What Have We Learned? Macroeconomic Policy After the Crisis

Conference entitled “Rethinking Macroeconomic Policy” held at the IMF brought together high level professionals from policy making and academics. The speakers reviewed the causes of financial crisis, the policy reactions to it, and a possible outlook for the future. The root of the crisis is linked on the one hand to the unstable nature of economy, on the other hand the unpreparedness of economy theory and models to capture properly the financial aspects and interlinkages of the economy. The policy reactions seem to be ad-hoc and do not aim to fundamentally eliminate the systematic risk inherent in the economies, especially in the finance sector. The future is gloomy. Neither the occurrence of severe shocks cannot be ruled out, nor are the economies ready to absorb those shocks flexibly.