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Macroeconomic Policy and Economic Performance

  • Pedro de Lima
  • Alain de Serres
  • Mike Kennedy

This paper analyses the major changes in both monetary and fiscal policy that have taken place over the past two decades and, within the limits of the existing empirical research, evaluates the overall costs and benefits for the OECD economies. The general findings for monetary policy are that, while it was costly to lower inflation (in terms of output and employment), there are also benefits in terms of lower risk premiums on interest rates, a more favourable investment climate and an improvement in economic efficiency. That said, the paper concludes that there is not much of a case for lowering inflation further from its already low level. While inflation was being lowered, in a number of cases central banks were also undergoing rather significant changes to their institutional structures and policy-making frameworks. There is some limited evidence that these changes have helped in terms of better anchoring inflation expectations. At the same time there is no firm answer on how ... Politique macro-économique et performance Cette étude examine les changements majeurs survenus au cours des vingt dernières années dans la conduite des politiques monétaire et fiscale et en évalue les principaux coûts et bénéfices sur la base de la littérature empirique existante. Concernant la politique monétaire, bien qu’il ait été coûteux de réduire l’inflation (en termes d’emploi et de production), il y eu également des bénéfices en termes de réduction de prime de risque sur les taux d’intérêt, un climat plus favorable à l’investissement et une plus grande efficience économique. Ceci étant, l’étude conclut qu’il n’apparaît pas justifié de poursuivre la désinflation au-delà des faibles niveaux déjà enregistrés dans la plupart des pays. Parallèlement à la poursuite de la politique désinflationniste, plusieurs banques centrales ont modifié de manière importante le cadre institutionnel dans lequel la politique est mise en opération. L’hypothèse selon laquelle ces changements ont contribué à mieux ancrer les anticipations ...

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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 353.

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Date of creation: 30 Apr 2003
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Handle: RePEc:oec:ecoaaa:353-en
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