Rethinking Macroeconomic Policy


  • The views expressed herein are those of the authors and should not be attributed to the IMF, its Executive Board, or its management. Helpful inputs from Mark Stone, Stephanie Eble, Aditya Narain, and Cemile Sancak are gratefully acknowledged. We thank Tam Bayoumi, Stijn Claessens, Charles Collyns, Stanley Fischer, Takatoshi Ito, Jean Pierre Landau, John Lipsky, Jonathan Ostry, David Romer, Robert Solow, Antonio Spilimbergo, Rodrigo Valdes, and Atchana Waiquamdee for their comments.


The great moderation lulled macroeconomists and policymakers alike in the belief that we knew how to conduct macroeconomic policy. The crisis clearly forces us to question that assessment. In this paper, we review the main elements of the precrisis consensus, identify where we were wrong and what tenets of the precrisis framework still hold, and take a tentative first pass at the contours of a new macroeconomic policy framework.