following NEP Reports:

NEP-ALL-2007-05-12 (All new papers)
NEP-CBA-2007-05-12 (Central Banking)
NEP-MAC-2007-05-12 (Macroeconomics)

Cited by:
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Wim Suyker & Henri L.F. de Groot & Piet Buitelaar & Jos Ebregt & Stefan Groot & Jan Möhlmann & Hugo Rojas-Romagosa & Bas Straathof, 2007. "India and the Dutch economy," CPB Documents 155, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]

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