Bird, Graham, “Fiscal Policy and the Global Crisis,” World Economics, Vol 17, No 1, 2016, 147-176.
Abstract: Up until the global economic crisis at the end of the 2000s an eclectic approach to fiscal policy seemed to have emerged from the long-standing debates that there had been about it. This largely ruled out using fiscal policy to fine tune the economy. Instead macro policy in advanced economies focused on monetary policy within a framework of inflation targeting. In the depths of the recession, however, and with interest rates approaching a zero lower bound, fiscal policy was dramatically resurrected and a broad global consensus formed around fiscal stimulus. The consensus did not last long and sharp disagreements soon re-emerged, in particular with respect to the speed and nature of fiscal consolidation. Why did these changes in the approach to fiscal policy happen and were they appropriate? Does the available empirical evidence allow us to form conclusions about the impact of fiscal policy or is it still a matter of ‘on the one hand…but on the other’? And how might fiscal policy evolve in the light of recent experience? This article examines these questions.
Bird, Graham, “Now You See Them, Now You Don’t: The Case of the Shrinking Global Economic Imbalances,” World Economics, Vol. 17, No. 4, 2016.
Abstract: Global economic imbalances in the mid-2000s reached a level that many commentators viewed as unsustainable. The claim was frequently made that the imbalances contributed significantly to causing the world-wide financial and economic crisis at the end of the decade. Since the mid-2000s the imbalances have shrunk considerably, and their pattern has also changed. This article uses conventional balance of payments theories to examine what may have been happening. It draws on empirical evidence to assess which theories receive the strongest support from the available data. It emerges that most of the adjustment has been brought about by reductions in expenditure in deficit countries. With some notable exceptions, expenditure switching by means of changes in real effective exchange rates has generally made only an extremely modest contribution. The article goes on to contemplate the future evolution of imbalances. The experience with global economic imbalances since the world economic crisis raises many fundamental issues about the future design of the international monetary system. These include the type of adjustment and financing mechanisms embodied in it, as well as the nature of international macroeconomic policy co-ordination.
Bird, Graham, “Towards a Better Understanding of International Capital Volatility,” World Economics, Vol. 17, No. 3, 2016, 1-24.
Abstract: Understanding why capital moves internationally in the way that it does has become increasingly important as capital accounts have been liberalized and as the size of international capital movements has expanded dramatically. International capital movements exert potentially significant effects on many key macroeconomic variables. The pattern of capital mobility reveals considerable volatility; surges, sudden stops and reversals are common features of the contemporary landscape of financial globalization. This article draws on both economic and behavioral approaches in an attempt to offer a reasonably complete analysis of capital movements and volatility. It also relates the ideas introduced to some specific episodes where international capital volatility has been observed. A better understanding of capital volatility involves recognizing that there is no simple and universally applicable explanation that fits all types of capital in all cases.
Bird, Graham and Edward Elgar. The International Monetary Fund: Distinguishing Reality from Rhetoric. Edward Elgar Publishing, 2016.
Abstract: There is no shortage of opinion about the International Monetary Fund (IMF). Some see it as the agent of austerity, being manipulated by wealthy nations and forcing poorer countries to pursue economic policies that suppress growth and development. A sharply contrasting view regards it as bailing out such countries with large amounts of soft finance, allowing them to avoid necessary adjustment. The challenge is to evaluate the alternative arguments and to distinguish reality from rhetoric. In this book, the authors undertake a careful and detailed empirical analysis of the underlying issues, covering participation in IMF programs, their implementation and effects on economic growth, and on the willingness of international capital markets to lend. Blending research methodologies and crossing conventional disciplinary boundaries, what emerges is a balanced and nuanced assessment of the IMF’s operations that confronts many commonly held views. Unique in its broad scope, this careful examination of the IMF will be of great interest to students and academics in the fields of international economics and international relations. Those involved in international financial institutions and national monetary institutions will also find it to be an impartial and illuminating study.