Answer to Question #66587 in Microeconomics for aryamaan malhotra

Question

What are the main problems in international policy coordination? How are they solved?

Answer 1

1)Neutral Assessor
Properties of a “Neutral Assessor” :
• Bridges differences across countries
• Assesses spillovers and the potential for policy trades
• Uses information from bilateral surveillance to assess policy tradeoffs
• Assessor role to date: still much to do on spillovers and on leveraging country surveillance
2)Rules of the Road
• Limit damage from harmful outward spillovers when coordination infeasible
• Rules of the road probably costly for countries generating negative spillovers Rules of the road probably costly for countries generating negative
• Rules should be grounded in fundamentals of IMF surveillance and supported by appropriate analytical toolkit
Source: https://www.ecb.europa.eu/events/pdf/conferences/140429/Ostry_KeynotePresentation.pdf?6ca40266612935eaa6cc073c564f2c62