International subprime crisis and recession: Emerging macroprudential, monetary, fiscal and global governance

Abstract

This paper scrutinizes technical international policy reactions to the subprime crisis and recession. Short-term policy responses present challenges to the conservative policies of the 1980s-2000s, while long-term structures and issues are likely to redirect governance significantly. Macroprudential policy now includes systemic risk and debt problems arising from booms in the cycle. Monetary policy considers asset price instability as well as inflation. Fiscal policy in practice cannot ignore functional finance. Alternative forms of global money and reducing international payment instabilities are now a core element of policy. While there is still some asymmetry in policy, international financial crises can be useful in moderating ceremonial policy structures.