IMF Working Papers

The Dog That Didn’t Bark: The Strange Case of Domestic Policy Cooperation in the “New Normal”

By Tamim Bayoumi

July 15, 2015

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Tamim Bayoumi. The Dog That Didn’t Bark: The Strange Case of Domestic Policy Cooperation in the “New Normal”, (USA: International Monetary Fund, 2015) accessed November 22, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines domestic policy cooperation, a curiously neglected issue. Both international and domestic cooperation were live issues in the 1970s when the IS/LM model predicted very different external outcomes from monetary and fiscal policies. Interest in domestic policy cooperation has since fallen on hard intellectual times—with knock-ons to international cooperation—as macroeconomic policy roles became highly compartmentalized. I first discuss the intellectual and policy making undercurrents behind this neglect, and explain why they are less relevant after the global crisis. This is followed by a discussion of: macroeconomic policy cooperation in a world of more fiscal activism; coordination across financial agencies and with macroeconomic policies; and how structural policies fit into this. The paper concludes with a proposal for a “grand bargain” across principle players to create a “new domestic cooperation.”

Subject: Banking, Financial crises, Financial sector policy and analysis, Financial sector stability, Fiscal policy, Macrostructural analysis, Structural policies, Structural reforms

Keywords: Aftermath, Central Bank Independence, Coordination literature, Domestic policy, Domestic Policy Cooperation, Financial sector stability, Global, Macroeconomic Policy cooperation, Macro-prudential policy, Macroprudential Policy, Monetary policy, Monetary policy decision, Monetary policy maker, Monetary policy process, Policy, Policy area, Policy coordination, Policy discussion, Policy level, Policy option, Structural policies, Structural reforms, WP

Publication Details

  • Pages:

    22

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2015/156

  • Stock No:

    WPIEA2015156

  • ISBN:

    9781513584607

  • ISSN:

    1018-5941

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