Rethinking Macroeconomic Policy

Disclaimer: The views expressed herein are those of the authors and should not be attributed to the IMF, its Executive Board, or its management. The great moderation lulled macroeconomists and policymakers alike in the belief that we knew how to conduct macroeconomic policy. The crisis clearly forces us to question that assessment. In this paper, we review the main elements of the pre-crisis consensus, we identify where we were wrong and what tenets of the pre-crisis framework still hold, and take a tentative first pass at the contours of a new macroeconomic policy framework.