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Macroeconomic Policy Regime Change in Advanced Economies

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  • Otaviano Canuto

Abstract

Three significant changes to the macroeconomic policy regime in advanced economies, compared to the post-global financial crisis period, have unfolded in the last two years. First, fears of a chronic insufficiency of aggregate demand as a growth deterrent prevailing after the 2008 global financial crisis, have been superseded by supply-side shocks and inflation. Second, as a result of the first change, the era of abundant and cheap liquidity provided by central banks has given way to higher interest rates and liquidity squeezes. Finally, because of the previous changes, there was a strong devaluation of financial assets in 2022. There are now fears about multiple possibilities of financial shocks ahead.

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  • Otaviano Canuto, 2023. "Macroeconomic Policy Regime Change in Advanced Economies," Policy notes & Policy briefs 1996, Policy Center for the New South.
    • Handle: RePEc:ocp:ppaper:pb02-23
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    1. Otaviano Canuto, 2021. "The Metamorphosis of Finance and Capital Flows to Emerging Market Economies," Policy notes & Policy briefs 1942, Policy Center for the New South.
    2. Charles Goodhart & Manoj Pradhan, 2020. "The Great Demographic Reversal," Economic Affairs, Wiley Blackwell, vol. 40(3), pages 436-445, October.
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