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Policy Frameworks in the Post-Crisis Environment

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  • Nigel Pain
  • Oliver Röhn

Abstract

The financial crisis revealed flaws in pre-crisis policy frameworks. Particular gaps included the failure of monetary and financial policies to incorporate fully the implications of the rapid pro-cyclical growth in financial leverage and risk-taking, especially across national borders, and the failure of fiscal policy to create sufficient space for policy manoeuvre in event of a crisis. During the crisis, the clear pre-crisis assignments of policy instruments to objectives became blurred, and the effectiveness of separate policy instruments became increasingly interdependent. In the early stages of the exit from the crisis, policy decisions continue to be made in an environment of high uncertainty. In the near term, important policy priorities are to support the recovery, to keep projected inflation close to target and to pursue internationally co-ordinated financial and structural reforms to enhance financial market resilience and strengthen the prospects for macroeconomic stability. In the medium term, the priority is to ensure that the overall policy framework is more robust than prior to the crisis, which may also require institutional reforms. There are good arguments for restoring a clear assignment of policy instruments to policy objectives and policy institutions, but for this to occur it will be especially important that well-founded and internationally consistent reforms to financial regulation and supervision are put in place. Le cadre de la politique économique après la crise La crise financière a révélé les failles des politiques économiques menées antérieurement. On peut citer en particulier l?incapacité des politiques monétaires et financières à intégrer pleinement les effets du rapide développement procyclique de l?effet de levier et de la prise de risques, y compris à l?échelle internationale; et aussi le fait que la politique budgétaire n?ait pas dégagé une marge suffisante pour pouvoir agir en cas de crise. Pendant la crise, l?affectation claire des instruments de politique aux objectifs s?est estompée et a fait place à une interdépendance croissante des différents instruments. Dans les premiers temps de la sortie de crise, on a continué à prendre des décisions entachées d?une grande incertitude. Dans le court terme, les priorités politiques essentielles sont de soutenir la reprise, maintenir l?anticipation d?inflation proche de l?objectif, ainsi qu?à procéder à des réformes financières et structurelles, coordonnées sur le plan international, qui renforcer la résistance des marchés financiers et améliorer les perspectives de stabilité macroéconomique. Á moyen terme, la priorité est de s?assurer que le cadre global de politique économique soit plus solide qu?avant la crise, ce qui pourrait aussi exiger des réformes institutionnelles. Il y a de bons arguments en faveur du retour à une affectation claire des instruments de politique aux objectifs et aux institutions ; mais cela sera conditionné par le lancement de réformes judicieuses et internationalement compatibles de la réglementation et de la supervision financières.

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File URL: http://dx.doi.org/10.1787/5kgdpn1w9lkb-en
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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 857.

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Date of creation: 22 Apr 2011
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Handle: RePEc:oec:ecoaaa:857-en

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Keywords: monetary policy; financial market policy; growth; fiscal policy; crisis; recovery; crise; politique monétaire; politique à l'égard des marchés financiers; reprise; croissance; politique budgétaire;

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