1. IMF conference march 2011 Book august 2012 23 leading economists reassess Economic Policy.

2. 6 POLICY TOPICS 1.Monetary Policy 2.Fiscal Policy 3.Financial Intermediation and Regulation 4.Capital Account Management 5.The International Monetary System 6.Growth Strategies

3. Macro Facing an Interventionist Nightmare? 1.Regulation: loan to value, asset prices 2.Regulation: fiscal policy/fiscal rule 3.Regulation: regulating banks / finance 4.Regulation: control capital flows 5.Regulation: control imbalances 6.Regulation: growth policy Before/after 2007: major changes of focus in macro literature, along with resistance to change.

4. Monetary Policy for Prudent macroeconomists A theoretical challenge of macro-prudential policy: For a few papers: « How the state opposite results than before 2007 using the same DSGE models with collateral constraints». Objectives: public control of asset prices to avoid ex-ante bubbles, public control of loan to value ratios to avoid over-lending.

5. Macro-prudential 1 1.A problem with tools: loan to value tool (quantitative credit constraint; indirect control on the monetary market with increasing costs, interest rate, quantitative easing)… 2.Connection with refined regulation: breaking the contagion between asset classes and between countries: firewall tools. Glass steagall act: investment/retail; Dodd Frank act, Control of capital flows/offshore/shadow

6. Macro-prudential 2 3. Connection with banking competition? Too big to fail versus stable control of activities. Is big a problem? Canada’s case? 4. Political determinants of banking regulation: Fragile by design International competition for regulators Cross border banking/opacity.

7. Crisis management 5. Ex post adjustment: part of macro- prudential, yes or no? Orderly management and distribution of losses, timing. 6. What to do with long run quantitative easing? Long run Risks and cumulated short run benefits? How to restore confidence? Coordination with fiscal policy? Alleviate or foster sovereign default?

8. Independance? 7. Saving the financial system/independance of central banks during crisis? 8. Liquidity trap, liquidity uncertainty trap: Coordination with fiscal policy (losing independance). 9. Inflation and distributing the losses of the crisis to borrowers.

9. II. Fiscal policy is back? 1.Contingent evaluation of fiscal multiplier effects: Coordinated policy, in liquidity trap, depending on tradable/non tradable, long term public investment, targeted public expenditures towards consumers, sectors, spillovers, long term green policy

10. Fiscal policy 2 2. Fiscal multiplier versus sovereign default (public debt) versus bank defaults (systemic risk), turning around « expansionary austerity ». 3. Targeted and conditional support of banks towards private lending of SME? Public banks? (the failure of Trouble Asset Relief Plan).

11. Fiscal Policy 3 4. The particular case of fiscal policy in the Euro-Area with nations with different degrees of competitivness and no willingness to fiscal transferse. 5. Changing the tax structure, the efficiency of the tax system (second bests)

12. 3. Banking regulation 1. It frames how monetary policy (with financial stability obejctive) and how budgetary policy (in systemic crisis) may react. Cf. previous slides. 2. Too much finance (cf growth policy). Misallocation of talent, too many trades, too much opacity, too many crisis.

13. How to do it 3. Political economy issue on the determinants of the bargaining power of international banks (fragile by design). 4. Details of micro-level regulations, tax, constraints (cf firewalls) and their consequences.

14. 4. Capital account management 1.Smoothing China / USA / Europe imbalances, how exports/exchange rate over-valuation is changing? Are there excess reserves and how to correct it over time? 2.Contingent evaluations of the efficiency of Capital controls: evaluations again with another view than it is always bad (signs of regressions will change).

15. Capital account management 3. Interactions with cross-border banking regulations and current account management. (short term sudden stop, contagion between asset classes, debt in foreign currency).

16. 6. Growth Policy The debate did not change much with respect to the crisis (issue such that industrial policy, export driven, public infrastructure, education, health, oppenness, commodities resources) Except: « too much finance » (cf. regulation) And still « green, less CO2, growth ».