Frankel, Jeffrey A. "International Macroeconomic Policy Coordination." VoxEU, December 9, 2015.

Abstract

Calls for international coordination of macroeconomic policy are back, after a 30-year hiatus (e.g. Rajan 2015). To some it looks anomalous for the Fed to raise interest rates at a time when most major central banks see a need to extend further monetary stimulus. The heyday of coordination in practice was the decade 1978-1987, beginning with a G7 Summit in Bonn in 1978 and including the Plaza Accord of 1985, of which this year is the 30th anniversary. Economists were able to provide a good rationale for coordination based in game theory. (The literature started with Cooper 1969, and Hamada 1976. I review the subject of coordination, with an emphasis on recent policy developments in Frankel 2015c; similarly, the Plaza Accord in Frankel 2015b.)