The Macroeconomic Policy Response to the International Financial and Economic Crisis and the G20

  • Alok Sheel


During the Great Depression of the 1930s, an event to which the recent crisis is often compared, the animosities of the interwar period prevented a coordinated policy response to what was essentially a global problem. Indeed, it is often argued that this failure resulted, inter alia, in the cascading competitive protectionism triggered by the Smoot–Hawley tariffs that may well have magnified a deep recession into the Great Depression. In sharp contradistinction, the G20 orchestrated a much acclaimed globally coordinated policy response to the Great Recession, in the process effectively putting in place a new institution to manage globalization.

With the prospects of the global recovery remaining uncertain, and with the IMF repeatedly downgrading its successive forecasts for global economic growth, the initial accolades received by the G20 for having forestalled a second Great Depression have yielded to questioning of the appropriateness of its policy response and its effectiveness as the premier forum for international economic co-operation.


Monetary Policy Central Bank International Monetary Fund Fiscal Policy World Trade Organization 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. Altman R (2013) A Response to Martin Wolf, Financial Times, May 13, 2013. (
  2. Baldacci E, Gupta S, Mulas-Granados C (2009) How effective is Fiscal policy response in systemic banking crises? IMF Working Paper, WP/09/160, July 2009. (
  3. Bank for International Settlements (2013) 83rd Annual Report, 1 April 2012–31 March 2013, Basel, June 23, 2013. (
  4. Bird G (2012) Dealing with global economic imbalances: the political economy of policy coordination. Global Econ Rev 41:4. (Perspectives on East Asian Economies and Industries, December 2012, pp 299–317.
  5. Blanchard O, Leigh D (2013) Growth forecast errors and Fiscal multipliers, IMF, WP/13/1, January 2013. (
  6. Blanchard O, Spilimbergo A, Symansky S, Cottarelli C (2008) Fiscal policy for the crisis, IMF Staff Position Note SPN/08/01, December 29, 2008. (p 12)Google Scholar
  7. Blanchard O, Dell’Ariccia G, Mauro P (2010) Rethinking macroeconomic policy, I M F Staff Position Note SPN/10/03, February 12, 2010. (
  8. Blanchard O, Dell’Ariccia G, Mauro P (2013) Rethinking macro: getting granular, I M F Staff Position Note SDN/13/03, April 2103. (
  9. Cannes (G20) Summit final declaration—building our common future: renewed collective action for the benefit of all Cannes, November 4, 2011Google Scholar
  10. Claessens S, Kose MA, Terrones ME (2008) What happens during recessions, crunches and busts? IMF, WP/08/274. December 2008. (
  11. Communiqué. G20 Meeting of Ministers and Governors, Sao Paulo, Brazil, 8–9, November, 2008Google Scholar
  12. Cottarelli C, Jaramillo L (2012) Walking hand in hand: fiscal policy and growth in advanced economies, IMF. Working Paper, WP/12/137, May 2012. (
  13. Declaration of the (G20) Summit on financial markets and the world economy, Washington DC, November 15, 2008Google Scholar
  14. Evenett SJ (2013) Protectionism’s quiet return: the GTA’s Pre-G8 Summit Report, VOX, June 13, 2013. (
  15. Eyraud L, Weber A (2013) The challenge of Debt reduction during fiscal consolidation, IMF. Working Paper, WP/13/67, March 2013. (
  16. Feldstein M (2013) The federal reserve’s policy dead end. The Wall Street Journal, May 10, 2013. (
  17. G20 Coherent Conclusions for the Management of Capital Flows Drawing on Country Experiences, October 15, 2011Google Scholar
  18. G20 Finance Ministers’ and Central Bank Governors’ Communiqué, March 14, 2009, issued from Horsham, U.KGoogle Scholar
  19. G20 Leaders Declaration, Los Cabos, Mexico, June 19, 2012Google Scholar
  20. G20 Leaders Statement: The Pittsburgh Summit, September 24–25, 2009, PittsburghGoogle Scholar
  21. Harding R, Mackenzie M, Ross A (2013) Bernanke warns banks on excessive risk, Financial Times, May 10, 2013. (
  22. IMF (2007) Staff Report on the Multilateral Consultation on Global Imbalances with China, the Euro Area, Japan, Saudi Arabia, and the United States June 29, 2007Google Scholar
  23. IMF (2008) World Economic Outlook, October 2008Google Scholar
  24. IMF (2009a) WEO Update, January 2009Google Scholar
  25. IMF (2009b) World Economic Outlook, April 2009. (p 113,
  26. IMF (2010) WEO Update January 26, 2010Google Scholar
  27. IMF (2011) World Economic Outlook, September 2011Google Scholar
  28. IMF (2012a) World Economic Outlook, April 2012Google Scholar
  29. IMF (2012b) World Economic Outlook, October 2012Google Scholar
  30. IMF (2012c) The Liberalization and Management of Capital Flows—An Institutional View, November 14, 2012. (
  31. IMF (2012d) People’s Republic of China, 2012 Article IV Consultation, IMF Country Report No. 12/195, 2012. (
  32. IMF (2013a) Fiscal Monitor April 2013Google Scholar
  33. IMF (2013b) Global Financial Stability Report, April 2013Google Scholar
  34. IMF (2013c) Greece: ex post evaluation of exceptional access under the 2010 Stand-By Arrangement, IMF Country Report No. 13/156, June 2013. (
  35. Jen SL, Dreisin A (2013) Assessing the ‘Sudden Stop’ risks for EM. SLJ Macro Partners, May 10, 2013. (
  36. Krugman P (2013) How the case for austerity has crumbled, The New York Review of Books, June 2013. (
  37. Lin JY (2013) How to kick-start a global recovery. The Wall Street Journal, July 1, 2013. (
  38. London (G20) Summit—Leaders’ Statement, 2 April 2009Google Scholar
  39. National Bureau of Economic Research (2010) Determination of December 2007 Peak in Economic Activity, April 13, 2010Google Scholar
  40. OECD (2013) Action Plan on Base Erosion and Profit Sharing.
  41. Rangarajan C, Sheel A (2013) Growth or austerity: the policy dilemma,. Money and Finance, ICRA Bulletin, February 2013. (p 47)Google Scholar
  42. Reinhart CM, Rogoff KS (2009a) This time is different. Eight Centuries of Financial Folly, Princeton University Press, 2009Google Scholar
  43. Reinhart CM, Rogoff KS (2009b) The aftermath of financial crises, NBER Working Paper Series # 14656, January 2009. (
  44. Report of the G20 Study Group on Commodities under the chairmanship of Mr. Hiroshi Nakaso, November 2011Google Scholar
  45. Sheel A (2013a) The Central Banker’s Brahmastra, Business Standard, New Delhi, April 2, 2013. (
  46. Sheel A (2013b) Misunderstood dog has not barked, yet, Financial Times, April 19, 2013. (
  47. Spiegel P, Daneshkhu S (2013) EU Eases Hard Line on Austerity, Financial Times, May 29, 2013. (
  48. Spilimbergo A, Symansky S, Schindler M (2009) Fiscal Multipliers, I M F Staff Position Note SPN/09/11, May 20, 2009Google Scholar
  49. Summers LH (2013) It is no time for faster cuts to the US budget deficit. Financial Times, June 3, 2013. (
  50. Summers LH, DeLong JB (2012) Fiscal policy in a depressed economy, March 20, 2012. (
  51. Tett G (2013) Markets insight: US Mortgage Market Depends on State Support, Financial Times, April 25, 2013. (–82b8-00144feabdc0.html#axzz2YFiLIkyy)
  52. The G20 Toronto Summit Declaration, Toronto, June 27, 2010Google Scholar
  53. The G20 Seoul Summit Leaders’ Declaration, Seoul, November 12, 2010Google Scholar
  54. UNCTAD (2012) Background note: macroeconomic policies to promote growth and job creation. Special high-level meeting of the Economic and Social Council with the Bretton Woods institutions, the World Trade Organization, and the United Nations Conference on Trade and Development. New York, March 12–13, 2012. ( p.3)
  55. U.S Federal Reserve (2013) Transcript of Chairman Bernanke’s Press Conference June 19, 2013. (
  56. Wolf M (2013a) The sad record of fiscal austerity, Financial Times, February 26, 2013. (
  57. Wolf M (2013b) Austerity in the Eurozone and U.K: kill or cure? Financial Times, May 23, 2013. 6 a.m. (
  58. WTO (2011) Trade patterns and global value chains in East Asia: From trade in goods to trade in tasks, 2011. (
  59. WTO, OECD and UNCTAD (2012) Reports on G20 Trade and Investment Measures (Mid-May to mid-October 2012), October 31, 2012Google Scholar

Copyright information

© Springer India 2014

Authors and Affiliations

  1. 1.Economic Advisory Council to Prime Minister of IndiaNew DelhiIndia

Personalised recommendations