What G20 Leaders Must Do To Stabilise our Economy and Fix ... - Vox

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VOXResearch-based policy analysis and commentary from leading economistsEBRD, the European Union and a number of national governments and government agencies.Since 2005, he is an Advisor to Goldman Sachs International. He has published widelyon subjects such as open economy macroeconomics, monetary and exchange rate theory,fiscal policy, social security, economic development and transition economies. He is a CEPRResearch Fellow.20
Reforming global economic and financialgovernanceRaghuram RajanUniversity of Chicago, ex-Chief Economist of the IMFG20 leaders should focus on global governance and should boost the IMF's financial firepower.Global financial coordination requires a broader group than the G7 or G20. The EUshould get only one chair in the ‘G20+’ to allow broader representation. The Secretariat forthis group should be a reformed IMF. The IMF's lending capacity should be immediatelyincreased by allowing the Fund to leverage its member quotas at a ratio of between 5 and 10to 1.The central problem in fostering global economic dialogue is that it is currently a ‘dialogueof the deaf’.• Industrial countries stopped requiring financing long ago; they now believe theyare responsible global citizens, and guard their policy independence carefully. Itseems they view the primary role of multilateral institutions as correcting thepolicy mistakes and the naked mercantilism of emerging markets, and – ofcourse – providing aid to the very poor.• Emerging markets feel they have come of age; they believe multilateralinstitutions follow an agenda set by the industrial countries, and don't see whytheir own policies should be under scrutiny when industrial countries showscant regard for the multilateral institutions (other than to enforce theirbidding).• Developing countries, beset with their own problems, have little time or interestin a global agenda.Unfortunately, global problems are mounting, and the problems are not just financial.The availability and pricing of resources is, as we have realised in recent years, ofcritical importance. Ideally, such resources would be produced and allocated by a freemarket to which everyone has access. Unfortunately government action distorts themarket. Decisions by small groups of countries on issues ranging from promoting biofuelsto restricting investment in, or production of, oil, have enormous impact. Asother countries try and adopt strategies that shield themselves from resource shocks,everyone's access to resources is impaired. Dialogue can help us reach a better globalsolution.Similarly, even though the world may have learnt the dangers of beggar-thy-neighbourstrategies in trade, echoes are still seen in cross-border investment. More barriersare being contemplated in industrial countries to investment from emerging markets.Old barriers, under the guise of promoting domestic stability and security, alsoexist -- all this while emerging markets have historically been exhorted to reduce theirbarriers to investment, and in some cases are doing so. It is important that we start aglobal dialogue on the admissible rules of the game in cross-border investment.Finally, global financial integration, while helpful, has increased the size of the21
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What G20 Leaders Must Do To Stabilise our Economy and Fix ... - Vox

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