New Policy Paradigms for a New World
One principal policy failure in the run-up to the recent crisis was a lack of imagination: we failed to appreciate just how intricate the global economic and financial web had become. Let our next failing not be the result of a lack of cooperation.
WASHINGTON, DC – Over the last quarter-century, the global economy enjoyed a remarkable stretch of stable growth and low inflation. The so-called “Great Moderation” lulled many policymakers into a false sense of security about their ability to manage the economy and deal with financial crises. But, as the Great Moderation metastasized into the Great Recession, fatal flaws in conventional thinking came to light. One of the most notable was just how poorly we grasped the linkages between the financial system and the broader economy – as well as the linkages between countries.
WASHINGTON, DC – Over the last quarter-century, the global economy enjoyed a remarkable stretch of stable growth and low inflation. The so-called “Great Moderation” lulled many policymakers into a false sense of security about their ability to manage the economy and deal with financial crises. But, as the Great Moderation metastasized into the Great Recession, fatal flaws in conventional thinking came to light. One of the most notable was just how poorly we grasped the linkages between the financial system and the broader economy – as well as the linkages between countries.