In The Wake Of The Crisis: Leading Economists Reassess Economic Policy

In 2011, the International Monetary Fund invited prominent economists and economic policy makers to consider the brave new world of the post-crisis global economy. The result is a book that captures the state of macroeconomic thinking at a transforma tional moment. The crisis and the weak recovery that has followed raise fundamental questions concerning macroeconomics and economic policy. For instance, to what extent are financial markets efficient and self-correcting? How crucial is low and st a ble inflation for growth and the real stability of the economy? How strong is the case for open capital markets? Too often, the standard models provided insufficient guidance on how to respond to the unprecedented situations created by the crisis. As a result, policy makers have been forced to improvise. What to do when interest rates reach the zero floor? How best to provide liquidity to segmented financial institutions and markets? How much to use fiscal policy starting from high levels of deb t?