Before the global economic crisis, mainstream macroeconomists had largely converged on a framework for the conduct of macroeconomic policy. The framework was elegant and conceptually simple, and it seemed to work. From the early 1980s on, macroeconomic fluctuations were increasingly muted, and the period became known as the “Great Moderation”. Then the crisis came. If nothing else, it forces us to do a wholesale reexamination of those principles. This raises questions that will keep us busy for years to come. To start exploring the answers, David Romer, Michael Spence, Joseph Stiglitz, and I have organized a conference at the IMF on March 7-8. Here are some ideas to get the conversation started.
The three Baltic states—Estonia, Latvia and Lithuania—were among the first victims of the global financial crisis. Although adjustment is still far from complete, a recovery is now underway. It is still too early to judge the success of the Baltic strategy, but it's fair to say that the most dire predictions have not come true.