Think Tank 20:
New Challenges for the Global Economy, New Uncertainties for the G-20
Macroeconomic Coordination: What Has theG-20 Achieved?
-20 macroeconomic coordination wentthrough three successive phases. In the rstone, rom Washington to Pittsburgh, the ocuswas on stimulating the global economy across theboard. All countries were requested to contribute,to the extent permitted by the domestic scal situ-ation. In the second one, rom oronto to Cannes,it shifed toward a more complex set o objectives,with the aim o combining continued support orgrowth, budgetary consolidation, and the avoid-ance o a resurgence o global imbalances. In thethird phase, rom Cannes onwards, the ocus wason the European crisis and potential contributionsto its solution rom the rest o the world.In this note, I give a broad-brush assessment o thepriorities and achievements in the three phases,beore oering a ew conclusions on the overallperormance o the G-20.
Phase 1: aving the World, 2008-2009
Te G-20 was created in extraordinary times. Itsinitial ocus was on coordinating a global stimu-lus to ward o depression, equipping the Interna-tional Monetary Fund with sucient resources tocope with potential requests, and beeng up globalliquidity through an exceptional allocation o Spe-cial Drawing Rights (SDRs).Te intellectual case or global action was madeorceully by the IMF
and it was—at the time atleast—relatively consensual among economistsand policymakers. I there had ever been a timeor a global Keynesian stimulus, it was 2009.On the scal ront, data conrm that a stimuluswas engineered not only in the advanced G-20group but also, and to a broadly similar extent, inthe emerging group (Figure 1). Russia, India andChina were among the countries where the 2008-2009 eort was the largest.
Source: Authors’ calculations with IMF data
Advanced G20Emerging G20
Note: Fiscal impulse is measured by the change in thecyclically-adjusted primary balance.Data are from the IMF’s Spring 2011 Fiscal Monitor
Te ull participation o the emerging group to theconcerted stimulus was a remarkable achievement.Emerging countries were traditionally viewed aspassive players in a global macroeconomic coor-dination game dominated by the members o theG-7. Te act that they ully took part in the stimu-lus was indicative o their new global role and wasan ex-post vindication o the very creation o theG-20.o what degree was action undertaken at nationallevels triggered by G-20 coordination? In a situa-tion o a global demand shortall, high risk aver-sion and partial paralysis o nancial markets, thepolicy prescription was very much the same every-where. It is likely, however, that the G-20 action