The International Economic Policy Coordination Instrument

This paper discusses the scope, methods, and effects of international coordination of economic policies. In analyzing the scope for and of coordination, the paper addresses the rationale for coordination, barriers to coordination, the range and specificivity of policies to be coordinated, and the frequency of coordination. In evaluating the methods of coordination, the emphasis is on the broad issues of rules versus discretion, single-indicator versus multi-Indicator systems, and hegemonic versus symmetric systems. Finally, using the MULTIMOD global macroeconomic model, some simulations are presented of several rule-based proposals for coordination.

This volume, which presents the proceedings of a seminar moderated by Wilfred Guth in Hamburg, Germany, dicusses the extent of international policy coordination, its effectiveness, and how it can be expected to work in the future.

This volume presents some of the best current research on international economic policy coordination.

Since the five largest industrial democracies concluded the Plaza Agreement in 1985, the theory and practice of international economic policy coordination has become the subject of spirited academic and public-policy debate. While some view policy coordination as crucial for the construction of an improved international monetary system, others fear that it risks delaying or weakening the implementation of macroeconomic and structural policies. In these papers and comments, prominent international economists consider past and present interpretations of the meaning of international policy coordination; conditions necessary for coordination to be beneficial both to the direct participants and the global economy; influential factors for the quantitative impact of coordination; obstacles to coordination; the most—and least—effective methods of coordination; and future directions of the coordination process, including processes associated with greater fixity of exchange rates. These studies will be readily accessible to policymakers, while offering sophisticated analyses to interested scholars of the global economy.

The "reality" of international economic policy coordination is the subject of this book. This reality comprises the objectives of policy-makers, the various constraints faced by policy makers, and current economic knowledge about international coordination. The treatment of the subject matter is unique because the principal authors have first-hand knowledge based on their current or past involvement in the process of international economic policy coordination. This makes the book important and stimulating for both policy makers and academic specialists in this field. The study provides an in-depth analytical overview of the most important topics in the area of international coordination: the role of institutions, fiscal policy, tax policy, the international monetary system, the European monetary system, policy assignment rules and exchange rate regimes, structural policy and structural reform, methods and empirical effects of international policy coordination.