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Symposium 2014

Virtual Library File - Overcoming the obstacles to international macro policy coordination is hard

The Challenge

Recent debt, currency, or banking crises have proven how difficult it is to forecast such events, let alone to prevent them. For example, the fiscal surveillance mechanism in the Euro Area was unabl ...

Recent debt, currency, or banking crises have proven how difficult it is to forecast such events, let alone to prevent them. For example, the fiscal surveillance mechanism in the Euro Area was unable to prevent the Euro debt crisis, still faced by some EU countries. Consequently, the EU and the G-20 have called for strengthening macroeconomic surveillance by means of closely monitoring a broad set of potential imbalance indicators. However, many issues with regard to macroeconomic surveillance are still hotly debated among economists and policymakers. Analyzing the potential of macroeconomic surveillance and developing forward-looking proposals for its improvement, could certainly contribute to a more stable economic system in the future.

IMF economists argue that more macroeconomic cooperation will be needed to prevent the next crisis, given the current (still expansionary) stance of fiscal and monetary policies all over the world. Moreover, the authors propose ways to overcome present obstacles.