This thought-provoking and accessible collection of reflections by economists, central bankers, and government officials explores how the unusual circumstances that have characterized the global economy since 2007 should change economists’ understanding of macroeconomic policy. One obvious point is that economists should pay much more attention to the financial system and its influence on production and employment, as well as to the policies that might strengthen the system against external shocks and destabilizing internal dynamics. Many of the contributors also argue that over the past decade, economies in Europe and North America have relied too much on monetary policy to shore up weak growth and not enough on government taxing and spending to boost demand. They note that allowing capital to flow freely across borders, as it now does in many parts of the world, creates severe problems for emerging-market countries trying to manage their monetary policies and currency exchange rates. One disappointing omission is the lack of a discussion of the influence of accounting rules on corporate behavior and economic stability.
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