Conference on Global Financial Crisis: Macroeconomic Policy Issues
Post-event Statement
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The conference on "Macroeconomic Policy Issues" was successfully completed on 28- 29 July 2009, as a part of the Global Financial Crisis conference series organized by the Asian Development Bank Institute. The thematic focus of this two-day conference was on five areas:
- Monetary policy issues;
- Fiscal policy issues;
- Exchange rate policy and reserve management issues;
- Issues related to the "impossible trinity"; and
- Impact of global financial crisis on Asia and policy responses.
The conference started with a session on monetary policy recommendations. The first paper focused on monetary policy frameworks adopted by central banks in the Asia and Pacific region. It discussed the adequacy of traditional policy instruments and argued for a closer coordination among central banks to ensure coherent policies in the region. The second paper reviewed the empirical literature on the effectiveness of various kinds of unconventional monetary policies, and assessed the effectiveness of such policies and implications for Asian central banks.
Three papers were presented on the second session which focused on fiscal policy recommendations. The first paper reviewed the latest literature on the effectiveness of fiscal policy in an open economy. The second paper analyzed the measures adopted by the Chinese government to stimulate their economy during the current global financial crisis; and discussed issues related to fiscal and debt sustainability. The third paper analyzed issues on fiscal stimulus packages including political economy and debt sustainability considerations of the Malaysian response.
Issues related to exchange rate policy and reserve management were discussed in the third session. The first paper analyzed the transmission of monetary shocks under alternative exchange rate arrangements and drew implications for the choice of exchange rate regime for Asian countries. The second paper analyzed the adequacy of the level of foreign exchange reserves in Asia and its implications on the effectiveness of exchange rate intervention.
In session four, recommendations related to the "impossible trinity" were made. The first paper analyzed the extent to which the holding of international reserves and financial development could relax the constraints of the "impossible trinity". The second paper focused on the issues of capital account liberalization for India, as well as for Asia's emerging markets.
Some concern was raised over the multiplier effects of fiscal spending and tax cuts, and stress was given on the automatic stabilizing functions of fiscal policy.
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Background
This activity is part of the global financial crisis project, which has a crosscutting theme. The current financial crisis and global economic downturn did not originate in Asia, but Asian economies and financial markets have already begun to feel their impacts, and these are likely to deepen substantially over the coming year. The most obvious areas of impact have been exports and equity markets, which have declined sharply across the region, but stresses in currency and credit markets have emerged as well, and domestic demand has softened. This sensitivity has been heightened by the export-led growth strategies followed by many countries.
ADBI is planning a series of conferences related to the crisis, including identifying its likely impacts on Asian countries, developing scenarios for growth re-balancing away from exports, and developing recommendations related to macroeconomic policy, structural and institutional innovations, regional integration and financial reform. This conference will examine implications of the global crisis for desired macroeconomic policy responses by Asian countries. It will build on results from the April conference on macroeconomic impacts of the current crisis and lessons from previous crises, including the effectiveness of monetary and fiscal policy in a situation of financial stress.
Objectives
The conference will review evidence and analysis of the implications of the global economic and financial crisis on the desired macroeconomic policy responses by Asian countries. This conference will build on the work of earlier conferences dealing with identifying the macroeconomic impacts of the crisis on the region and lessons from previous crises. The main areas included in this conference are: - monetary policy
- fiscal policy
- currency policy
- issues related to “impossible trinity” constraints on policy
Outputs
Conference proceedings
ADBI Policy Brief and Working Papers
Participants
Senior policymakers from multilateral institutions, private sector, think tanks and the academic community.
Language
English
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